Entrepreneurship Case Study: IBM - Essay Example

Running Head: Entrepreneurship Entrepreneurship Case Study and Section # of IntroductionThe scope and focus of any good business school is to equip its students with the art and science of decision-making and business administration in different environments. For this purpose, an individual needs to be familiar with the necessary tools in order to successfully take care of the various business functions. Marketing, finance, operations management and sales are amongst the most important divisions in any firm that generally are split into more than one division sometimes and that make up the core elements of a company. Though the general focus of business graduates is to learn the trades that would assist one in becoming a good “manager” or “leader” there are few schools of thought particularly focused on breeding entrepreneurs. For one, it would be wrong to assume that entrepreneurship is a subject that can be taught or explained in text-book terms or lectures. Entrepreneurship, arguably, is an in-born talent that allows individuals to innovate, take risks and reap the benefits, if successful. It is rather like a culture that needs to be instilled in order for a person to inherit the spirit of entrepreneurship. It would be wrong to say that IBM is not an innovative company. However, it can be remarked that the level of innovation at IBM is not upto the mark keeping into view its competitors. Companies like Apple and Microsoft have been the market makers since decades. The iPhone, iPod, Windows and Mac have been products that have broken the market barriers and captivated audiences. IBM has always been somehow better at “re-innovating” rather than being the leader in the market. This paper is going to discuss the different ways in which an entrepreneurial culture can be developed at IBM that would result in greater innovation and business development in a globalized world. The Enterprise Culture The culture that is inherently being followed at the workplace of a company is referred to as the enterprise culture – it consists of the norms, values and beliefs that contribute towards shaping up the high-level and low-level characteristics of behavior, thought and perception of the individuals working there (Robbins & Judge, 2004). Enterprise culture also comprises of the fact that what response do individuals get when they try to innovate, i.e. perform any act out of their defined business processes. There are various kinds of enterprise cultures, most of them specific to the nature of an organization and determined by the people in power. It is said that the behavior and attitudes of the higher authorities are the most important factors that shape up an enterprise culture. This seems to be true due to the fact that employees at the lower end of the hierarchy tend to emulate the ones above them – their managers and bosses. Thus, the degree of entrepreneurial nature of an enterprise culture is highly dependent on the people of an organization, their behavior, attitudes and beliefs, particularly of those in power. Entrepreneurship is a characteristic that cannot be inherited in any workplace by tangible objects – there is the element of organizational behavior and organizational culture that depicts whether an enterprise culture embraces entrepreneurship or not. Apple Inc. is one of the most innovative technology firms in the world – this is due to the fact that the organizational culture at the company is built by its CEO, Steve Jobs, in such a way that intrapreneurship and innovation are norms there and are highly appreciated. Creativity, to a certain extent, is better confined to certain areas – a creative accountant would be highly disregarded while a creative marketer would be reaping rewards (Daft, 2001). Thus, entrepreneurial culture within an organization is generally confined to the innovative departments of a company in order to keep the standard functions going correctly. Corporate Profile: International Business Machines - IBM The enterprise culture at IBM has always been one which has been focused towards employees – equality, justice and hierarchical respect has been some of the important characteristics inherent in the culture. Founded in 1896, IBM is the first company that manufactured the computer mainframes and business systems long back in the 1970s. Then considered to be just an oddity, home computer systems were labeled as “unwanted” by the CEO of IBM, who estimated the number of such systems to be just over a hundred by 2010. He did not survive that long, nor did his predictions. Today, all of us are familiar with the need for a computer system, the various implications on society without automation and the different areas that just would not have been possible without computers. The culture of innovation and intrapreneurship is an important one for companies in the technology industry (Tadelis, 2007). Though IBM started off as a tabulating machine manufacturer, its humble beginning did not stop it from reaching peaks of ruling over the corporate technological globe. After capturing the business computing markets early on in the 1970s, IBM today is a global technology and services firm in the business of servers and client machines, laptops, software and a wide range of technology gadgets for businesses including network support services and information systems consultancy. The enterprise culture at IBM is one that can be marveled. Globally, the culture of IBM keeps into account the needs and wants of employees providing them with the best facilities and perks a company can. These have been the major reasons why employees at IBM prefer to stay there in spite of the hierarchical nature of the organization and lack of intrapreneurship focus. IBM and Entrepreneurship IBM has recently started to be known for its entrepreneurial culture. However, it was not so when the company had first started. The firm has not had a very cozy history of supporting intrapreneurs and harboring a culture of innovation. The corporate culture earlier at IBM was hostile to intrapreneurship and thus lost important innovative ideas to other companies – the desktop computer, LCDs and printers are some of the few innovations that IBM possessed the technical and human resources to produce, but eventually lost it to other companies due to the inability of the corporate leaders to support their development (Armstrong, 2006). The culture at IBM is one which is very supportive of entrepreneurial activities – today. Two decades down the memory lane, things were hostile for intrapreneurs as corporate heads failed to find the “reason” to invest in such projects and thus lost a great many good ideas to other companies. Sometimes individuals were able to work on other projects and sold their ideas to other companies. It was all but a culture of innovation that has gradually changed so much with time. Currently IBM has an innovation center and employees are encouraged to experiment with their knowledge and skills in order to come up with exciting new products and services. The Lenovo division of IBM that caters to the laptop market is a collaboration with a Chinese counterpart. Though most analysts would regard IBM to be an innovative firm doing things the right way following the path of innovation, it is important to realize that entrepreneurship and innovation are not the only two factors that need to be considered for an entrepreneurial culture. IBM has had a history of following the market in spite of its focus on innovation and thus does not display entrepreneurial market behavior. Internally, the firm may be promoting a culture of intrapreneurs but that has not really brewed up any significant competitive edges for IBM (Donna, Prestwood & Schumann, 2003). The Current Workplace Atmosphere IBM work culture has always been an example for other companies – right from the time it established its mainframe monopoly till today, IBM has been known for its lucrative policies and employee compensation benefits. However, these benefits have been centered towards employee motivation and empowerment in the workplace rather than to enlighten their creative and entrepreneurial skills. Fact is that, IBM has promoted its employees, spoilt them and given them a great atmosphere asking for work in return. This suggests that the “work” in return is the actual task that the employees are designated to perform. It would be wrong to say that these types of motivational tools and techniques are not required. They are needed in order to maintain a healthy and motivational work atmosphere. However, to promote a culture of entrepreneurship, it is necessary for the IBM managers to devise a strategy that will bring the focus of employees towards entrepreneurship and innovation. The current atmosphere is centered towards motivation, not innovation. It offers benefits to good workers, not employees who would be willing to explore the extra mile and explore the unknown. The current “centers for innovation” at IBM are treated as routine work centers, more so as a department of the company like sales or marketing. The focus has to be changed and the temperament of the employees needs reworking. The Changes Needed It would be wrong to say that firms like IBM need a great deal of change in order to become the entrepreneurs in the technology market. There have not been many products in the market by IBM that can be truly regarded as the product of innovation – most have been brought out as a result of competition or countering other innovations. Thus, the changes that need to be implemented should be focused at the employees’ behavior and their perception of the company itself (Robbins & Judge, 2004). At Google, employees are made to believe that Google is the most innovative company in the world and that its aim and objective is to give the world dynamic products and services that would ease out human work and make it simpler. This belief instilled in the employees has shown immense results worth mentioning here: Google has grown from a Larry-Sergey venture to a billion-dollar company at par with giants like Yahoo and Microsoft in the e-domain. The culture of innovation instilled at Google coupled with entrepreneurial assistance for employees in the form of work-innovate policies have been very effective. Employees at Google spend only 70% of their actual time for “Googlework” (Donna, Prestwood & Schuman,, 2003). The rest of the 30% is to pursue wild imaginations and experiment with newer ideas. Ideas such as Google Labs, labels and a whole lot more bunch of offerings are the results of some of the quickest minds on Earth sitting in the Googleplex flexing their thinking muscles and coming up with innovative ideas. The scenario at IBM is similar in terms of the management commitment to contain entrepreneurial characteristics and innovation in the company. However, it seems that this is hard to convince the employees to believe in – traditionally, IBM employees have found greener pastures in companies like Google. The more creative people have found out other ways of pursuing their interests and hobbies by leaving the company and setting up their own firms. This has been the single hardest blow to IBM in harboring a culture of intrapreneurship – in-house entrepreneurship. Due to lack of attention from the higher management, employees used to pay lesser emphasis on intrapreneurship. There were no “real” incentives to innovation and that was a non-motivating factor for employees to go ahead and achieve the extra mile (Daft, 2001). The facilities at IBM to develop an entrepreneurial culture have been in the right direction however, the enforcement of a culture of entrepreneurship has not paid off well. It may not be very true that this is the case for the entire global IBM workforce – there are instances when There is the need to enforce gently the sense of entrepreneurship at the global IBM workforce (Armstrong, 2006). IBM needs to tackle the issue on a global level. Since most decisions and strategies of the company are taken at a global level, the need to emphasize on the importance of intrapreneurship at IBM is important. And this can only be signified by the people in managerial positions. As a first step, it is important for there to be a rewards system in place for an entrepreneurial culture. Google has a private compensation policy that allows the new ideas generated by its employees to yield them great benefits. Other employees would then definitely like to be motivated by looking at such instances of rewards – this is known as motivation by example and is a very common method of getting the message from the company to the employees regarding their attitude and perception towards a particular behavior (Aaker, 2008). Conclusion IBM is one of the largest technology firms across the globe – with millions of dollars in global profits. It is necessary for IBM to change its existing workplace culture in order to make it a haven for intrapreneurs. As mentioned above, the need to innovate is not clearly communicated to the employees, as a result of which the company has become a meagre follower of the industry innovations. IBM needs to innovate: not just at the company strategy level but on the ground roots level (Tadelis, 2007). The conclusion here would be a proposal for IBM to look into the employee motivation factor that will turn the employee focus from treating their work at IBM as an intrapreneurship project rather than a routine job. It is said that often things need only a slight tilt to get them up and running. Analysis of the current workplace culture suggests that this is exactly the case with IBM. It seems that the half degree tilt in the theories employed at the workplace will be able to do the trick for IBM. The theories discussed above for the inducement of an culture of entrepreneurship should be the serving guide for IBM management to implement an enterprise culture that will be able to develop and sustain innovative and creative ideas. The fact that entrepreneurship is not only about innovation, but also includes aspects of risk-taking, networking and effective management cannot be over-emphasized. IBM has to, and should, focus on redesigning its employee motivation program that is existent in the workplace. Recommendations An enterprise culture is composed of a combination of behavioral and perceptional elements: the need to find the a combination to induce an entrepreneurial culture at IBM is integral to innovation and aggressive competition for IBM. At IBM, this enterprise culture is more than just a set of beliefs and attitudes. Since it governs the lives of employees more deeply than just “another” company, it needs to be re-defined keeping into view the focus of IBM. Thus, the bottom line for IBM to install an entrepreneurial enterprise culture would be to invest in the managerial style of its leaders so that they can overturn the perceptions and attitudes of their employees, gradually, but on a global scale. It is after all an age of globalization, where borders are no more obstacles to trade and collaboration (Donna, Prestwood & Schumann, 2003). And IBM should be looking to capitalize on just that: employee motivation and entrepreneurial reward system implementation across its global workforce in consultation with the best experts and consultancies on human resources from across the globe. References Aaker, D. A. (2008). Design-Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean. Harvard Business School Press Books , 272. Armstrong, M. (2006). A Handbook of Human Resource Management Practice. Kogan Page Publishers. Daft, R. (2001). Organization Theory and Design, 9th ed. Chicago: South-Western. Donna, C. L., Prestwood, & Schumann, P. A. (2003). INNOVATION STRATEGIES. Retrieved December 4, 2009: http://web.archive.org/web/20030506201140/www.glocalvantage.com/InnovationStrategies.pdf Harvard Business School. (2008). Creativity and Entrepreneurship in the Global Environment. Retrieved from http://www.hbs.edu/centennial/businesssummit/entrepreneurship/creativity-and-entrepreneurship-in-the-global-environment.pdf Miles, R. E., Miles, G., & Snow, C. C. (n.d.). Collaborative Entrepreneurship: How Communities of Networked Firms Use Continuous Innovation to Create Economic Wealth. Retrieved December 2, 2009, from http://www.sup.org/html/book_pages/0804748012/Press%20Release.pdf Robbins, S. P., & Judge, T. A. (2004). Organizational Behavior. New York: Pearsons. Russell, R. D. (n.d.). THE IMPACT OF NATIONAL CULTURE ON THE EMERGENCE OF ENTREPRENEURSHIP. Retrieved from http://usasbe.org/knowledge/proceedings/proceedingsDocs/USASBE1997proceedings-P126Russell.PDF Tadelis, S. (2007). The Innovative Organization: Creating Value Through Outsourcing Vol. 50 No. 1. California Management Review , 1-17. The Innovator. (2008, August 19). How do you build and sustain a culture and climate for innovation and entrepreneurship? 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