IBM: Management Change - Example

IBM: Management Change Name Course Instructor’s Name 8th May 2010 Background IBM is an abbreviation for International Business Machines. It is a corporation whose headquarters are found in United States of America in the New York City (Doz & Kosonen, 2008). It was founded in the mid 1890s. It is a technology company known to be the largest worldwide. It is involved in the computer hardware and associated software manufacturing and selling alongside provision of hosting and consultation services. It estimated that the company has an employee base of about half a million. Organization change is usually aimed at reducing costs and risks and increasing the commitment of stakeholders (Khosrowpour, 2006). Thus, organization change is usually categorized into cost, process and cultural changes. The Integrated Supply Chain (ISC) of IBM underwent major management changes between 2003 and 2004. The market forces were the driving force behind these changes. These changes had far reaching consequences on the way IBM runs its chains of supply. The structure of the organization and alignment was affected. In addition, the process of organization and the support of Information technology were affected. The process also had various changes and problems. IBM before management change In the 1990s, IBM underwent major changes in terms of innovation of new technologies and markets. In spite this, the company needed to undergo changes in its organization especially the supply chain and process to be successful (Doz & Kosonen, 2008). The company had a functional organization dating back many years prior to 1993 and making decision was in accordance to hierarchy occupied. Thus, any new changes innovation required an agreement among the functional executives on strategy, the design of the product, the resources required and how to roll out the change and make necessary budget adjustments. The functional structure prevented close working among different groups and conflicts were difficult to resolve. Thus, the functional structure hindered independence and further innovation since there was little coordination of activities in the company. In addition, there were no reports for marketing which were directly handed to the senior executives and thus the supply chain lagged far behind targets in various regions allocated. This resulted in major losses (Khosrowpour, 2006). The company had new products but lacked the organization structure to drive it to success. The company had elaborate system of information technology but lacked alignment of personnel. Thus, it required a new organizational change, which was process, based rather than functional based to realize the returns from the investment in the innovation of new products. The “end to end process” in place was not flexible hence could not meet the market demand. Thus, the availability of the products could not be translated to the overall performance of the company. The complexity of the end-to-end process did not allow the management to identify and resolve the problem (Doz & Kosonen, 2008). Thus, the management ended up resolving symptoms of the problem using functional alignment rather than addressing the key cause of the symptoms using the process alignment. A turn around was realized in mid 2004 when the various management teams cooperated in the identification of the major issues which needed resolution to spur the performance of the company (Scott, 2005). IBM after management change Various initiatives to improve performance of the integrated supply chain of IBM were devised by the cooperating management teams. The initiatives were instrumental in identifying various underlying issues to under performance. The initiatives were organized into priority order depending on the impact, which was expected from their implementation on the process. The initiatives were also assessed to infer knowledge transfer and strategy supported by the changes and their effect on major stages in the flow process (Khosrowpour, 2006). Four milestones were used to flow up the performance of the process. The first milestone involved the time of receipt and entry of an order into the system. The second milestone was the time for entry and manufacturing of an order. The third was the time for manufacturing and shipping of the order. The final milestone was the time for shipping and delivering the order. These milestones improved the flow process of the order (Scott, 2005). The management system helped in tracking the implementation and management of the four milestones. The performance of the process of ordering and delivery improved greatly due to implementation of these four milestones (Needle, 2004). Thus, most orders were delivered within the time that was agreed between the customer and the company. Thus, the initiatives by the management teams enabled better understanding of the process of ordering up to delivery of orders to the consumers and allowed better allocation of relevant resources to different process, which was much beneficial to the company performance at large. These initiatives helped to transform IBM into a process aligned company from a function aligned company (Scott, 2005). Analysis of management structure within IBM Under the old IBM’s management structure, definition and improvement of architecture of a product line was done through consensus and was shared by all groups. This had no impact on the performance of IBM (Khosrowpour, 2006). This was changed through creation of teams for designing systems. The teams were made up of marketing executives and technologists. This separated the product development from subsystem development which was no the case in the earlier functional design. An integrated management portfolio team was also established to market the products that were produced. Furthermore, the old management structure where each department was an independent of each other was faced out through multi functioning teams. This was mainly because they were costly to run in addition to difficult decision-making process, which was mainly hierarchical (Needle, 2004). Therefore planning was left to multi tasking teams. The market was also segmented into various users of different products of the company (Khosrowpour, 2006). These were supervised by the segment team leaders who were tasked with overseeing the process of talking to users and potential users. The direct sales team was tasked with gaining access to small businesses. More importantly, IBM turned its marketing process into what it termed e-business that came with increased sales and profits. Thus, changes in the management from the rigid functional alignment to process alignment were instrumental to the turn around of the performance of the IBM (Scott, 2005). Analysis of motivation and performance within IBM The sales centered culture of IBM is usually used to motivate workers within this organization. The promotion of an individual to managerial position is not based on the academic qualification alone but the output of the person. For instance, most of the general managers and executives are chosen from the hardworking sales people. This motivates the persons employed there to work hard for their efforts are not usually in vain but they are recognized and rewarded accordingly (Khosrowpour, 2006). Prior to changes in the IBM, personnel used to wear uniform but this was phased out and the code of behavior was also altered to be in tandem with that of other competing technology companies. This was motivating to the employees to feel free to put on attires, which are casual but businesslike. The changes in values which were implemented during the change in management were mainly consultative hence most employees were involved in coming up with them. These consultations were carried out online. The implementation process of these values was also done through online consultation. Thus, their implementations were not faced by rejection. Thus, the values that were coined enabled employees to be dedicated toward the success of the client, to value innovation and the relationship among employees was guided by trust and responsibility. The innovation process was also consultative online with employees, business partners and the clients (Khosrowpour, 2006). This was aimed at encouraging innovation which was market oriented. Thus, most products that were developed as a result of this had positive reception in the market since they were market based. This motivated the employees knowing that what they developed was received positively in the market. At the IBM, hiring of employees is not involve racial, gender or ethnic discrimination but is dependent but talent based. Therefore, diversity is encouraged and this motivates the workers to know that they are there because of their ability and not their gender, race or ethnic origin. Another key motivation IBM is money (Doz & Kosonen, 2008). Employees at this company are usually given monetary rewards after having shown great performance in their duties. There is also Intellectual Property rights motivation at the company in that anyone or group of persons involved in innovation or invention is assisted to patent his or her idea and the returns are shared by the inventor and the company thus the employees are motivated to invent. Furthermore, employees at IBM are known to have job security and is one of the companies known to retain their employees for a long period of time. This is a motivation in accordance to both Maslow and Hertzberg motivational theories (Needle, 2004). Change management strategies used The IBM formed a team, which was to optimize the process alignment and transform the company from the function alignment. The team was tasked with identification of the improvement in the process that needed to be implemented. The team was also to determine the impact of these changes once implemented and advice the management accordingly. The improvements that were to be identified were to be of benefit to the company as a whole. These benefits were to be mainly in the time efficiency fro the time of ordering a product to its delivery to the client (Khosrowpour, 2006). On the other hand, different autonomous units of the business were encouraged to work in unison for IBM to achieve its goals (Needle, 2004). The senior management was expected to understand the impact of cross function in any request concerning change and lead the process of change. To do this, another team to oversee this was formed and its work was assessment, screening, and presentation of the outcome of the change process to the upper management. The information technology systems, which were used to implement the changes, were personalized and this allowed innovation to take place at the same time the change was being undertaken. Conclusion The implementation of change management from functional alignment to process alignment was instrumental to the success of IBM integrated supply chains. Thus, any organization whose functional structure is not working should try process alignment to increase its output if the functional system is complex. Therefore, it is the mandate of the management to steer the process of change and to ensure it is all inclusive to reduce reactionary from employees. References Doz, Y. & Kosonen, M. (2008). Fast strategy: how strategic agility will help you stay ahead of the game. London; Wharton School Publishing. Khosrowpour, M. (2006). Cases on information technology and organizational politics & culture. New York: Idea Group Inc (IGI). Needle, D. (2004). Business in context: an introduction to business and its environment, 4th Ed. London: Cengage Learning EMEA. Scott, J. (2005). The concise handbook of management: a practitioner's approach. London: Routledge. Read More