Wednesday, March 23, 2016

IBM and its strategic journey



The article 'Your Strategy needs a Strategy' by Martin Reeves, Claire Love, and Philipp Tillmanns highlights the importance of realizing the 'predictability' and 'malleability' of the industry in which the firm operates. It is confounding how most of the awareness of the industry is based on only one combination of these - Predictable and Malleable. As described by the author, most of the strategies in such industries use the Classical approach – Set the goal, Target the most favorable market and fortify that position. Many companies come to mind when thinking of this strategy. Uber for example took advantage of the technological change that prevailed to disrupt the market for cabs. Many more such examples can be quoted. But it is interesting to study the companies like IBM which changed their strategies to adapt to the market.

Initially, IBM first sold punch card tabulators, massive mainframe computers and calculators. It operated in the technology industry which has high innovation rates. IBM failed to recognize this which almost lead to their demise in 1993 when it recorded a huge loss of $8 billion. Technological advancements in computer architectures pushed IBM out of the market. After this loss, IBM brought about a massive change in its business model and focused primarily on providing IT services and infrastructure. Since then IBM has been continuously renovating their strategies to suit the highly unpredictable technological industry. In terms of the article, it seems to have adopted a ‘Shaping’ strategy to strategy development. Flexibility and experimentation have played an important role in IBM’s success since then. It has been innovating and keeping up with the upcoming technologies in data analytics as well as various enterprise server solutions.

It is evident from the history of IBM that understanding of the industry plays a crucial part in the success of the company and should be employed in developing the strategy that drives the company to the success.

References:
"History of IBM." Wikipedia. Wikimedia Foundation. Web. 23 Mar. 2016.
"Smart"Change in Strategy: IBM's Response to Challenging Times. Web. 23 Mar. 2016.


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