Once-omnipotent Big Blue crumbling under old structure



All good ideas are eventually oversold. Corporate vision and values are no exception.

The "vision and values thing" in business took off in the late '70s. To empower workers to focus on quality and service, companies ditched their four-pound policy manuals and instilled "spiritual" ideals about "what's important around here" that leave lots of room for individual initiative.

The idea was -- and is -- right. But there are caveats. Before you know it, a value set becomes more rigid than the rule book it replaces. It ends up stifling the very initiative it was meant to induce.

Consider IBM. No company has been praised more highly for adherence to soaring, widely shared values. Yet each of its three pillars of wisdom -- service, people, perfection -- has cracked, if not crumbled. Start with the firm's raison d'etre, providing matchless customer service. When technology was unreliable, IBM's "service first" approach was dynamite, since most of its competitors dismissed service as only marginally significant. But reliability improved throughout the industry, service ceased to be a singular advantage.

Moreover, unflinching service to the customer took odd twists within IBM.

One translation was leadership by salesmen -- period. A lot of companies could use a sales-oriented top dog, but salespeople (like all of us) have blind sides. They want to carefully manage the nature and pace of new product offerings and create minimum angst among their customers. One result: The salesperson is about the last to suggest bold, disruptive moves. In fact, the sales mentality led IBM to try to control the industry and customers long after doing so became impossible.

Salespeople also tend to focus on yesterday's buyer -- in IBM's case, the central MIS director. But as desktop computers stole the march from mainframes, IBM was woefully unprepared to deal with a diverse, new set of purchasers. (Even IBM's long-standing dress code, which "professionalized" service delivery, backfired. It became a symbol of rigidity in an increasingly fluid marketplace.)

The IBM "people value" became a tie that bound, too. For years, the firm's approach to its work force was a beacon to world industry. Nonetheless, in a more volatile world, IBM's concern for its people bordered on smothering paternalism, an "IBM way of doing things" that tolerated little individuality. And its noble adherence to lifetime employment cost it dearly in epic bureaucratic bloat.

The final value in the IBM troika is the pursuit of perfection. Decades ago, CEO Tom Watson Jr. acknowledged perfectionism's dark side. As this value, like the others, became ever more elaborated, it led to hopelessly complex approaches to doing everything. Take it from me, the mundane act of working with IBM as an outside speaker at a sales conference is uniquely frustrating, marked by a string of pointless rituals.

Weighty policy manuals, organization charts and job descriptions are clearly out of step with these cacophonous times. Yet anarchy's hardly the answer -- consistent quality and service, for example, have never been more important. So a widely shared vision and core values remain the best alternatives to overweaning, paper-based control systems.

But we must comprehend how quickly values age, becoming hopelessly narrow, ludicrously elaborated -- and at odds with a shifting marketplace! Ironically, the more virtuous the value (service, people) the greater the chance of long-term perversion. Why? Because the "better" the value, the more the establishment makes sure you adhere to it exactly. (No surprise here. After all, some of the bloodiest wars were fought in defense of rigid religious values.)

What's the answer? How about "review your values and update them regularly"? Sounds good, but experience suggests caution. Those who live calcified values are the last to grasp their destructiveness. Most value-review processes, even involving "honest broker" outsiders, are a waste of time. Or worse: they frequently produce even more convolutions.

Maybe there ought to be a "values sunset statute" -- throw out a third of your values every five years, or burn the lot and start over every 10 years. There's a certain appeal to the idea, but has anyone really done it?

The only solution I know is creating a corporate confederation of business units autonomous enough to develop their own values. Billion-dollar publisher Random House, for example, consists of independent, often clashing imprints. The "personalities" of these modest-sized units differ widely. (Why, then, bother with the Random House umbrella? In part, for an overall quality orientation and the ability to project market power.)

As for IBM, if I were CEO John Akers, I'd split it into a half-dozen, self-governing bits, then sell most or all of each one to the public. I'd bet such a move would invigorate the phenomenally talented, phenomenally moribund giant.

Values, vision? Can't live without them in today's world. Can't live with them, either. The times require reassessing the way we keep energy and cockeyed views (necessary for dealing with a cockeyed world) surging through big-firm veins.

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