Will straight-laced IBM squeeze the life out of Lotus?

June 12, 1995|By Newsday

As everyone speculates whether IBM will change Lotus Development Corp.'s culture, driving off key creative people, Lotus founder Mitch Kapor cautioned against falling into stereotypes.

"If you start out with the idea that IBM is a big, impersonal, tightly structured corporation and Lotus is loose and funky . . . you are starting out with a stereotype that is inaccurate," he said.

The issues and the companies are more complex than that. But, Mr. Kapor acknowledged in a phone interview last week, that the old IBM could never have carried off this takeover. "The programmers would walk out the door," he said.

And the key person whom everyone will be watching is Raymond Ozzie, the exalted developer of Notes, Lotus' highly successful groupware program that allows several users across a computer network to work on a document simultaneously.

"What Ray Ozzie wants and needs to believe is if he will be understood and respected and have an appropriate degree of autonomy," said Mr. Kapor, who left Lotus in 1986.

Mr. Kapor and others said that Louis V. Gerstner Jr., chief executive of IBM Corp., will have to have the discipline to allow Lotus the autonomy he promised when he announced the $3.3 billion tender offer for Lotus' shares.

Lotus agreed yesterday to be bought by IBM for $3.52 billion in a sweetened offer of $64 a share.

Warren McFarlan, a senior associate dean at the Harvard Graduate School of Business who specializes in information systems, pointed to successful takeovers where company cultures sharply differed.

After each such takeover, the companies continued to operate independently, with contact only at the most senior level.

"I think this is a great strategic action" for IBM, Mr. McFarlan said. "It gives them a hot, credible entry into desktop.Making this thing work is key to getting their stock price up to the $130 and $140 range. That kind of gold ring probably will keep Gerstner focused, allowing the Lotus culture to flourish. They are out of their . . . minds if they don't."

Mr. McFarlan noted that Lotus needs IBM's deep pockets and marketing clout to make Notes an even bigger success than it already is.

Richard Murray, a Los Angeles-based principal with the management consulting firm A. T. Kearney, agreed.

He said IBM, in its dealings with Apple Computer Inc. to build personal computers around a common hardware design, is displaying a battle strategy in which the weapons are desktop computers.

"Lotus has something" to further that strategy, Mr. Murray said. "The one thing they don't want to do is destroy it."

While Mr. Gerstner has led IBM through wrenching changes, loosening its highly bureaucratic structure since the company faltered in the late 1980s and early 1990s, IBM and Lotus remain very different.

Mr. Kapor had been part of the 1960s counterculture, practicing Zen, before founding Lotus in 1982.

One of the company's operating principles is "have fun," which doesn't mean "don't work hard."

While there have been declines in morale recently as the company posted its first loss, Lotus is known for employees who love their jobs and prove it by working long hours.

Milton Moskowitz, who co-authored "The 100 Best Companies to Work for in America," cited IBM and Lotus in the book. In an interview last week, he pointed out some significant differences.

"IBM does not believe in having on-site child care. Lotus has a spectacular on-site child-care center costing about $600,000 a year to operate. . . . They have paid leave for adoptive parents. IBM does not have domestic partner benefits for gay employees," while Lotus was the first publicly traded company to offer them.

IBM has dropped its formal, if unwritten, dress code, but Lotus never had one.

Suits in its Cambridge, Mass., headquarters are about as common as manual typewriters.

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