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Monday, November 15, 2004

IBM -Innovation - Business Values and Company Values

(Via James Wycoff) : Sam Palmisano, President & CEO of IBM has made the following announcement inside IBM yesterday:

We've been spending a great deal of time thinking, debating and determining the fundamentals of this company. It has been important to do so. When IBMers have been crystal clear and united about our strategies and purpose, it's amazing what we've been able to create and accomplish. When we've been uncertain, conflicted or hesitant, we've squandered opportunities and even made blunders that would have sunk smaller companies.
It may not surprise you, then, that last year we examined IBM's core values for the first time since the company's founding. In this time of great change, we needed to affirm IBM's reason for being, what sets the company apart and what should drive our actions as individual IBMers.Importantly, we needed to find a way to engage everyone in the company and get them to speak up on these important issues. Given the realities of a smart, global, independent-minded, 21st-century workforce like ours, I don't believe something as vital and personal as values could be dictated from the top.
So, for 72 hours last summer, we invited all 319,000 IBMers around the world to engage in an open "values jam" on our global intranet. IBMers by the tens of thousands weighed in. They were thoughtful and passionate about the company they want to be a part of. They were also brutally honest. Some of what they wrote was painful to read, because they pointed out all the bureaucratic and dysfunctional things that get in the way of serving clients, working as a team or implementing new ideas. But we were resolute in keeping the dialog free-flowing and candid. And I don't think what resulted - broad, enthusiastic, grass-roots consensus - could have been obtained in any other way.
In the end, IBMers determined that our actions will be driven by these values:

- Dedication to every client's success
- Innovation that matters, for our company and for the world
- Trust and personal responsibility in all relationships

I must tell you, this process has been very meaningful to me. We are getting back in touch with what IBM has always been about - and always will be about - in a very concrete way. And I feel that I've been handed something every CEO craves: a mandate, for exactly the right kinds of transformation, from an entire workforce

Where will this lead? It is a work in progress, and many of the implications remain to be discovered. What I can tell you is that we are rolling up our sleeves to bring IBM's values to life in our policies, procedures and daily operations.I've already touched on a number of things relating to clients and innovation, but our values of trust and personal responsibility are being managed just as seriously - from changes in how we measure and reward performance, to how we equip and support IBMers' community volunteerism.
Our values underpin our relationships with investors, as well. In late February, the board of directors approved sweeping changes in executive compensation. They include innovative programs that ensure investors first receive meaningful returns - a 10 percent increase in the stock price - before IBM's top 300 executives can realize a penny of profit from their stock option grants. Putting that into perspective, IBM's market value would have to increase by $17 billion before executives saw any benefit from this year's option awards. In addition, these executives will be able to acquire market-priced stock options only if they first invest their own money in IBM stock. We believe these programs are unprecedented, certainly in our industry and perhaps in business.

Clearly, leading by values is very different from some kinds of leadership demonstrated in the past by business. It is empowering, and I think that's much healthier. Rather than burden our people with excessive controls, we are trusting them to make decisions and to act based on values - values they themselves shaped.To me, it's also just common sense. In today's world, where everyone is so interconnected and interdependent, it is simply essential that we work for each other's success. If we're going to solve the biggest, thorniest and most widespread problems in business and society, we have to innovate in ways that truly matter. And we have to do all this by taking personal responsibility for all of our relationships - with clients, colleagues, partners, investors and the public at large. This is IBM's mission as an enterprise, and a goal toward which we hope to work with many others, in our industry and beyond.

Samuel J. Palmisano
Chairman, President and Chief Executive Officer
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"All views expressed are my personal views are not related in any way to my employer"