QAUID-E-AWAM UNIVERSITY OF ENGINEERING, SCIENCE &

TECHNOLOGY, NAWABSHAH - PAKISTAN

THE IBM WAY

By

Waqas Ali Tunio

Industrial Economics & Management

Department of Mechanical Engineering

 THE IBM WAY – BUCK RODGERS
About the Author
‘The IBM Way’ is written by Buck Rodgers, the ex-
CEO of IBM, who spent over 40 years in the
company. Buck Rodgers is a respected
management consultant, an advisor to several
companies and also a visiting faculty at some of
the leading Business schools in the USA.
Under Buck Rodgers, IBM grew from being a $10
billion company to a $50 billion company. He has
been instrumental in introducing a lot of
innovative marketing concepts and motivating
employees at IBM. Buck Rodgers fine tuned the
wonderful culture of IBM and turned it into a
totally customer-oriented and customer-driven
company. In fact, under his leadership, IBM was
rated ‘America’s most admired company’.
This book talks in great detail about the
organization, culture, values, people and
philosophy that go into making one of the largest
and most successful organizations in the world. It
talks of how IBM behaves behind closed doors,
what goes into the decision making, what it deems
important and how it prioritises activities, why
lakhs of IBM employees never had a union and
why students recruited from colleges never leave
IBM. It provides a great perspective into building
an excellent customer oriented organization. Let
us now turn to various concepts introduced by the
author.
1. The Beliefs and Commitments of IBM
2 IBM Management Report | www.aliwaqas.tk
Waqas Ali Tunio
IBM was founded in 1914 by Thomas J. Watson,
Sr. Like any successful entrepreneur, he wanted
his company to be financially successful, but he
also wanted it to reflect some of his personal
values. These values became the foundation for
the company and anyone who worked in the
company.
IBM conscientiously drives home these
philosophical messages at meetings and in internal
publications. The management also demonstrates,
by personal deeds, what these beliefs mean. The
three important commitments made by Thomas J.
Watson, Sr. are:
a.) The individual must be respected:
Tom Watson wanted his people to feel good about
themselves and their work. No one could be paid
enough money to be compensated for being made
uncomfortable and unhappy by his supervisors.
IBM tries to let every person know that he/she can
make a difference. For instance, there are no titles
on any doors or desks, no bathrooms for
‘executive use only’, no reserved parking spaces
and no executive dining room. The author quotes
his personal experience where Tom Watson
allowed him to skip a crucial training program to
be with his pregnant wife and later also sent
flowers to the hospital where the wife delivered a
child.
b.) The customer must be given the best possible
service:
IBM is a totally customer-oriented company. Every
operation and every job description is related to
providing the best possible service to customers,
 THE IBM WAY – BUCK RODGERS
prospects and vendors. Any complaint by a
customer is responded to, if not resolved, within
twenty-four hours of its receipt. When a customer
requests a service call, the response is frequently
within an hour. Also, understanding that quality of
service depends upon the training of its
employees, the hours logged in the classroom by
every IBM employee exceed those spent in any
major university.
c.) Excellence and superior performance must be
pursued:
Watson’s third mandate is excellence – the pursuit
of all tasks with the idea that they can be
accomplished in a superior fashion. IBM ensures
excellence by picking the best students from the
best colleges, imparting the best education and
training and creating a highly competitive
environment that nurtures excellence.
IBM believes that the principles of an organization
are sacrosanct. No matter what the nature or size
of its business, a company needs certain bedrock
beliefs to serve as a guiding force. Paying
attention to detail, doing things right the first
time, practicing good human relations and being
market driven separate the leading organizations
from the rest.
1. Leadership
A leader must promote an atmosphere of healthy
competition among his subordinates, without
being insecure about his own position. The most
successful leaders feel good about themselves, are
people-oriented, like to assume responsibility and
3 IBM Management Report | www.aliwaqas.tk
Waqas Ali Tunio
solve problems. Good leaders delegate
responsibility and provide subordinates with
freedom to make decisions, knowing that
responsibility and accountability go along with
leadership. At times, people are required to
implement decisions taken by superiors, which
they do not necessarily agree with. It is important
that once a decision is made, a leader must follow
it as if it were his own and must not be apologetic
about it to his subordinates. Prioritising work is
another crucial aspect of a leader’s qualities. He
cannot spend inordinate time on tasks that add
very little value to the organization. He also needs
to have integrity, be perceived as a genuine
person who keeps his word under all
circumstances. Balancing professional and private
life is important because anything done in excess
is exhausting and tired people cannot be most
efficient. So, people need to find ways to express
themselves outside their work, perhaps through
music, art, or social work. While a leader is always
there to give advice, he is also unafraid to
approach others when he needs advice. He has no
compunctions about approaching juniors or peers
if they can help. Keeping in mind that people like
to be given credit for significant contributions and
at the same time, people feel humiliated if
criticized in front of colleagues or juniors, a good
leader always praises in public and criticizes in
private.
2. Every employee is responsible for
sales
A company may deal in goods or services.
However, it is not merely the sales force that is
responsible for sales. Long lasting relationships
with customers are what every organization strives
for. For a customer, every employee of a
company, from the salesperson, to the
 THE IBM WAY – BUCK RODGERS
development team, to the receptionist, to the
CEO, is merely a representative of the company.
Recognizing this, good companies create a totally
sales-oriented environment, where every
employee understands that the customer is
responsible for his pay cheque, and so every job is
oriented towards providing the best possible
service and the highest customer satisfaction. At
IBM, it is mandatory for every employee, at some
time, to accompany salespersons in order to
understand customer needs. It is also important
that employees who go that extra distance to
make a customer feel special should be
appreciated and rewarded. A company could also
have periodic reviews of all its major accounts,
and schedule meetings with clients to discuss
short-term and long-term action plans.
The success of a sales force depends to a large
extent on the amount of office support it receives.
The training imparted by IBM to its sales force is
very rigorous and it follows a pattern where
classroom sessions are followed by real-life
practice in terms of assisting sales representatives,
followed by further classroom sessions to
consolidate their learning. After training on the
products and communication techniques, trainees
make their first presentation to veteran salesmen,
who provide them with constructive criticism to
sharpen their skills. A customer does not judge a
salesman on what he knows, but rather by his
communication of what he knows. The best
salesmen must be part of the training process
because not only do they understand selling
techniques; they have the best marketing acumen
and keenest perceptions. In addition, IBM also
involves customers in its training sessions. This
provides trainees with a first hand experience of
what customers look for in a salesman. The top
management of IBM is also very conscious about
keeping in touch with the sales force and with
4 IBM Management Report | www.aliwaqas.tk
Waqas Ali Tunio
customers. It is also important for an organization
to communicate changes, policies and information
quickly to all the employees. It is very frustrating
for a sales representative to hear information from
a customer about his company, which he is not
aware of. It is vital for all levels of management to
have some form of one-to-one communication
with its sales force. This keeps the sales force
motivated, while providing first hand information
on happenings in the market. A manager must not
have too many people reporting to him. It makes
it impossible for him to maintain discipline and
recognition. Also, it is most frustrating to work for
a manager who does not have adequate time for
his staff. An open-door culture, wherein every
employee can freely express himself to his
manager as well as higher levels of authority is
very desirable. The employee knows that someone
other than his manager is aware of his
accomplishments.
IBM believes that anyone who stops learning goes
backward. Hence, there is continuous training and
learning that takes place. Each week, the
company announces on an average ten new
products plus new programs, so the marketing
people must deal with a continuous flow of
information. Training is undergone at every stage,
after every promotion. Promising people are made
assistants to high-ranking executives, so that they
get a tremendous amount of exposure, which
enables them to assume managerial
responsibilities pretty early in their careers. Future
managers are also sent to attend educational
programs at institutes like London School of
Economics, MIT’s and Stanford’s Sloan Program
etc.
 THE IBM WAY – BUCK RODGERS
3. Managing the future
The best organizations always plan ahead of their
times, trying to understand unfulfilled needs of
customers and trying to innovate products to
satisfy those needs. While one must be aware of
his short-term targets, a successful manager
keeps an eye on the future and tries to relate
today’s tasks with long-term objectives. Often,
Marketing managers fall into the trap of being too
concerned about yearly profits and in the effort to
enhance the bottom line, they may pursue
marketing programs that are detrimental in the
long-term. Short-term marketing only achieves
erosion in the market share in the long run.
Every business, no matter how well organized,
does face unexpected external factors over which
it has no control, e.g., government policies,
market slowdowns etc. When a strategic plan is
developed, the management needs to look as far
into the future as possible and build as many
safeguards as possible. Of course, it is impossible
to build safeguards for factors that cannot be
predicted. But, it is important to have people who
are sensitive to environmental changes and can
react quickly in unexpected circumstances.
Threats can also be internal to an organization. A
company needs to look out for signs of trouble,
such as changes in employee attitudes, motivation
and performance. When developing products, a
company would do well to involve customers
through the development phases. Interaction with
customers provides valuable insights, which may
prevent products from failing. Sometimes,
businesses suffer from ‘business myopia’. This
could be due to a company losing focus from its
core competence or a company getting
5 IBM Management Report | www.aliwaqas.tk
Waqas Ali Tunio
complacent and resting on past glories. Pioneering
is challenging and requires a lot of resolve to
implement. People often say “if it ain’t broke, don’t
fix it”, but companies with vision continue to come
up with revolutionary products even when older
products are doing well in the market. This
requires an understanding of changing values,
changing needs and an understanding of the
‘pulse’ of the market. Sometimes, companies have
to undergo radical changes, such as change in
operating style, change in the distribution
channels and change in policies. These become
requisites for survival and many good companies
have undergone massive changes, without ever
compromising on the core values or principles that
were the foundation of the company.
4. Sell solutions, not products
Customers do not buy products, rather, they buy
solutions to needs or problems. A company must
therefore focus on providing solutions rather than
push its products. In order to do this, the sales
force needs to be knowledgeable about the
customer’s business and trends emerging in that
business, besides being thoroughly knowledgeable
about the company’s solutions. Only thorough
knowledge of the customer’s needs would help in
designing appropriate solutions. Customers usually
appreciate it when a sales person shows interest
and knowledge of their company. A company must
also stand by its customer after selling the solution
by efficient and prompt service. IBM trains its
sales persons by conducting role-plays where a
sales representative acts as a customer. This way,
the sales persons realize the difference in
perceptions as a buyer and as a seller and are
able to relate more easily with customers’ needs.
The best salesmen are usually those who listen to
customers, help them verbalize their problem and
 THE IBM WAY – BUCK RODGERS
work together with them in developing a solution.
Sometimes, when a customer is unable to
visualize the gains from the solution, it is a good
idea to demonstrate the solution at work in an
existing customer’s business. There is nothing
better than having a satisfied customer talking
about how the solution improved productivity and
increased savings. In addition to offering quality
products, it is essential that a company provide
value-added services. Quality should only be the
tip of the iceberg. It is important to make a
customer feel that signing a contract is the
beginning of a long-term relationship. Also, it is
not enough if a company has the capability to
provide tremendous value added services. It is
also vital that this capability is communicated to
the customer. When competing brands offer
products of similar quality, it is often value
addition that sways the decision in favour of one
brand.
In this age of supermarkets, we often miss the
simple human touch, which a traditional grocery
provided. This being the case, companies that can
provide that human touch are the ones that are
patronized. It costs much more to gain a new
customer than to retain a loyal customer. Very
often, little things are responsible for a lost
customer, such as not returning a telephone call,
being late for an appointment or failing to say
‘thank you’. It is often the little things that make
excellent companies – doing a thousand things
one percent better rather than doing one thing a
thousand times better. No matter how big or small
a customer is it is imperative that he be treated
with the same consideration and respect as the
biggest customer. There are times when a
company might have to go out of its way and put
in an extra effort for a customer. It might even
cost a lot of money, but these are investments
that pay off many times over in the long run. A
6 IBM Management Report | www.aliwaqas.tk
Waqas Ali Tunio
company that stays in touch with customers is not
surprised by sudden problems and it is important
to maintain contact with a customer even between
two successive sales. Customers repose their faith
in companies that show genuine concern, and that
are available when problems surface.
5. Everybody wants service, but most do
not want to give it
Selling and servicing, though different in meaning,
are inseparable as far as a marketing function is
concerned. The most reliable contributor in
building a solid sales-base is top class service.
Providing convenience is almost expected of a
company in this day and age, but convenience
alone is not sufficient. To elucidate, a customer
may not have to leave his armchair in order to get
a product delivered to his home. But, it wouldn’t
be too convenient for a customer if the product
came in hundreds of pieces with assembling
instructions loosely translated from Chinese. This
is where customer friendly service, and being
available when a customer is in need make a huge
difference. While it does cost to service a
customer, a company must treat it as an
investment for the future. All it takes is a strong
resolution on the part of the company. Service has
got to be a part of the product development
process, from the very inception. This can be
achieved by following an interlock process,
wherein engineering, manufacturing, marketing
and servicing are integrated.
Preventive maintenance programs are another
way of showing reliability and concern for the
customer. Sometimes, it pays to perform regular
check-ups at customer sites, even when there are
 THE IBM WAY – BUCK RODGERS
no complaints, as these could avert major
disasters and severe downtime for a customer. All
said and done, however, it is the top management
that has to drive the culture of caring for the
customer and putting the customer first, always. If
the management is apathetic towards customers,
it cannot expect its representatives to be any
different. Good service is like the water drop
principle. Every act, no matter how insignificant it
may seem, is tremendously important.
6. Employee Welfare
Having invested vast amounts of money in
recruiting and training a highly skilled workforce, it
would be foolish if the potential of this workforce
is wasted because the compensation package
promises more than it delivers. The money paid to
an employee must be fair to him, as well as to the
company. A good pay package must:
- make the employee feel secure
- include strong incentives and motivation
- reward deserving employees
The appraisal system must be absolutely fair and
an employee must be given total freedom to
express his ideas, grievances and suggestions.
Employees could be rewarded if good ideas prove
to be profitable when implemented.
A company starts off because of an original idea, a
dream and a willingness to take risks. This spirit
needs to be retained even when a company
grows. Often, entrepreneurs lose their sense of
adventure once their business reaches a
respectable stage. At this stage, people focus
more on minimizing risks, rather than capitalizing
7 IBM Management Report | www.aliwaqas.tk
Waqas Ali Tunio
on opportunities. That is why risk-takers are
important not only at the top, but, at all levels in
an organization. Besides, good people need room
to develop. The most talented employees need to
find and express their own voice. Their growth is
stunted if they are strictly supervised. The best
managers quickly step aside once they delegate
tasks to their best workers. In order to grow,
people need exposure to the various aspects of a
business, be it in line roles or staff roles. That is
why the best companies follow a job rotation
policy where every employee spends time in all
functions in the organization.
In addition to the performers, a company does
need its share of cynics and critics. Such people
often point out flaws in existing systems, even
though they may not provide solutions to these
issues. In fact they should be encouraged to
express their opinions, as these might lead to
better products and services.
7. In Conclusion
To summarize, an organization needs to
essentially be customer driven and customer
focused. It must provide the best quality products
and the best possible service to its customers,
both before and after a sale. It must recognize
that the customer is the most important part of
the business. Besides, it also needs to care for the
welfare of its own employees, impart continuous
training and encourage continuous learning.
Finally, a company needs to have a set of values,
which it adheres to under all circumstances and
which forms the basis of its existence.