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Values That Create Value- The IBM Story

In 1911, Endicott, New York, a company called “Computing-Tabulating-Recording Company (CTR)” was founded by Herman Hollerith, Charles Flint and Thomas J. Watson Sr. A company we now know as IBM. The founders enshrined three core values into the company: “Respect for the individual”, “The best customer service” and “The pursuit of excellence”. The values that were meant to last forever.  

IBM dominated the markets for decades, till stiff competition from Apple and Google, a breakdown of the IBM-Microsoft Partnership and the untimely demise of the main mind behind the IBM PC, Don Estridge shook the organisation in the 80s. By the 1990s, IBM was on the verge of shutting down. The world was getting highly agile. IBM’s immense size had become its drawback. To its credit, IBM fought hard and found its success again in the B-B market it once dominated. 

But the near-death experience shook up the company and provided the backdrop for its new CEO Sam Palmisano in 2003. 

Palmisano began his tenure with a three-day experiment called “ValuesJam” in 2003, an open forum on the company’s intranet to have a broader discussion around the company’s values. As a career IBM employee, he was convinced that the company needed to build off his predecessor’s strategies, and its values. It was meant to reaffirm the faith of the large workforce in the values that had been on the walls for over 80 years.

But quite the opposite happened. Employees found a voice to express their dissonance with these values. Many said the values didn’t exist. Others said they existed only in name and on the walls. As the voices grew, Palmisano discovered that even those who believed the values existed, had found an interpretation that was contrary to the company’s needs. The pursuit of excellence, for example, had become an excuse to ignore the customer’s voice. 

Analysts, leaders and commentators all urged Palmisano to shut down the intranet after day 1. But he was determined to hear every voice. 

Palmisano, converted the jam into a feedback session and then a dialogue. The debate, as he saw it, was never about the values. The debate was about whether IBM was willing to live them. He used the dissonance as an opportunity to get every single employee to help create an evolved set of values, through their feedback. Values they owned and were willing to live. 

This dialogue was informed by four themes:

  • What would the company that truly lived its beliefs, look and act like?
  • What values are essential to who we want to become? How might these values change the way we act and make decisions?
  • If our company disappeared tonight, how different would the world be tomorrow?
  • When is IBM at its best? When has each person been proudest to belong? What happened and what was uniquely meaningful about it? What do we need to do to be the gold standard going forward?

He used the feedback and dialogue to rearticulate the values:

  • Dedication to client’s success
  • Innovation that matters for our company and the world
  • Trust and personal responsibility in all relationships 

To prove these were more than window dressing, he asked all his direct reports to identify how the company fell short of living these values. He then got them elaborated and sent them back to employees for feedback. He received thousands of candid emails, telling him what was missing and why the company would fall short. He read every single one, iterated the document and engaged in fresh dialogue. 

IBM’s culture story is unique and courageous. Not many CEOs have the stomach to revisit values. Not many can engage in honest unfiltered conversation with thousands of employees. It is a living case study of how a company managed to have an entire workforce aligned with the Big Picture.

In fact, alignment of the Big Picture is one of the dimensions that come through in our research and work on helping companies thrive. 

 If you’re curious about how your organisation, teams and leaders can thrive – do reach out for a chat. 

About Rameet Arora

Rameet is a highly awarded business leader and marketer, writer, keynote speaker and mentor. He is a co-founder, and leadership coach at The Core Questin

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