It’s not news that a boss yells at his subordinates. But this was one of America’s premier companies, and Akers’s querulous and frustrated tone gave the impression of a CEO at the end of his patience. He complained that a U.S. sales force of 20,000 people produced $26 billion of revenue four years ago, while in 1990 a 25,000 force delivered just $1 billion more. “Where’s my return for the extra 5,000 people?” Akers demanded. “Where’s the beef?” Everyone, he said, “is too damn comfortable at a time when the business is in crisis.” IBM products have quality problems, he continued, and he threatened to fire salespeople who lose sales.
Is this any way to run a $69 billion-a-year company renowned for its paternalistic management style? Some employees didn’t think so. Using IBM’s message system, one anonymous writer said Akers should take responsibility and resign. The finger-pointing recalled memories of battles between George Steinbrenner and his New York Yankees. Says computer consultant Bob Djurdjevic, who was tracking the employee reaction: “Any time when the top guy ends up blaming the players for the poor results, chances are he’s no longer going to get their respect or their support.” What does the top guy say to that? “He’s been making this message for six, seven months,” says an IBM spokesman. “This is not a case of Mr. Akers losing his cool.”
Indeed, if Akers was trying to get an elephant to dance, management experts said the dressing-down was warranted. According to many IBM watchers, the company’s woes go far beyond this recession and require a major shake-up. “The halcyon days are behind them,” says analyst Ulric Weil. Since 1983 its market share of the worldwide computer business has dropped from 37 percent to 23 percent. In April the company reported a nearly 50 percent plunge in operating earnings for the first three months of the year. The problem, say analysts, is that the market has shifted to smaller and cheaper computers that require less handholding, while IBM has largely stuck to its traditional policy of charging high prices for premium service. “People are not ascribing much advantage to the IBM name anymore,” says Gary Curtis of The Boston Consulting Group, Inc.
While IBM contests that conclusion, a spokesman says Akers understands the company has to work harder to be more competitive. Akers will have cut his work force by 47,000 people by the end of the year, and his company has introduced new products. Now even more drastic steps may be needed. Analyst Weil says IBM needs to create more autonomous operations that can respond quickly and to cut even more overhead. The question is whether Akers is too respectful of IBM’s deliberate culture to make those changes. Says Weil, “He’s always behind the power curve.”
Even if Akers does move to shake up IBM before his probable retirement in 1994, resistance will be strong. “It’s very difficult, especially in a company with a strong caring culture like IBM’s, to say, ‘We’ve got to ratchet up this performance a couple of levels’,” says Mary Anne Devanna, a Columbia Business School dean who has studied how big companies transform themselves. The danger, she says, is when a company or industry, like steel and now automotive, wakes up too late. Tellingly, IBM management didn’t appear upset that Akers’s tough talk got such wide play. They seem determined to wake up groggy IBMers, and may be grateful to Brent Henderson for sounding the alarm.
When Akers gave his managers a stern talking-to, one was impressed enough to type a memo and distribute it via electronic mail. Some of the boss’s key points:
[IBM workers are ] too damn comfortable at a time when the business is in crisis… standing around the water cooler waiting to be told what to do.
The fact that we’re losing share makes me God Damn mad. I used to think my job as a rep was at risk if I lost a sale. Tell them theirs is at risk if they lose.
I’m sick and tired of visiting plants to hear nothing but great things about quality and cycle time–and then to visit customers who tell me of problems.
We get A’s for being a company with an ability to change… but with our current structure … A is not good enough.
