Brand IBM: Strategy, Rediscovery And Growth

Eric TsytsylinJune 20, 20124 min

When Millward Brown Optimor partnered with Jim Stengel on his book, Grow, we sought to identify and decode those brands that generated the most financial value and built the strongest consumer relationships over the past decade.

Our finding was a simple one – but one that admittedly requires a leap of faith: that if business could focus less on profit-making and more on serving customers, employees, and the world (in ways large and small), the money – a lot of it – would come.

For some of the brands we uncovered, that leap isn’t too great. It’s not much of a stretch to believe that two Bay Area roommates (one an ad man, the other a chemist) might want to make cleaning ‘happy’ and ‘healthy’, or that a few jaded consultants might drop everything to sell ‘goodness’ in the form of a bottled smoothie. But what about the companies who’ve been around the block a few times – who like the idea of serving a higher purpose and achieving new levels of growth, but who operate in large, established firms with thousands of employees and the weight of the status quo on their shoulders? For those serious about change, the story of IBM is perhaps the best proof that ideal-driven transformation knows no bounds of time, size, or category.

Since its founding in 1911, IBM has grown from a producer of meat slicers and census tabulators to a $100 billion business whose “product” is nearly impossible to articulate. This year, IBM announced double digit growth in earnings per share for the ninth year in a row, overtook Google as the second-most valuable brand in world according to BrandZ™, and is one of only a few business-to-business companies that made it onto the “Stengel 50” list of high-growth brands.

Yet in the early 1990’s, IBM famously found itself on the brink of collapse, with a lack of focus and direction, and a $5 billion loss. With CEO Louis Gerstner, Jr. at the helm of the ship, it was time to move forward – and the first step was to look backward.  Thomas J. Watson, IBM’s Founding Father, believed that, “All the problems of the world could be settled easily if men were only willing to THINK,” and it was by reconsidering and reinterpreting this idea that IBM propelled itself into the future.

Gerstner started by settling IBM’s internal problems – cutting expenses, selling assets, and restructuring the organization into a cohesive whole – but it was the re-imagining of its ‘product’ that signaled a true transformation. If IBM was truly in the ‘thinking’ business, no longer could it survive by selling mainframes. Instead, Gerstner and his team took a solutions – and service-oriented approach, showing how IBM could solve problems from the optimization of e-commerce to the global energy crisis (not to mention winning Jeopardy).

IBM also found a new, unified voice by partnering with Ogilvy & Mather – first on its “e-Business” campaign and most recently on “Let’s Build a Smarter Planet.” These campaigns articulated the congruency of IBM’s service offerings with its purpose and brought the company back into cultural consciousness. And like any great campaign, they also served to unite, excite, and inspire employees.

Indeed, one of the most important and most challenging (particularly in a company of 400,000+) components of an ideal-driven transformation is the creation and sustenance of an aligned employee culture. IBM began by launching an online forum in which employees would co-create an updated set of corporate values and beliefs (among them, “Innovation that matters – for our company and the world”), making every IBMer an accountable stakeholder in the company’s success. Today, IBM spends over $600 million on employee training, contributes $1,000 to every employee for any kind of continuing education, and launched the “Transition 2 Teaching” program to support IBMers who seek to live the company’s Brand Ideal in classrooms all over the world.

More than any other, IBM’s story shows us the transformative power of ideals: from functional product categories to an uncategorizable, competitor-free higher-order space; “employees” to brand ambassadors; incidental innovation and slumping sales to focused, growth-propelling strategies. It also proves that a large, century-old technology company could be nimble and forward-looking enough to re-think the entirety of its business – from the ‘why’ to the ‘how’ to the ‘what.’ In doing so, IBM built not only a smarter planet, but also one of the fastest-growing, most valuable brands in the world

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Eric Tsytsylin

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