{"id":6947,"date":"2014-11-13T11:44:12","date_gmt":"2014-11-13T15:44:12","guid":{"rendered":"http:\/\/calleam.com\/WTPF\/?p=6947"},"modified":"2026-03-13T14:53:43","modified_gmt":"2026-03-13T21:53:43","slug":"ibm","status":"publish","type":"post","link":"https:\/\/calleam.com\/WTPF\/?p=6947","title":{"rendered":"IBM"},"content":{"rendered":"

The following entry is a record in the \u201cCatalogue of Catastrophe<\/a>\u201d \u2013\u00a0a list of failed or troubled projects from around the world.<\/p>\n

\n

IBM\u00a0(International Business Machines)\u00a0<\/strong>–\u00a0USA
\nProject type :\u00a0<\/strong>Organizational performance improvement and strategic realignment
\nProject name :<\/strong>\u00a0Roadmap 2015
\nDate :<\/strong>\u00a02010-2014\u00a0 Cost :\u00a0<\/strong>Unknown<\/p>\n

Synopsis :
\n<\/strong>Most of the projects noted in the catalogue were aimed at producing some form of product or tangible deliverable. IBM\u2019s \u201cRoadmap 2015\u201d initiative is a little different; it was an \u201corganizational change\u201d project that attempted to improve the financial performance of an entire organization thereby unleashing a significant growth in “shareholder value”.<\/p>\n

\"\"<\/a>
IBM Office by Thomas Nugent – Creative Commons Attribution-Share Alike 2.0 Generic<\/figcaption><\/figure>\n

Started back in 2010, the Roadmap 2015 initiative set a financial performance target that the organization committed to achieving. Aiming to grow shareholder value, the roadmap set the goal of achieving \u201cEarnings Per Share\u201d (EPS) of $20 by the year 2015. The publicly announced $20 EPS goal was to shape policy and strategic direction for the organization over a 5 years period.<\/p>\n

The path to $20 EPS involved, cost cutting measures, share buy-backs, plus divesting under performing assets, while simultaneously realigning to high growth and higher margin sectors. On paper that makes business sense and financial markets responded positively. Share price rose from below $130 in early 2010 to almost $215 by 2013.<\/p>\n

However, some observers were concerned that the use of a single shareholder value oriented metric (EPS) against which to measure progress was too narrow. Where a performance measurement system is too narrow you can quickly end up with unintended side effects that can cause significant harm (even while the publicized metric itself makes things look relatively healthy). Of course, one stakeholder group who vented their concerns was the staff themselves. Staffs were concerned that the short-term perspective needed to achieve quarterly results and the EPS $20 goal distracted from longer-term investments in people and product. Turning to public bulletin boards, staff reported plunging morale and tales of internal strife as a result of high numbers of layoffs, use of under-skilled substitutes and a lack of investment in training. I spoke to a number of current and former IBM employees in writing this post and the feedback on the roadmap was resoundingly negative.<\/p>\n

Over the years the concerned voices grew and the investment community started to voice concerns. Talk of a “crisis” appeared. Word that IBM was into financial-engineering rather than product creation spread and when asked in Oct 2014 outspoken billionaire investor Mark Cuban told CNBC that he would “absolutely not invest in IBM” … “IBM is no longer a tech company” … “they’ve evolved into is a company that does arbitrage on acquisitions. It’s stock buybacks. Who is IBM anymore?”<\/p>\n

IBM\u2019s own business results also pointed to problems. As of Q4 2014, IBM had suffered 10 successive quarters of declining revenue. Share price dropped into the $180\u2019s and sentiment towards IBM turned negative (at the time of writing the share price is in the low $160\u2019s). Along with the 3rd<\/sup>\u00a0quarter 2014 results the IBM CEO announced that she was \u201cdisappointed\u201d with the organization\u2019s performance, and that the $20 EPS goal was being shelved. IBM remains committed to the underlying strategy of improving performance, but the goals used to measure success will apparently be changing. Hopefully the new metrics will use a more balanced set of measurements that reflect the complete picture of what it takes to make a services based organization a success.<\/p>\n

Although a management strategy like Roadmap 2015 isn\u2019t the type of project I usually included in the catalogue, I\u2019ve included it because it allows discussion of\u00a0several important points:<\/p>\n

    \n
  1. The performance metrics an organization uses to govern itself set the context within which all other work (including projects) in the organization exists. If the metrics are purely financial, and oriented to the shorter term rather than longer term, short term results may look rosy, but long term value can be sacrificed. Yes share price might rise in the short term, but in the longer term, it is a set up for failures.<\/li>\n
  2. An organization like IBM succeeds or fails based on its ability to delivery successful projects for its clients. If employee morale or skills are allowed to slide, the organization’s delivery capability will erode. Short term the effects may not show up, but eventually reputation is hit, productivity dives and business results are impacted.<\/li>\n
  3. You can’t manage a service oriented business based purely on the numbers in a spreadsheet. Talent, good will, productivity and relationships don’t compute in an excel formula. They do however compute in the interactions between a business and its clients.<\/li>\n<\/ol>\n

    Was Roadmap 2015 a failed project? Well as for many projects the definition of success differs depending on who you are. Shareholders who rode the share price up the ladder and bailed at the right time may well see it as a success. Others who are exposed to its side effects or longer-term impacts may see it very differently. IBM does of course still have tremendous value to offer and hopefully putting in place the right performance measures\u00a0will realign the organization’s capabilities\u00a0with its underlying strengths.<\/p>\n

    Note:<\/strong> The idea that organizations should focus their energies on the creation of shareholder value is sometimes credited to a 1981 speech giving by then CEO of General Electric (Jack Welch). In that speech he extolled the importance of seeing shareholders as owners and the need to focus on creation of “shareholder value”. Welch\u2019s speech is sometimes credited with triggering the short-term share-price oriented form of management that the IBM staff worried about. Jack Welch himself recognized how the shareholder value mantra could corrupt the core values of an organization and in 2009 he backtracked on his earlier speech saying that “On the face of it, shareholder value is the dumbest idea in the world,\u201d … \u201cShareholder value is a result, not a strategy<\/strong>\u2009.<\/strong>\u2009.<\/strong>\u2009.<\/strong>\u2009Your main constituencies are your employees, your customers and your products<\/strong><\/a>.\u201d<\/p>\n

    Contributing factors as reported in the press:<\/strong>
    \nPerformance metrics too narrow.<\/p>\n

    See also:<\/strong><\/p>\n

      \n
    1. The incentives infrastructure<\/a> – a look at how incentives shape behaviours<\/li>\n
    2. Boeing 787 Dreamliner<\/a> – Another project that attempted to use a narrow performance metric and came unstuck as a result<\/li>\n
    3. The bean counter’s blind spot<\/a> – A look at how morale and other soft issues are hard to quantify and hence often ignored<\/li>\n
    4. Cheese and onions \u2013 Frameworks for Analyzing Project Failure<\/a> – A look at how the context in which a project exists can shape the outcomes it achieves.<\/li>\n<\/ol>\n

      Reference links:<\/strong><\/p>\n

        \n
      1. Why IBM Is In Decline?<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

        The following entry is a record in the \u201cCatalogue of Catastrophe\u201d \u2013\u00a0a list of failed or troubled projects from around the world. IBM\u00a0(International Business Machines)\u00a0–\u00a0USA Project type :\u00a0Organizational performance improvement and strategic realignment Project name :\u00a0Roadmap 2015 Date :\u00a02010-2014\u00a0 Cost :\u00a0Unknown Synopsis : Most of the projects noted in the catalogue were aimed at producing […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,3,77],"tags":[138,149,132,17,141,62,144,93,147],"class_list":["post-6947","post","type-post","status-publish","format-standard","hentry","category-private-sector","category-failed-project","category-why-projects-fail","tag-causes-of-failure","tag-corporate-culture","tag-private-sector","tag-leadership","tag-management","tag-quality-management","tag-team-dynamics","tag-why-do-projects-fail","tag-why-projects-fail"],"_links":{"self":[{"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=\/wp\/v2\/posts\/6947","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6947"}],"version-history":[{"count":23,"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=\/wp\/v2\/posts\/6947\/revisions"}],"predecessor-version":[{"id":10083,"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=\/wp\/v2\/posts\/6947\/revisions\/10083"}],"wp:attachment":[{"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/calleam.com\/WTPF\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}