Let’s get one thing straight from the start. If someone has been named president of International Business Machines Corporation, it means that he is the heir and future CEO of what was once the world’s largest IT vendor and, along with previous presidents, was in fact the largest IT provider in the world. This is why the announcement of Jim Whitehurst’s departure from IBM on the Friday before Independence Day in America was such a surprise.
Someone in the company has forgotten what it means to be named president of the IBM company. Or didn’t care anymore.
This person is most likely the current CEO, Arvind Krishna, who was given this role in January 2021, when the company’s board of directors also appointed the chairman of Whitehurst. Whitehurst came to IBM after serving as CEO of Red Hat, the open source software giant – the only open source software giant if you want to be specific – which IBM paid $ 34 billion to acquire in October 2018. Maybe Krishna, who is 59 and already facing the traditional retirement age of 60 for the CEO of IBM, has decided that it is better to run Big Blue and that the person who has run Red Hat for over a dozen years, who was COO of Delta Air Lines for six years (covering operations as well as the role of CIO), who had been a partner at the Boston Consulting Group for a dozen years, and who obtained a dual major in computer science and economics from Rice University and an MBA from l ‘Harvard University is not.
To be fair, that person who forgot the meaning of the title of IBM chairman could have been the board of directors of the company, it could have been the general management of Big Blue, or it could have been Whitehurst himself- even. Or maybe all four at the same time.
The bottom line is that we’ll never know what that future IBM might have been, the one that brought in the sensibilities Whitehurst developed during his long career outside of Big Blue. We expected a transformation, and because there is precedent for bringing strangers inside Big Blue to help transform it, as former CEO and Chairman Louis Gerstner did masterfully when he been brought in from outside Big Blue to literally save his corporate life on April Fool’s Day. Day 1993. There is an equally important one which we will explain below, and Whitehurst could have been the third.
Those of us who have been around for a long time and have watched IBM very carefully know exactly how dire the situation IBM was in the late 1980s and early 1990s, when the entire IT industry was changing shape and the world as Big Blue knew it was suddenly collapsing. At the time, the demand for mainframes and minicomputers dried up, and the Unix open systems revolution took enterprise data centers around the world by storm. It was hard to watch IBM’s death spiral, and that’s what it really was.
In the late 1980s, at its peak, IBM had well over 400,000 employees, half of them in the United States. In 1991, IBM laid off about 30,000 employees and recorded a charge of $ 3.4 billion, which prompted it to report a loss of $ 2.8 billion. In 1992, IBM’s revenue declined slightly, but it lost nearly $ 5 billion and the number of employees fell by almost 43,000, to just over 300,000 people worldwide. The following year, 1993, was nothing short of horrible for IBM, with revenues down a few points and IBM laying off 45,000 more employees and posting $ 8.9 billion in restructuring charges and a loss of $ 8.1 billion. of dollars against 62.7 billion dollars in sales. Chairman and CEO John Akers retired in April of that year and Gerstner was recruited to replace him. The following year, IBM managed to increase its revenue by two points to $ 64 billion and actually posted a profit of $ 3 billion, but layoffs continued and the number of employees fell by 36,000. to 220,000.
It was the first time that an outsider had run Big Blue outside of Thomas Watson himself, when he joined the Computing-Tabulating-Recording Company in May 1914 to be its general manager and almost a year later , he was named its first president. CTR was eventually modified, with meat slicers and scales sold, and it focused on punch card tabulation equipment that made it the first iteration of what we know as IBM. Gerstner redesigned IBM in a different way, putting its services and software at the forefront and opening up to both competing computing platforms while making its four platforms – mainframes, proprietary minicomputers, mini – Unix computers and X86 servers – open to operating systems, middleware, and applications created by others. The commercial Internet and the dot-com boom and resulting explosion in “electronic commerce” helped keep IBM alive for another decade. Gerstner retired as a hero and joined private equity firm The Carlyle Group.
From one point of view, IBM’s situation is not as bad now in 2021 as it was from 1991. But on the other hand, IBM is much less relevant today than it was in 1991. in the early 1990s, and Red Hat was exactly the big transfusion of fresh blood IBM needed to revitalize and change. Whitehurst was undoubtedly one of the great assets Big Blue got in the deal, and it was undoubtedly a goal of former Chairman, CEO and Chairman of IBM Ginni Rometty, who predated Krishna. and Whitehurst in their roles, to see Whitehurst finally – and we think sooner rather than later – take the helm. By the way, we expected Krishna to be president for several years, before Whitehurst took on this role.
The precedent for presidents is clear here at IBM, and it’s important to stress it. What happened with Whitehurst violates that precedent, which means it had to be pretty important. While it is true, as has been reported, that Whitehurst, who is 54, wants to be CEO of a company before he retires, the CEO job he undoubtedly thought he would have – and that any IBMer and observer of IBM already thought he had – was the future CEO of IBM.
Thomas Watson who is called the founder of IBM but it’s a bit hazy if you look at the long history of the companies that make up IBM, from the Hermann Hollerith punch card tabulators that were used in the US Census in 1890 , succeeded by his son, Thomas Watson, Jr, who was named president in 1952 and CEO upon his father’s death in 1956. It was at this point that IBM was transforming itself into a mainframe manufacturer which has made it a household name and fabulously wealthy by all corporate standards. care to bring to the table. Vin Learson was named president of IBM in 1966 and was president and chief executive officer from 1971 to 1973. Frank Cary was named president in 1971, Learson approaching the mandatory retirement age of 60 in 1973, when Cary took over. then appointed chairman and chief executive officer. Cary was CEO until 1981 and Chairman until 1983. John Opel was appointed Chairman in 1974 under Cary and succeeded as CEO and Chairman when Cary stepped down. John Akers was appointed chairman in 1983 and two years later he was appointed CEO and chairman when Opel resigned. IBM did not have a president initially when Gerstner arrived, but Akers had an assistant named Sam Palmisano that Gerstner was happy to have, and in 2000 he was named president, in 2002 he was named CEO and in 2003 he was appointed president. As Palmisano approached 60 years of retirement, Ginni Rometty was appointed President and CEO in early 2012 and President in late 2012. When Rometty stepped down as President and CEO in January 2020, Krishna was appointed CEO and President of Whitehurst, and she resigned as President. in December 2020 and Krishna assumed this role.
The split of CEO / President roles that Rometty has played between two people is unusual in IBM’s history, but not unprecedented either. It was reasonable to expect that Whitehurst would be CEO and wield power while Krishna would be president and provide the historical context for IBM. Krishna has called all the pieces since Rometty stepped down, including the sale of much of the service business and the focus on the hybrid cloud message. Neither is particularly exciting for Wall Street or customers, although the latter is effectively how IT will be done for many of the big companies Big Blue cares about the most.
IBM didn’t have a platform that captivates the imagination and didn’t have a story to tell, and Red Hat definitely gave it both. We wonder why Whitehurst is not the one to call the coins and relay this message to the world. Considering his experience as a consultant, CIO and CEO of a large software company that rocked the business, this is indeed a wonder. And we wonder what kind of IBM might have emerged under Whitehurst’s leadership in a few years. IBM will persevere, and Red Hat is still a great asset, but Big Blue can’t be the same after that. It will be a little less red and a little more blue, at the very least.
In other news on IBM’s reorganization, Tom Rosamilia, who we always thought was Big Blue’s president and CEO, has been named head of the company’s Cloud and Cognitive Software group – the role that Krishna was busy when Rometty made the deal with Red Hat. . Ric Lewis, who headed Mission Critical Systems at Hewlett Packard Enterprise, has been appointed to lead the Systems group, replacing Rosamilia. Bridget van Kralingen is retiring and stepping down as head of Global Markets, a group and division spanning marketing and sales, and Rob Thomas, who has headed various hardware and software units, has taken over this role.