Last week the screws got a bit tighter: IBM chief John Akers unveiled one of the biggest cuts ever. It will eliminate 20,000 jobs at a cost of some $3 billion. biore important, the company took another step in a strategy that it signaled several years ago: to break up monolithic IBM into a loose federation of more competitive companies. Akers called it “a fundamental redefinition of how IBM does business.”
Some change is certainly necessary, but many analysts were skeptical that IBM was cutting back enough. “Every year they tighten a notch,” says Ulric Weil, an industry analyst and former 16-year IBM employee. “They should have tightened several notches three years ago.” Speed has long been giant IBM’s problem–and, of course, its rivals aren’t standing still. Says Esther Dyson, publisher of industry newsletter Release 1.0: “It’s not that the dinosaur can’t put one foot ahead of the next foot. It’s that the message doesn’t get from the foot to the brain fast enough.” Others doubt IBM can deliver on its still-hazy federation strategy. Richard Shaffer, who publishes the Computer Letter, questions whether IBM can truly liberate its most promising units (like PCs) or will simply shuffle titles on the organization chart. “Just by changing names I don’t see how you can make a company as big as IBM as feisty as Dell.” Rick Martin of Prudential Securities, however, says the naysayers are missing the point-and that IBM is leading the way to a revolution. While the ’80s saw companies rushing to combine, Martin predicts: “The ’90s are going to be involved in the breakup of major conglomerates and corporations that thrived by being big.”
Not many people think of starched IBM executives as revolutionaries, however. To pull it off, some analysts say the company needs fresh management not brought up through the IBM culture-because that culture will have to change profoundly. Bob Djurdjevic, president of Annex Research, says, “I wonder if the marketplace might do to IBM what the Justice Department failed to do.” Are a bunch of Baby Blues in our future? If Akers wants to save his company, they might be.
