The IBM Company’s Transformational Change

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The downfall of most organizations is articulated to the inability of those particular firms to adapt to the environment and market. Precisely, that was virtually the situation for IBM, as the company’s performance over decades caused it to become excessively devoted to maintaining its competitive edge. Hence, paralyzing it to the verge of failure and exhibiting excessive losses rather than profits; for the first time, a lifetime career was replaced by retrenchment. In the midst of failure, IBM refocused its efforts, adapted to new difficulties, and re-established its route to recovery. The purpose of this article is to examine organizational theories and design principles affiliated with IBM. Additionally, the essay will discuss change and its disadvantages as it delves deeper into its contribution to strategy. Finally, the article will focus on the change management paradigm and its eventual implementation strategy.

Classical Theory

Max Weber’s Bureaucratic Theory

Weber’s theory places a premium on inflexible systems characterized by a clear hierarchy, division of labor, and specified regulations and protocols that serve as a foundation for a company to run as effectively as feasible. The concept possesses impersonality, division of labor, hierarchical structure, authority structure, and career selection and direction (Dash & Padhi, 2020). Watson is acknowledged for laying the groundwork for IBM’s management principles and procedures during his tenure as CEO. These rules and procedures were clearly founded on classical management. In that regard, IBM needed to restructure its operation by availing new challenges to support the new IBM strategy.

Although the transformation was effective, it was hampered by limitations that caused operations to stall, such as when the implementation of a good plan is believed to be solely the duty of senior executives. Then it is almost certain to fail; change success in transformation projects is primarily determined by people rather than innovation, changing mentalities and perceptions. Further, company heritage is the two most significant obstacles noted by practitioners; and this seemingly simple task is the most difficult to get right.

Some of the difficulties encountered by IBM throughout the execution of the plan involved a variety of variables. As a result, leaders recognize that their organizations must anticipate and respond to external and internal factors that impact the path of their strategy. These variables may include significant impediments identified, innovative technologies, significant obstacles identified, and economic downturns, as well as predicting a market demand and taking the initiative in developing solutions. Change may be dramatic and revolutionary, or it can be a minor glitch in our lives. It can be gradual or abrupt. For a company to implement new strategies, it must undergo transformational change.

IBM’s Organizational Structure and Design

The structure is based on product divisions and the primary characteristic of the depiction of business activities engaged in coordinating the manufacture, global development, and distribution sale of products. IBM’s organizational structure serves as a strategic tool for streamlining product development and delivery in the information technology sector (Bivins, 2014). The structural qualities of the organization enable it to connect various parts of the business with the corporate vision and goal. The organizational structure or corporate structure of a corporation specifies its physical characteristics, the systems of interaction between components, and the design that impacts operations.

IBM’s organizational structure, for example, dictates how its regional offices connect. The structural characteristics also significantly impact how the company’s workers, dubbed IBMers, interact. According to Bivins (2014), these circumstances affect managers’ actions, particularly regarding how plans are executed inside the corporate structure. With such commercial impact and relevance, IBM’s organizational structure becomes a critical factor dictating the corporation’s success and capacity to adapt to industry problems effectively. The company’s primary structural characteristic that considers the management of diverse product kinds reflects its emphasis on continual innovation and product development. Such innovation and product development are consistent with IBM’s growth and worldwide expansion plans (Bivins, 2014). Employees perform their job functions and make judgments under the constraints of the business structure. These consequences demonstrate the critical role of structural characteristics in IBM’s worldwide information technology sector success. The Organizational Structure and Characteristics of IBM.

IBM’s organizational structure is based on product divisions. This organizational structure’s primary characteristic is the depiction of business processes involved in the creation, manufacture, distribution, and sale of products. For instance, as Bivins (2014) emphasizes, product-type divisions are a critical structural characteristic that dictates how a corporation responds to opportunities in the information technology industry. As a result, the corporate structure of the corporation promotes strategies and methods that promote competitive products. IBM’s corporate system is defined by the following characteristics: Divisions by product category, divisions by geography divisions by product type and segmentation by function,

The product-type divisions of IBM’s organizational structure reflect the company’s most essential business offerings. According to the Securities and Exchange Commission in the United States, these divisions are designated as reportable segments in the company’s annual reports. In reaction to industry and market change, this crucial structural trait is centered on attempts to concentrate on the firm’s core functions (Bivins, 2014). For example, the company’s Technology Services and Cloud Platforms section caters to the increased need for cloud-based solutions in the industrial sector. It is possible to divide IBM’s organizational structure into the following product groups.

The Change Management Model IBM’s Approach

Organizational life cycles are similar to those of humans; for example, individuals go through many stages of childhood and early adolescence, all of which are defined by rapid growth over a short period of time. Organizations go through periods of establishment, development, maturity, decline, rebirth, and death, just as individuals do (Hülshegeret al., 2021). Employees in these stages typically go to extraordinary lengths to keep their jobs. In particular, the IBM organization, in accordance with the organization life cycle concept, was in the decline phase in the early 1990s, and as a result, the company was on the edge of failure during the organization decline stage.

Therefore, IBM used a variety of change methods to tackle their predicament, including assembling the team responsible for driving change and aligning with their employees’ visions and the organization’s overall goals and objectives. Also noteworthy was teaching the workers about their role in implementing the change management plan, which included short-term objectives in addition to long-term objectives in accordance with the change management strategy.

In this regard, the transformation includes a dynamic and unrelenting movement. For an organization to be effective, it must do the following: Clearly identify the change and ensure that it is aligned with corporate objectives; determine the repercussions and those who will be impacted; and create an effective communication plan, among other things. Some of the appropriate cycles that IBM implemented included the following;

Whetten and Cameron

David Whetten and Kim Cameron created an additional framework he demonstrated that effective transformation requires management abilities and activities. In IBM regard, the organization deployed some of its notions such as setting the organization tone, preparing the groundwork, communicating the vision, mobilizing the team, and institutionalizing the change to achieve permanent commitment (Bivins, 2014). Collectively, they contributed to positive deviance and extraordinary performance, according to Whetten. His concept further advocated positive energy networks to create a conducive atmosphere within IBM.

John Kotter Process

Dr. John Kotter is a prolific thinker, writer, and consultant on transformational change. He discovered that a significant part of extensive transformation attempts in firms fails. In his discovery, he emphasized the significant flaws that might lead to failure. Some of Dr. Kotter’s proposal of successful business steps was adapted by IBM during its transformational change. For example, they create a feeling of urgency within the work culture, form a robust governing coalition, and create a change vision.

Salerno and Brock’s Cycle Model

A Change Cycle Model figure in accordance with Salerno and Brock's
A Change Cycle Model figure in accordance with Salerno and Brock’s

IBM adopted this cycle model, and the organization thought their employees and stakeholders adapt and cope in six stages. Their paradigm assigns ideas, feelings, and actions to each growth stage. For instance, some samples of their first and end-stage descriptions:

  • Stage one; Loss

IBM acknowledged that regardless of they felt about the change, there was a feeling of loss of what conspired as they were afraid.

  • Stage six; Integration

IBM regained its flexibility at this stage, and they understood the change’s implications, repercussions, and benefits. They were delighted, attentive, and giving in this final period.

To emphasize that individuals at the organization went through expected psychological phases when faced with significant change and that those delivering change should be aware.


IBM’s demeanor was depressing, both inside and outside the office. Hundreds of thousands of employees have received leave packages, yet, none was named as a replacement. Even though change is challenging, IBM desperately needed it. Hence, it was inevitable that IBM needed urgent change to save it from extinction in the market. In recognition of this, IBM’s announced sales and marketing objectives were as follows: Customer satisfaction was the starting point for the task force, which began with a conceptual design for transformation developed by the executive sponsor and task force head and backed by the general manager. The task force was divided into four groups, which were as follows: The groups comprised of 100 senior non-managerial employees who were ranked in the top 10 percent of their current positions in terms of client, platform, and compensation. Four supervisors were assigned the responsibility of coordinating the progress and difficulties of the team. Each team was led by a member who was responsible for developing: responsibilities and roles.


Most noticeable is IBM’s shift away from hardware and toward software and services as part of its product mix adjustment. For the past several years, the company has been updating its product range in order to keep up with the changing times. With the decline in hardware sales, IBM’s revenue from hardware plummeted from 25% in 2007 to 10% in 2017 (Bivins, 2014). The company’s Strategic Imperatives include analytics, cloud computing, mobile computing, security, and social media. The total sales proportion of Strategic Imperatives has increased from 27 percent in 2014 to 46 percent last year (Bivins, 2014). Hence, it was accomplished through the restructuring of internal systems and the development of new goods that were clean, simple, and almost consumer-like in appearance.


Bivins, S. S. (2014) A transformational change at IBM. Paper presented at PMI® Global Congress 2014—North America, Phoenix, AZ. Newtown Square, PA: Project Management Institute.

Cortada, J. W. (2019). IBM: The rise and fall and reinvention of a global icon.

Dash, S. S., & Padhi, M. (2020). Relevance of Max Weber’s rational bureaucratic organizations in modern society. Management Revue, 31(1), 81–91. Web.

Hülsheger, U. R., van Gils, S., & Walkowiak, A. (2021). The regulating role of mindfulness in enacted workplace incivility: An experience sampling study. Journal of applied psychology, 106(8), 1250.

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