The way back for Big Blue

The way back for Big Blue

An experiment in collaborative leadership for IBM Australia and New Zealand.

How do you zap some energy back into a fading giant? IBM Australia and NZ chief Glen Boreham reckons it calls for an unconventional approach. His collaborative style of leadership has been instrumental in IBM's recent turnaround in Australia. But he also disavows the long-held management mantra that you should avoid change for change's sake.

"One of the leadership philosophies I have is that change, even just for change's sake, is very healthy, particularly in big companies like IBM where people can get too comfortable,'' he says.

Last year the comfort factor fell dramatically when hundreds of IBM Australia's staff were told their present jobs were no longer required and they either had to find a new one, or take a redundancy. Boreham, who was appointed in January 2006, refers to this, and the almost clean sweep of top executive roles, when he says: ''We had lots of change last year which [made] everyone sharpen up a bit and I think that's reflected in our results.''

At the end of June 2007, IBM Australia closed its best quarter ever. Revenue was 19 per cent higher than in the same period a year before. It's a sharp contrast to calendar 2006, when its profit plunged 58 per cent and revenues slipped 1.6 per cent. The company earned revenues of $3.4 billion that year.

Boreham and his staff aren't keen to paint the CEO as hero. There are 10,000-plus people in the company and the financial turnaround has been years in the making. However, it is Boreham who has delivered the goods. Boreham, 43, one of the youngest CEOs ever of IBM Australia, has demonstrated an ability to be the right man in the right place at the right time. When he took on the CEO role in January 2006, IBM had begun to emerge from a bleak period of missed revenue targets and low morale. Some of this was external - the technology market as a whole had dived after the excesses of Y2K and the boom - but there had also been trouble within.

IBM has bought many companies in its 100-year history but few have proved as difficult to swallow as Pricewaterhouse Cooper's consulting business. It was a massive $US3.5-billion ($4.16-billion) acquisition where most of the assets lay inside people's heads. For some time after the October 2002 deal, different pay rates and different ways of doing things led to some poisonous relationships between IBM's own consultants and those acquired from PwC. By last year, the ill feeling had largely dissipated, helped in no small part by the departure of disgruntled PwC partners who waited only until the golden handcuffs were off and the consulting market had picked up again.

Meanwhile a joint venture that had housed IBM's technology services business in Australia - and created its own conflicts with customers doubling as directors - was dissolved in August 2003, allowing IBM to get all its business back under the one roof.

Boreham's predecessor in the CEO role, the quietly spoken Phil Bullock, managed to get just about everybody in the company pulling in the right direction before leaving to run IBM's systems and technology business across Asia Pacific. And in the wider technology market, growth rates were back up to a steady 5 to 10 per cent per annum, a big improvement over the previous few years. The stage was set for success but it was not guaranteed. "What Glen has done is an evolution of what Phil started,'' says Tony Best, who runs IBM Australia's software business. "There is no doubt some buying cycles have swung around but you have to be in the right position to respond and be successful.''

IBM still had much to prove. The company had been talking for years about moving beyond hardware and software and its services business, which entailed recommending, installing and running technology. IBM's future depended on moving to the point where it could take over the business processes, such as human resources or procurement, that its customers used technology for. IBM's main businesses are hardware, software, outsourced IT services (its biggest revenue earner), and consulting. But the best hope for future growth is business services; rather than just running their clients' computers it also runs their payroll, accounts or HR systems, etc.

Boreham was well placed to know what was required to make that connection. In his time at IBM he had always been in front of customers, some of whom became his biggest fans.

"What impressed me the most was that he listened to what you said and remembered it,'' says Allen Windross, who was NSW TAB chief executive in the late 80s and early 90s when Boreham was the account rep. "Months later he would say something and you realised your message had got through. He was alert enough to have sensed when something was not right and to go out and do something about it.''

Boreham knew many customers who believed IBM's commission structure had often led the various divisions to work as different companies. This was particularly true in Australia, where at one point there were separate companies housing both services and consulting. The separate structures were largely a product of corporate history.

"The unintended consequence was customers saying 'you look like three companies to me','' says Boreham.

Now IBM wants to exploit its ability to sell products, services, business process outsourcing and strategic advice on what is happening in 173 countries. "To do that,'' Boreham says "we need to be a joined-up company.''

Boreham moved quickly to change the composition of the Australia/New Zealand leadership team. The group was meant to meet monthly but with 90 members, many of whom dialled in, the monthly meeting had become a broadcast. Now there is a general management team with 25 people who meet face-to-face, once a month, around a boardroom table and "actually talk about the business and what we can do to work together'', Boreham says.

Client teams and even real, live clients also make regular appearances at these meetings, Earlier this year, five of the sales teams that run IBM Australia's largest accounts presented to the leadership team over the course of a day. The goal was not to work out what could be sold to those customers in the next quarter but to get inside the head of the CEOs of the businesses, work out what was worrying them, and try and come up with some solutions.

It was a revolutionary concept, says Jackie Korhonen, vice-president of the company's managed business process services: "We were looking at the business problems the client had, and not just in the short term but as long as five years away. We are a listed company and we tend to get absorbed in quarterly results so it was different thinking about a five-year outlook.''

In another example of Boreham's enthusiasm for collective leadership, when one part of the business is having problems, he throws the issues open to the entire leadership team, rather than reviewing it one on one with a particular manager. Says Korhonen: "When you work like that, a lot of camaraderie is built up. You feel supported rather than isolated."

Such isolation could be the kiss of death for a new and emerging part of the business, such as business process outsourcing. "I need everyone who is in front of a client to be aware of what we do," Korhonen says. "They know how to sell hardware, software and services, but they need a bit of education to sell processes. It would have been much harder if we had been an island."

Like Korhonen, IBM Australia's consulting chief Ian Ball came onboard Boreham's leadership team last year. Ball's consulting career prior to joining IBM in 2000 has taken him across the UK, the US and Asia. He believes the Holden Statesman-driving Boreham has a particularly Australian approach to leadership. "Glen has encouraged us to get to know each other a bit better by revealing a bit of our personality and that has helped foster teamwork," Ball says. "I have been in other IBM leadership teams where the chemistry has not been that great. I have seen other country general managers perform the role very differently with strict top-to-bottom hierarchies.

"Glen is very open and collaborative, and he runs a very horizontal leadership team; we are all equals and I think that helps teaming. I think it's partly a reflection of the Australian character, which is relaxed but direct. People here will come right back at you if you do something they don't like. They're straight talkers and that's refreshing in comparison to the United Sates, where people will often dance around an issue. People here are very direct and open; they are not afraid to reveal themselves."

Boreham thinks IBM Australia is about halfway on the journey. And the US management is watching closely. "I do think we are leading the way," he says. "That's partly due to our size and our distance from the rest of the world, which makes it a little easier to bring it together here. In the US for example, IBM has a couple of hundred thousand employees, which makes it a little harder for them.''

© Fairfax Business Media

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