Can IBM’s New Duopoly Produce A Unifying Vision? – Forbes blog by John Webster

By John Webster, Sunday, February 16th 2020

Analyst Blogs

IBM has announced the replacement of current CEO Ginni Rometty with a duopoly – Arvind Krishna as CEO with Jim Whitehurst as President. Why? And, why?

Reading the published reports on the reasons for succession, it becomes clear that Ginni Rometty’s tenure at as CEO had become increasingly untenable. Under her leadership, IBM had lost a quarter of its value. Time to retire. But why replace her with two executives who will run what is still the most foundational company in enterprise IT?

Top management successions can be momentous occasions at IBM, and I believe this is certainly one of them. A new CEO can establish his or her vision for IBM as computing technology advances. When its compelling, the vision energizes the rank and file and IBM goes on to repeat performances as an industry leader. When it isn’t, IBM continues to make headway, but not under full steam. Now with two leaders, who’s vision will IBMers and IBM customers look to? That of Arvind Krishna, the consummate IBM insider, or Jim Whitehusrt, the one-time leader of open source barbarians storming the gates of Armonk.

The answer may well be that its time for another outsider. Back on April Fool’s Day 1993, Lou Gerstner was brought in from RJR Nabisco to run IBM. Over his ten-year tenure, he remade IBM by taking the company back to its roots as a purveyor of computing as opposed to computers. He gave birth to IBM’s Global Technology Services division that went on to become IBM’s largest revenue producer while engineering a transformation and unification of IBM’s other business groups.

Now IBM brings-in Jim Whitehurst and the open source perspective he brings to his new role. In 2008, he came from Delta to make Red Hat a commercial success. And he did so while preserving Red Hat’s open source culture. But why is he paired with Arvind Krishna?

Maintaining the growth trajectory of a multifaced technology business, which for decades has been at the heart of enterprise computing, has always been a challenging venture at IBM. A CEO must keep its proprietary platforms like Z System, IBM i and Power producing revenue while fending off competitors looking to replace them. That job now falls into Krishna’s lap. At the same time however, this leadership team must develop new opportunities leveraged by continued technological advancement, or slowly become irrelevant.

It’s a difficult balance to be sure. Ginni Rometty was successful in maintaining the legacy platforms but can be faulted I think for pushing the company in too many new directions at once and in ways that were ahead of or adjacent to where her enterprise customers were. Last year, it seemed that she couldn’t utter a sentence in public without saying “AI.” Yes, AI is becoming an increasingly important enterprise IT initiative, but it is only one of many that includes containerization, security, migration to public cloud and digital transformation. She spent what now appears to be an inordinate amount of energy on Blockchain – a technology only beginning to take hold within a limited number of industry segments, most notably financial services. One can rightly question if IBM’s current position in Blockchain was worth the considerable effort that may have come at the expense of other more pressing enterprise IT requirements. To her credit, she did see that the acquisition of Red Hat was the best way to bring IBM into the world of containerized applications. On the other hand, IBM’s investment in public cloud has only resulted in a less than 2% market share and wasn’t even mentioned in the most recent earnings report.

The question before us now is whether or not a Red Hat-inspired infusion of open source energy at the top will transform and unify IBM as Lou Gerstner once did? Or will IBM continue to strike-out in multiple directions at once with no clearly discernable vision? Ginni Rometty will leave, but what she will leave behind is two powerful forces, now working within the same company, that have traditionally been at odds with one another. At this point, it is impossible to predict what comes out of this crucible.

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