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Computerworld - CIOs commonly report to the chief financial officer or the CEO. But at IBM, Brian Truskowski reports to the senior vice president for internal business transformation.

Truskowski says that’s because management believes IT has unique insight into the internal workings of the giant company. But he concedes that he gets a lot of help from his friends — 329,000 other IBM employees.

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Many companies do “business transformation,” of course, but at the mother of all technology companies (IBM was making mechanical computing machines in 1911), the concept has special importance. For decades, IBM bestrode the world of IT like a colossus, but it lost its hegemony in the 1980s and early 1990s in the face of the rise of Microsoft Corp. and other competitive forces.

IBM

Location: Armonk, N.Y. Business: Technology systems and services 2005 Revenue: $91.1 billion 2005 Earnings: $8 billion Market capitalization: $127.83 billion, as of Oct. 9, 2006 Employees: 329,000 IT employees: 2,500

Recognizing that the company had to confront 21st century market realities, IBM Chairman, President and CEO Sam Palmisano decided in 2003 that it was time to update the “basic beliefs” set forth in 1914 by IBM’s first president, Thomas Watson Sr. Using intranet-based collaboration technology, IBM polled its employees for their ideas, got 50,000 responses and — assisted by IT — distilled those into just three corporate values.

A sharp focus on those values has helped IBM regain its footing, Truskowski says. Last year, the company’s $91 billion in revenue put it 10th on Fortune’s list of the 500 largest U.S. companies.

Mind the Gaps

IBM’s new values, which include putting client needs first and fostering innovation, may seem obvious, but Truskowski says the participatory, grass-roots means by which they were developed gives them credibility with employees — something they would have lacked if they’d been developed by “a senior executive sitting in Armonk.”

Armed with the freshly minted corporate values, senior management charged business unit managers to find and close the gaps between those values and actual business practices. To help with that, IT rolled out in October 2004 a so-called jam ¿— a worldwide brainstorming session that Truskowski describes as “a blog on steroids.” It drew ideas from 33,000 employees, and IBM later implemented the top 35 suggestions as determined by an employee vote.

“A very obvious problem was our lack of integration in front of the customer,” Truskowski says of one of the gaps identified in the jam. Indeed, the second-highest-rated idea from the jam was to overhaul the way IBM sets prices for deals that include combinations of hardware, software and services.