IBM: Tapping Employee Brain Power

October 30, 2006 (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. Previously, every brand had its own profit objectives and pricing policies. “Of course, that’s crazy, because it’s our ability to solve a problem — as opposed to selling piece parts — that makes us special,” Truskowski says. So the company created what it calls its deal hub, a one-stop shop for sales teams working on bids that draw on offerings from multiple IBM brands and business lines. The hub helps sales teams worldwide come up with competitive bids faster, he says.

The top-rated idea from the 2004 jam was a program in which employees can anonymously rate their bosses. About 81% of eligible managers got feedback reports last year. Another idea, to simplify password use and administration, resulted in a single-sign-on plan that’s now being pilot-tested.

Jams are just one of the tools that IBM, enabled by its internal IT group, developed so it can avoid the stagnation that led to its stumbles in the 1980s and 1990s. The tools are intended to tap into the company’s huge store of knowledge, whether it’s in a client database in Armonk, in the mind of a software engineer in India or on the desktop of an accountant in England.

IBM has employees in 74 countries and thousands of them have innovative ideas, Truskowski says. So its latest jam sought ideas on new markets, technologies and products, and for the first time, it was opened up to IBM clients and employees’ families. It generated 37,000 ideas from 140,000 people in 75 countries and 67 companies.

That was quite a feat for the IT infrastructure, says Truskowski, noting that 31,000 jammers were logged on at one time on the first day. “I haven’t seen much else that can handle this scale,” he says. “From a CIO’s perspective, it’s 72 hours of hell.” He says several IBM clients have asked for the technology to conduct their own jams, and IBM is providing it.

Another tool for harvesting ideas is the Technology Adoption Program, or TAP, an initiative aimed at the company’s new goal of fostering innovation. “When I took this job 20 months ago, I had a lot of passionate IBMers tell me what great ideas they had about things we should be doing inside,” Truskowski says. The result was TAP, an intranet system based on WebSphere and the LAMPStack suite of open-source tools.

Employees known as early adopters use an intranet-based testbed to try new tools and technologies that have been posted by employee “innovators” around the world. There are now 1,000 innovators and 36,000 early adopters using the system. “We pick off the best ideas for internal pilots, and eventually some end up in our products,” Truskowski says. For example, some enhancements in the current release of IBM’s Sametime instant messaging product — such as emoticons, broadcast capability and a link into voice over IP — originated with internal users who had developed those features on an ad hoc basis.

The jamming and TAP initiatives are naturals for IBM, says Eileen Strider, a Kansas City, Mo.-based consultant in an IT organization. “IBM has a very rich history around their values,” she says. “I don’t know of other companies doing this as aggressively as they are. And given that IBM is a technology company, the employees are attracted to ‘blogs on steroids’ kinds of ideas.”

Strider calls it “a good thing” that IT falls under internal business transformation in IBM’s corporate structure. “The people in IT sort of know how all the pieces fit together, and they see where the issues are and where the disconnects are,” she says.

Appropriate IT

Truskowski says his biggest challenge is “supporting the hypergrowth markets in emerging countries.” For example, IBM has 43,000 employees in India, second only to the number of employees it has in the U.S. “Understanding the constantly changing business models in those countries is critical,” he says.

He’s experimenting with a new model in which all employees are not treated equally. In the past, he says, all employees got fully loaded ThinkPads. “Now we are delivering just the right capabilities for your role — just enough IT to get your job done,” he says. “That simplifies people’s lives [and] my life, reduces costs and better supports those emerging business models.”

Paying close attention to the IT needs of individual employees has become increasingly important, because more than half of all IBM workers have been with the company fewer than five years and 45% do not report to a traditional office every day. “Employees used to say IBM stood for ‘I’ve been moved,’” says Truskowski. “Now I hear it means ‘I’m by myself.’” One of his challenges is ensuring that all employees have access to the resources they need and are “connected,” even if it’s just virtually, he says.

Asked what advice he’d offer his successor, Truskowski says, “Be ready to get a lot of suggestions. There are a lot of IT experts at IBM, and probably half of them think they can do the job better than I can. And probably half of those are right.”

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