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The absolute necessity to reinvent your business

24 Oct 14

There has been a lot of discussion recently surrounding the changing nature of businesses in this digital age and how innovation and relevance are key tools to survival.

Virginia ‘Ginni’ Rometty, Chairman and CEO of IBM, has noted the importance of transformation. IBM is a global technology and consulting corporation reaching its 103rd year.

“You know, if I have learned nothing else in all my years here, my biggest lesson is you have to constantly reinvent this company,” she says. “That’s how you get to be 103 years old.”

Rometty’s rules are: Don’t protect the past, never be defined by your product, and always transform yourself.

With these rules in mind, and focusing on what is essential for the transformation of IBM, Rometty is making a number of changes. The company is moving into areas such as cloud and mobile and making headway with Watson, the cognitive computing device.

These changes are said to be the response to a continuing decrease in revenue. In the most recent quarter, the company reported sales of $24.4 billion, which is down two percent from last year. This is the ninth quarter in a row that revenue has decreased.

Businesses of today are dealing with the challenge of facing multiple transitions at once. There is the move to cloud computing, an increasing need for big data software, and a fast growing demand for mobile and social tools in the workplace.

Buying habits of corporate customers is changing. More are opting for a software as a service model, as opposed to investing in hardware that is costly, bulky and requires consultants to get it running.

Not only that, long established businesses are competing with new and agile competitors. For instance, IBM is coming up against Amazon and Google.

Rometty has already proved she can make change fast and understands that bolder, faster moves are needed to succeed.

“What’s different from the past – because we’ve lived through every one of these transitions – is the speed at which this is happening,” Rometty says. “We have to keep moving at that speed.”

The global giant has traditionally had three core business components: services, software and hardware. Rometty is taking these business units and realigning them under three technological pillars that recognise that changes taking place in the technology sector: big data, cloud and engagement.

Internal communication is another big factor for Rometty. She has spent time and money encouraging connections and collaboration within the business. This is a challenge in and of itself, as IBM has more than 431,000 workers operating in 170 countries.

Jeffery Sonnenfeld, a senior associate dean at the Yale School of Management says, "This is a great time for more repositioning. This is the time for Rometty to prove wrong the thesis that large enterprises have no chance of surviving through innovation."

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