Leadership Strategies and Change Implementation: IBM Case Study Report

This report presents an in-depth analysis of the IBM case study, focusing on the leadership and change management strategies implemented during the company's transformation. It begins with an examination of the change kaleidoscope model, evaluating the options available to Louis V. Gestner upon taking over IBM, considering aspects like time, scope, preservation, diversity, capability, capacity, readiness, and power. The report then delves into theories that explain how Gestner might have addressed resistance to change, specifically highlighting Kurt Lewin's three-phase model, which includes unfreezing, changing, and refreezing stages, and explores how these phases were applied within IBM. The report also discusses other change management theories, such as Kotter's 8-Step Change Model, to explain the methods used by Gestner in managing change within IBM. The report concludes with an overview of the key strategies and their impact on IBM's restructuring and financial recovery, providing insights into effective leadership and change management practices in a large organization.

Group Report on IBM
Case Study

Table of Contents
INTRODUCTION..........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Draw a change kaleidoscope for the organisation at the point at which Gestner took over.
Using this model (Balogun and Hope-Hailey), discuss the change options available to him at
that point......................................................................................................................................1
2. What theories are you aware of that would explain the steps Gestner might have taken to
help to overcome resistance to change?......................................................................................6
Conclusion.....................................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Change is very much important for any type of organisation, which will allow
management and supervisor to look into need for change and steps that are important.
Organisation change management will be part of transformation that would help company to
shape essential and key features for change (Carnall, 2018). But while incorporating these
changes there are many types of difficulties which management will be facing so it is required
that organisation is becoming sophisticated and using the best practise for organisational change
management.
The present report is based on IBM ,which is called to as International business Machine
is American multinational company having its operation into about 170 countries of world. IBM
is known as to manufacture computer hardware, software and middleware with providing
consulting services and hosting as well. This report is largely discussing about culture and
structural changes which taken place within IBM and how the change management models could
be applied.
MAIN BODY
1. Draw a change kaleidoscope for the organisation at the point at which Gestner took over.
Using this model (Balogun and Hope-Hailey), discuss the change options available to him
at that point.
IBM started its business on June 6th 1911 founded by Charles Flint originally known as
Computing Tabulating- Recording Company (CTR), which was manufacturing the record
keeping. During this starting phase of company it was having domination over the market of
Punched card machine to about 95%. IBM is regarded to as one of the best company, which is
working into market of computer hardware and software since the time of its inception. As IBM
is having its long history of having transparent relationship with its employees, concept of
excellent working conditions and then lifetime employment.
IBM is also known for its continuous development and involvement of change within its
style of managing and leading people so that they could be able to maximise sales and profits for
firm. The company is known for having one of the largest workforce in all over world that too
for all time as in 1985 it was having about 405000 employees working this is the reason why it is
called to as Big Blue in blue chip market of USA. IBM is also having very good relationship
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with its customers as it is based on strong product range of highly expensive mainframe
computer and software.
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Despite this their competitors of Personal Computer market were selling their products at
low cost than that of IBM that turn down its market gradually. Then in early 1990’s the actual
problem occurred in management of IBM when John Akers who was working in company for
past many years headed it. At this time company from 6 years was cutting down its cost due to
which problem was highlighted in 1991 with Akers miserable assessment of sales performance
as well. With this there were many failures that were highlighted by media as well as recruitment
of 5000 additional sales representatives. This was done by Akers to boost up sales representative
to 20000 but it only increased the revenue of company to 4%. Then Akers announced for the job
cut of 14000 employees and then following 3000 more jobs cut were there. All these were
regarded to as the part of management initiated separations (MIS) by IBM which resulted into
employees leaving organisation due to cut off taken by management of company due to lack of
funds or lack of work.
IBM was into loss of about $4 billion in 1992 that took place replacement of John Akers
by Louis Vincent Gestner as there were some major changes that were demanded by Wall Street
analyst for company. During very first initiatives of Gestner was appointment of experts in cost
cutting for organisation who were Gerald Czarnecki known for his reduction in cost in HonFed
bank and Jerome York the chief financial officer at Chrysler? After this Gestner listed out some
major priorities of IBM which were required at this time which were:
 Defining core areas of IBM
 Decentralisation
 Major staff reduction
 Improving customer relations
As due to huge loss to IBM change within company was very much required as per their
changing business environment and cost cutting (Hayes, 2018). This change need to be there
among two parts namely organisation and individual level as well that is related to strategy
alignment and adapting the changes in internal and external environment. But for this main
priority for organisation will be adaptation of change at individual level so that this will help
company to initiate change and make strategies at organisational level.
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Balogun and Hope Hailey made kaleidoscope Change in 2002, which is method or model of
arraigning and putting together the variety of important highlights and choice that would be
required to insist change within organisation. This model comprises of inner and outer ring,
which denote organisational feature like that of scope, capability, readiness, power, preservation,
diversity, time and capacity. While inner section defines changes that are taking place like that of
intervention, role, style, path, and start point and design choices. All these points will be linked
with change in IBM, which took place and that was necessary as well.
Figure 1: The Change Kaleidoscope
[Source: The Change Kaleidoscope, 2018]
Consider drawing the kaleidoscope model chart and briefly describe them and categorised
them which might be enabler, neutral or constraint
Time-
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This will define the period of time that is taken to accomplish the changes, as without
specified timeframe it will not be possible for them to incorporate strategies for change
management. Within the case of IBM the actual time that was needed to do the whole planning
of change process was when company suffered loss of $4 billion in 1992 in leadership of John
Akers. This was the correct time for IBM to incorporate change within company so that they
could be overcoming difficulties and loss which company was facing (Kuipers, Grandia and Van
der Voet, 2014). The change was Gestner introduced or plan to introduce within IBM was
needed to implemented within set time frame.
Scope-
The change that will be influencing IBM is related to working upon priorities that
Gestner defined including that of staff reduction, core areas, improving customer relation and
decentralisation. So the whole scope of change management will be related to increase in cost to
company. There were significant changes that team of Gestner made within the compensation
plan of IBM. So the change that was taken by Gestner included whole organisation into and not
concerned with only one section of IBM.
Preservation-
At the time when company was facing such huge problem related to job cutting and
quarterly loss of $8 billion in 1993. This also included charge of laying off 5000 additional
employees into company that year which was about $8.9 billion. Other than increasing cost of
company there were also other factors like that of reward system of company. So company
changed its compensation plan by giving higher salary to employees who were regarded to as
star performers of IBM. In this way out IBM should have kept back their old employees and not
taking them out within Eliminate the older people program. The practice of company that is
related to culture and structure of IBM that needs to be retained at time when Gestner announced
to incorporate changes.
Diversity-
There was very little difference between people who were working or who were making
them work, as IBM is famous for its product range of highly expensive mainframe computer and
also for the culture and structure of company. So there were no such signs of diversity that
occurred within organisation that need to be changed.
Capability-
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IBM was very much capable of incorporating changes within their company as there was
larger amount of change that is actually required with the structure and management of company.
All the employees who were working within company were there due to their skills and
experience only so they were capable to incorporate modification or changes within working
environment of IBM.
Capacity-
There was huge loss to company in year 1993 that was $8 billion capacity of company for
incorporating changes was very much in terms of cash. In spite it was having more number of
employees within company who were not needed or required who were dismissed from
company.
Readiness-
Among all employees it was included or labelled that they should be ready to take up
changes which management is incorporating within. The proper system of planning and
recruitment was implemented within IBM employees were also given training for the same.
There was as included that employees will be given lifetime employment that gave them chance
to change the job within company (Samuel, Found and Williams, 2015). Employees of IBM
were given equal status at time of staff restaurants and facilities, which allowed them for fringe
benefits although they were restricted to use their own car or vehicles.
Power-
Gestner was the man behind incorporating all sorts of changes which IBM was requiring
power for implementing planning process which was done by him. The time when company was
intro serious trouble for and having loss with the highest number of workforces working within
IBM power was very much required.
2. What theories are you aware of that would explain the steps Gestner might have taken to help
to overcome resistance to change?
IBM was originally established for computing, tabulating and recording. After facing many ups
and downs organisation has now decided to appoint Louis Vincent Gestner as the Chairman of
the company. New chairman has announced to make major reduction in the staff of the company
due to the heavy loss organisation is facing. Likewise, IBM will now focus on improving
relationship with their customers. As due to huge loss to IBM change within company was very
much required as per their changing business environment and cost cutting many changes are
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required to be implement by the establishment in order to bring IBM on its position again.
Gestner has also thought of decentralization so that employees can get involved in the procedure
of decision making of the company. It will help in giving job satisfaction to workers so that they
can give better performance and innovative ideas to achieve organisational objectives.
To implement the changes Gestner has decided to apply the theories to change
management. These theories are explained below which are used in IBM while implementing
changes for increasing the profitability of the company.
Kurt Lewin's Three phase model
To bring changes Lewin has given model in which there is a three steps process. It helps
the chairman of IBM in implementing the changes that are highly sensitive in nature. As per the
Lewin changes are not so easy to implement, as it requires lots of understanding and stages
before executing the final stability.
As per this model, there are three stages, which are described below.
Unfreezing: This is the most tough and critical stage in the whole process of change
management. As in this stage every employee of the company will be told about the need for
change. IBM has already suffered a loss of US $4 billion. So new chairman of the company is
planning to make changes in order to improve the financial performance of the establishment. At
this step employees will be motivated so that they can accept the new ways of working (Murphy,
Gardoni and McKim, 2018). Effective communication is really important at this stage of change
management. As, it will help in motivating and conveying employees about the change and
taking their consent for the same.
Change: This is the stage where actual changes are being implemented. Employees
accept the new policies and procedures of doing their work. A proper planning, effective
communication and motivating workers for changes is really important for executing changes in
the company. The entire process of change in IBM has been treated as an investment because it
will help in the growth of the organisation. Company really has need to make changes as per its
recent financial performance. IBM should accept changes in constructive way so that it can
recover its losses and earn higher profits in the future.
Freeze: This is the stage where everyone in the organisation accepts the changes and
consider it as their part of life. IBM should give rewards to its employees for cooperating while
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new changes are being applicable (Morozov and et.al., 2017). This will make it easier for the
company to implement all those changes by the cooperation of employees working for them.
New chairman of IBM has followed this model to implement the changes to earn back
the losses and reputation of the company. It helps the management of the company in knowing
the right direction to apply the desired changes. Gestner has planned to bring decentralization so
that it will make involvement of employees while making any decision. It will be beneficial for
both, establishment and employees as well (Kurt Lewin's Three phase model. 2017). It will give
job satisfaction to work man, which will ultimately result in more contribution of entire
management of the company.
Lewin’s change management model can be implemented in three ways:
 Focusing on the activity, attitudes, and skills of the individuals working in the
organization.
 Changing the systems and processes of the company and structure of the company as
well.
 Changing the organizational climate, culture and social style.
IBM has all the three ways to make changes by implementing above ways. It will help the
organisation in achiving its future goals and objectives.
McKinsey’s 7-S Model
When an organisation fails in achieving its objectives, this model can be used by the
management system. This will help in knowing that how aligned the company is and in what
areas establishment needs changes and improvements (So and et.al., 2017). As per this model,
there are seven elements that helps in achieving success to the company. All the elements are
described in brief.
Strategy: This is a way to determine that how an organisation can overcome its
problems. Like in the current case study, IBM is suffering huge losses so company should make
proper strategies to meet such losses and earn profits in the future. For the same it has to make
changes in its work system and new policies should be made like decentralisation or improving
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relationship with consumer. Making proper strategies for change and implementing the same can
do this.
Structure: Every organisation has some structure, which they follow to make work done
on time. IBM can change its working structure as company has hired many employees that
became a huge loss for the establishment. IBM should accept changes in positive way so that it
can recover its losses and earn higher profits in the future.
Systems: System includes all those work that takes place on regular basis to keep the
business working. Manager gives its majority of the time on entire system. It helps in knowing
that all employees are working in right direction and every one has assigned right work
according to their skills and knowledge. Changes are hard to accept in system but Chairman of
IBM is making high efforts for implementing changes for betterment. It will give huge success in
future to the company as system plays the most important role in a company.
Style: IBM follows team working where leadership plays the most important role in
change management. When employees resist to a change, that time leader can influence and
motivate employees for overcoming resistance to change (Skogland and Hansen, 2017).
Company should follow different leadership styles that will help in accepting changes that are
required for increasing profitability of the organisation.
Staff: Staff plays a major role while change management because they only resist
changing. So Company should have such staff that is flexible in nature and does not resist to
changes. Employees should be trained in such a way that they can accept every new policies and
procedures, which will help the organisation in implementing new regulations. Salary to
employees is also a focus if Gestner so that employees can feel job satisfaction and motivated
towards work. Highly motivated workers always contribute more to IBM.
Skills: Employees of the IBM should be given proper training so that there skills can be
enhanced. A skilled employee can accept every new policy of the company for achieving goals
and objectives of the establishment. It is the major concern that changes are hard to accept by
employees because every one has their own mindset regarding their lifestyle. A sudden change
makes it difficult for the employees to accept. But here as per this model workers should be
trained in such a way that they can overcome resistance to change.
Shared values: It shows the overall culture of the company. IBM has its own values and
beliefs, which they are following. In recent years, organisation has suffered huge loss so it should
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change its values and believes. It can help in implementing changes for earning financial growth
and regaining the goodwill of the company.
These all seven elements, helps a company in knowing the conditions that are prevailing
in the organisation. It helps in knowing the causes of failures and also let know the remedial
measures that should be taken to overcome the same. In addition to this, IBM can know its
capabilities in every dimension and implement the changes accordingly.
Effective Communication strategy:
Communicate the reason for change to all the employees of the company so that they can
understand the reason behind it. Effective communication is really important while brining any
change as it will help in overcoming resistance to change.
Conclusion
From the above report it has been summarized that changes are part of every work system
and it`s should be implemented after proper study and its effect in the future. Changes are hard to
accept by employees but they should be given proper training and seminars on change that are
being implemented by the company. In addition to this, Kurt Lewin's Three phase model says
that there are three stages of change management. IBM should follow in order to implement the
changes by applying all the three stages i.e. unfreezing, change and freezing. This will result in
improving financial performance of the organisation.
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