IBM Change Management: Analysis of Strategies and Outcomes

This report provides a comprehensive analysis of IBM's change management strategies, focusing on the period when Louis Vincent Gestner was appointed as Chairman. It utilizes the change kaleidoscope model to dissect the various elements of change implementation, including time, scope, preservation, diversity, capability, capacity, readiness, and power. The report examines Gestner's approach to overcoming resistance to change, emphasizing the revolutionary approach adopted to restructure the company and improve its financial standing. It details the different choices made regarding change path, start point, style, target, interventions, and roles, illustrating how these decisions impacted IBM's transformation. The analysis covers key aspects such as staff reduction, defining core areas, improving customer relations, and decentralization, offering insights into the challenges and successes of IBM's change management process. The report concludes that the effective implementation of the change kaleidoscope diagram and Gestner's decisive actions were critical to IBM's recovery and improved organizational structure, customer relations, and market position. This report is contributed by a student to Desklib, a platform offering AI-based study tools and resources for students.

Leading and managing
change

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Change Kaleidoscope Diagram for IBM.....................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
It is imperative for every organization to adopt change, without changes no business can
grow. Changes help an organization to achieve competitive edge and to accomplish goals and
objectives effectively and efficiently(Adeyinka and Foster, 2017). Analysing the latest trends in
the industry helps the organization to perform research and development and develop innovative
products and services accordingly. IBM is an abbreviation for International Business Machines
Corporation, an American Multinational information technology company headquartered in New
York, USA. IBM was founded in 1911 by Charles Ranlett Flint and the company has spread its
operations in more than 177 countries. The current report will focus on how IBM identifies and
implements change with the help of cultural web diagram and change kaleidoscope and will also
provide the information about various steps that Gestner needs to take in order to overcome the
resistance to change.
Change Kaleidoscope Diagram for IBM
Figure:- 1
Balogun and Hailey devised change kaleidoscope in order to help the change agents. This
model is composed of outer and inner ring where inner ring provides design that includes change
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Illustration 1: Kaleidoscope Diagram

path, change start point, change style, change target, change levels and change roles. On the
other hand the outer ring features time, scope, preservation, diversity, capability, capacity,
readiness and power(by Vermersch, Carteado and Johnson, 2018). In order to apply the change
successfully in IBM, Gestner have to select and implement appropriate options and change
awareness encourage the working employees with the helps of different tools used in this model.
Using the change-kaleidoscope, organisation can have proper understanding with respect to
appropriate and inappropriate designs in bringing the changes.
Organisational Contextual features:-
The organisational contextual features are as following:-
 Time:- It is the period in which necessary change needs to be accomplished. Louis
Vincent Gestner was appointed in the year 1993 as Chairman of IBM and after his
appointed as chairman, he decided to bring change in organisation as company was in
trouble with a loss of US$ 8 billion. IBM was in crises and a short term plan was required
in order to bring the respective changes in the organisation.
 Scope:- It is basically the degree of change which can be separate out with respect to
realignment and transformation. Gestner prioritised the three major changes that were
related to staff reduction, defining IBM's core areas and working on them, improving
relation with the respective customers and also decentralization. Gestner decided to right
sizing the company by decreasing the workforce and change the bureaucratic decision
making structure of the organisation(Kabungu and Barakomerwa, 2018).
 Preservation:- This feature includes different assets of the organisation and its practices
that are essential for bringing change. The major assets for bringing change for IBM were
its Human resource and effective budget. The eight product groups was in need to be
preserved in order to maintain continuity in its industry. The respective HR practices that
business carry like recruitment, planning and training can be preserved in an effective
manner.
 Diversity:- This feature indicates the level of difference among group of employees that
may affect the change with respect to attitude of working staff and different business
norms. The staff of IBM is homogeneous with respect to their values and norms. As
employees are hired globally for IBM, all the employees are having different attitude in
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bringing the respective change in organisation. As Gestner decided to cut the job titles
from 5000 to less than 1200, many employees were dissatisfied.
 Capability:- This feature defines the capability of IBM to implement the change with
respect to managerial skills and ability of human resource. Gestner as a chairman was not
having any experience to run a computer business but was having effective managerial
skills to handle the change management(Belay, 2018). However, the managers of the
organisation were not having that much experience but it changed gradually.
 Capacity:- This feature includes cash, human resource and the respective time taken to
implement the change. IBM was having sufficient cash in hand and also skilled
employees that can effectively bring this change in organisation.
 Readiness:- Here, awareness and readiness of employees is identified related to
implementation of change. For bring the respective change, employees of IBM are quite
aware about this change but there are some employees who are against due to their won
reasons(Horrell and et.al., 2018). However, there were many employees who felt rejected
by IBM.
 Power:- This includes power that is essential for initiating change. Gestner is having
power in hand in order to bring the respective change in IBM and bring the business on
track. However, the managers were also having power in order to restructure the business
practices.
Implementing Choices:-
According to this change model, there are different range of design choices that are as
following:-
Change path:- It depends on the end state that how change will be implemented in the
organisation. For the same there are four change paths that are evolutionary, revolutionary,
adaptation and reconstruction approach. In order to have total transformation in an incremental
way, it leads to evolutionary(Bellini and et.al., 2019). With a big bang approach the change path
become revolutionary. On the other side, for realignment of business, IBM can use incremental
change path that leads to adaptation or with big bang approach, reconstruction can be there. In
order to bring change in IBM, Gestner used revolutionary approach in order to bring immediate,
dramatic and forced down change in the organisation. Gestner decided that no pussyfooting and
salami-slicing will be there in IBM and convinced all its stakeholders. He worked to in line the
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structure by right sizing the company as previously, 5000 additional sales representatives were
hired because of which IBM failed in many ways. Single salary structure was changed by
Gestner and Job titles were cut from 5000 to less 1200. With the help of big bang approach, the
business was able to recover its loss from US$ 8 billion to huge profitability and effective
reputation in market.
Change start point:- The change start point indicates from where the respective change have to
be initiated in the organisation. It is divided into following:-
 Tow down change:- Here the organisation initiate the change from top management. IBM
worked to bring the change in organisation by hiring Gestner as Chairman of IBM. Many
experts were relocated and business worked in saving US$ 100 million.
 Bottom up change:- Here the respective change is initiated from bottom line and Gestner
worked to bring change from bottom line of the organisation as Job titles were cut from
5000 to less 1200 and human resource was restructured in the organisation. IBM become
more customer focused as Gestner gave priority to improve the customers relations and
Define the core areas of IBM(Rosenbaum, More and Steane, 2018). Gestner also filter
down the lower level and restructure the organisation.
 Pilot sites:- Here, the change is implemented in individual part of the company. However,
IBM worked to bring the respective change to different level of its business.
Change style:- It is basically the respective style that organisation chooses to manage the
process of change. There are five different styles that organisations can choose to bring change
and are as following:-
 Education and delegation:- Here, change idea is discussed and change support from
employees are taken by the organisation. Gestner also discussed and then restructure the
human resource in order to implement the change(Holten and Brenner, 2015).
 Collaboration:- Here, organisation involve the employees for decision of how and when
to implement the change. Gestner discussed with the employees for the respective
changes, but the final decision was of the chairman itself.
 Participation:- In this style, involvement of employees is limited in order to have desired
change in organisation. However, Gestner involved the employees for discussion but the
change was implemented according to him.
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 Direction:- Here, leaders direct and have control for implementing the respective change.
Gestner and higher authorities were having control on the employees and human resource
department for implementing the respective changes in IBM.
 Coercion:- Here, change is imposed with authority. Gestner also used Coercion style for
bringing the change in organisation that can be beneficial to them in long run(Adserias,
Charleston and Jackson, 2017).
Change target:- The target of this change is behaviour of people with in IBM and also
customers as Gestner worked to bring change with respect to customer relation. Gestner also
targeted the working employees with respect to their job title and also salary as the structure of
IBM was not appropriate and respective changes were necessary for the organisation.
Change interventions:- IBM hired two experienced consultants and they planned different
activities in order to bring respective changes in the organisation and to have improvement in
business practices in order to increase business efficiency.
Change levels:- The cultural web is used by Gestner in order to identify organisational culture
and different barriers that may arise while implementation of change in IBM. This helped
Gestner to develop the change successfully and it made the staff and stakeholders of IBM
participative in nature.
Change roles:- In order to implement the change in IBM, different people played different roles.
The role played by Chairman was to direct the employees with respect to the flaws that are
leading to trouble for organisation. Gestner worked in identifying the problems and directed all
the individuals to work for the change. Managers were given a proper budget and they
accordingly have reward the performance of its employees. This change helped the organisation
as no more wastage of assets will be their and deserving staff will get the rewards.
CONCLUSION
From the above study it is been concluded that Change Kaleidoscope Diagram for IBM
helped the organisation in implementing the change effectively and made the change adoptable
to the working staff. Report also concluded that the decision of Gestner to bring change in
organisation as company was in trouble by right sizing the company was an effective decision
and that helped IBM as it gained a proper organisational structure. It also helped the organisation
in improving customers relation and taking the business on right track.
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REFERENCES
Books and Journals
Adeyinka, O. and Foster, M.K., 2017. Getting back on track: change management at AfrobitLink
Ltd. The CASE Journal. 13(1). pp.120-151.
Adserias, R.P., Charleston, L.J. and Jackson, J.F., 2017. What style of leadership is best suited to
direct organizational change to fuel institutional diversity in higher education?. Race
Ethnicity and Education. 20(3). pp.315-331.
Belay, G.M., 2018. An implementation model for strategic organizational change in Ethiopian
commercial banks (Doctoral dissertation).
Bellini, D. and et.al., 2019. Exploring the influence of working environments' restorative quality
on organisational citizenship behaviours. International Journal of Environment, Workplace
and Employment. 5(1). pp.32-50.
by Vermersch, L.R.P., Carteado, R. and Johnson, A., 2018. Change management as an
indispensable component when planning for NRW control.
Hetkamp, M., 2012. Success factors of change management in the European steel market
(Doctoral dissertation, University of Southern Queensland).
Holten, A.L. and Brenner, S.O., 2015. Leadership style and the process of organizational change.
Leadership & Organization Development Journal. 36(1). pp.2-16.
Horrell, J. and et.al., 2018. Creating and facilitating change for Person‐Centred Coordinated Care
(P3C): The development of the Organisational Change Tool (P3C‐OCT). Health
Expectations. 21(2). pp.448-456.
Kabungu, B.B. and Barakomerwa, P.N., 2018. FROM MANUAL PAY TO BANKING OF
OFFICIALS IN THE DRC: ANALYSIS OF THE STRATEGIES OF KALEIDOSCOPIC
CHANGE.
Rosenbaum, D., More, E. and Steane, P., 2018. Planned organisational change management:
Forward to the past? An exploratory literature review. Journal of Organizational Change
Management. 31(2). pp.286-303.
Online
Change Kaleidoscope. 2019. [Online]. Available. Through<https://www.mbaknol.com/modern-
management-concepts/change-kaleidoscope/>
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