A View from Beneath the Dancing Elephant – another book

Now this book is different from Cringely’s. It was written by Peter E. Greulich, an insider. He tells the story of the Watsons in IBM and the impact they had on a positive corporate culture. Something inexistent today, as the author believes.
While Cringely relies on information he can gather from the outside, Peter E. Greulich has worked for IBM for about 30 years in various positions, including management. He has many interesting stories to tell, but the essence of the book is his grief with IBM’s current situation and how it came to it. For him it started with the reign of the white knight in the person of Louis V. Gerstner, Jr. who at first was his hero. Later, especially after changing the retirement schema, he started to feel, that IBM was going in the wrong direction. With Sam Palmisano, it got worse. Management started to use rules and tools, that were either incomplete or not understood. As an example he recalls Tivoli Configuration Manager. At first a game changing product, but for the lack of continuous developement it became obsolete.

The development director said, “TCM is a cash cow. Why should I spend money on a product that is nothing but pure profit?” He believed that products in this market were commodities with low margins, and should be left to others to waste their profits on. We never convinced him otherwise.

The cow in „cash cow“ is quite a good example for this. When you got a cow you have still to feed it and you have to look for a replacement – its offsprings normally – while the profit you make with the milk, pays also for growing (cash-)cow. But until the old cash cow becomes a poor dog (meat loaf), it is the duty of the product manager to push the poor dog as far in the future as possible. In the software business that means constant upgrades and enhancements and at least some marketing, until nobody has any new ideas (good ideas that is) to keep the milk flowing. By then, the rising star should be ready to take over and eventually become the next cash cow. That’s the ideal world and it does not always happen but still, Just abandoning a product, just because one thinks it good enough right now, without having the next thing in the drawer, is rather short-sighted.

The other story was with „Lean“, even so he does not mention the word. IBM used Toyota’s „Lean“ initiative in a perverted kind of way. The real „Lean“ wants to free resources by using everyone’s knowledge to eliminate inefficiency AND augment quality. The idea is not to find ways to fire people but to free resources to use them better. That’s one of the main principles of Lean, not to fire people. Greulich recounts how he lived through that time, when more and more of his friends disappeared and how that hurt his and others work. Key people were „resource actioned“ (fired), because that department just had a quota to fill. It works exactly like Microsoft’s performance management. If you have a bad quarter, you are a goner. Does not matter, if your family just died in a train crash. Or in other words, if you had Einstein, Newton, Curie and Pauli on your team, Curie probably would have let go, due to her morning sickness and the resulting slightly lower performance at 7:30 AM. With that IBM became even more inefficient and the quality dropped. To make up for the loss, IBM bought more and more other companies for a lot of money, only to bluewash and crush them. Small example: Nitix. Developing their own products ahead of time with freed resources from a proper Lean program, could have saved and made IBM billions (in the case of Nitix, IBM once had a lot more Linux developers). But that would have cost shareholder-value. Now that’s bad, if the friends at Wallstreet don’t like you anymore because you don’t fill their pockets enough. It might be a wild guess, but if you look a the prices IBM paid for some companies and the number of products that after a few years are still alive, one gets some doubts about that strategy.
This kind of senseless loss of manpower (today: knowledge drain), did not happen 20 years before, when Greulich had a hard time himself as a single parent with three small kids. His friends at IBM and his manager just helped him through this time and he is forever grateful. First, it did not hurt IBM, because the work got done anyway and second, Greulich committed himself even more. If that isn’t a win-win situation? And don’t tell me that isn’t possible today. Many companies all over the world show that you can prosper and accepting a social responsibility.*
The numbers are also different to Cringeley’s. According to Greulich, for every old IBMer (in the US, Europe and so on) let go, three to five Indians or Chinese developers were hired and still they can not match the quality and therefore the speed of the old team. Not even financially that makes sense. As a side note, many big european companies in-source again. Even Apple starts to build computers in the US. Do they probably know something IBM does not? None of all those companies do that because suddenly labor costs dropped below China’s, oh no, they do it because it makes sense financially. More money in the long run!

Worth a read? Definitely. It does give you a point of view of somebody inside. Cringely looks for sensation (that’s his job) and Greulich is just sad. Somewhere in the middle lies probably the truth, but all in all, the pictures match.

A View from Beneath the Dancing Elephant
Rediscovering IBM’s Corporate Constitution

by Peter E. Greulich

* One of the best example came from the union representative at Porsche during an interview at Le Mans. You can be nice to your workforce and demand that extra effort if somebody wants to work for Porsche. That’s the view of the „Betriebsrat„! In early days the enemy inside, today an important asset to the company. No wonder VW wanted one for their american workforce, because it pays off.

i Cringely: the Decline and Fall of IBM – a review

For quite a while I was working on a series of blog posts about the decline of Notes and Domino and then came this book. Damn, he was faster. But this book isn’t about Notes and Domino and I couldn’t say if Cringely even knows it, but it does not matter. Here is a bigger picture and it explains quite well, why Notes and Domino are on a sinking ship. It’s not only that Notes is under constant fire from outside, the whole IBM is a mess, if all what Cringely writes is only half-true.
I like the book. I said similar things before. But is the magnitude of stupidity that reigns in the ivory tower of IBM as bad? Sam was on the wrong track, but it looks like, the Road Kill 2015 is not going to stop soon and the C-level is following like lemmings.
Forbes has a nice article about it, too.
The whole problem with IBM turns around shareholder value, or rather the gamblers version of it. Even as a first year student, I knew shareholder value is not one of the clever ideas (according to Jack Welch, the most stupid and he should know), if you want a company to survive. It’s a good idea, if you don’t care about the company and all you want is more money. But that river will dry out eventually. It just does not work as a sustainable strategy.
From my point of view – you may call it idealistic – investors are people who give a company money to work with, to build on. They have a long-term view, because the investors believe in the company and the products. People like Ican, BlackRock and so on, are more like gamblers. They are not investors, because they do not invest. They want making money as fast as possible. Which means buying cheap and – now comes the important part – selling high in the shortest possible time. Only by selling the stocks, they actually make a lot of money. Dividends are just a nice to have on the way there and a way to move the stock price higher (read: the twenty bucks target of IBM in 2015). What comes after, isn’t their concern. If they leave a bloodless hull on their way to wealth, who cares. What amazes me most, is the way Sam thought, that the investors are a good thing for IBM. They buy stocks from outsiders and sell to outsiders. There is no money flowing into IBM. It is absolutely useless. The only reason to schmooze with them, were his own pockets, as Cringely points out. According to him, Sam did everything to get rich and get out … and on the way make his friends on Wallstreet happy.
What I find interesting about the investors, is their view about „their“ money. If it was „their“ money, it wouldn’t be in stocks, it would be a credit, where the company pays an interest and after a while the whole sum back. Capital stock is money you don’t get back from the company you invested in. That’s the whole point. It’s the companies own capital. But you get a dividend which is hopefully higher than the interest you would get from a credit. The only way to get your money back, is to sell the shares to somebody, who believes that this risk is worth taking at a certain price. That’s the stock market were the gamblers reign. There is nothing wrong with that, but it is wrong to use your power to influence companies to act in a way that hurts their business only to make money for gamblers, who have nothing to do with the company. Why the heck should IBM care about them? But it looks like, there is a whole generation of economists, that never saw the stupidity of shareholder value.

My profession – the economist, not the developer – is a lame one. We can’t do anything. We depend entirely on others to develop, build and sell products (I am not really one of them, because I can build stuff) but we are the clever ones that made a whole economic world revolve around us and we are very good at slapping each others backs. Yes, there are things we learn and can do, like organising, reorganising, book-keeping, all very important things, but we are nothing without the grunts on the shop floor, who turn the screw drivers.
Unfortunately, not many managers realise this.
Now the real clever ones think; yes, the grunts know a few things we don’t. How can we make them expendable anyway? How about knowledge management? If that works, we can fire the expensive grunts and hire cheap ones without loosing anything. Unfortunately it does not work, not even with IBM Connections. Because intuition, experience and creativity isn’t something you can store in a database.
Back to the book. IBM added 100’000 Indians, Brazilians and Chinese developers, managers and whatever else, and fired (or talked them into leaving) 100’000 Americans, Canadians, Germans, Swiss and others to cut cost. What I don’t get is the fact, that outsourcing developement, services and design is so last century. By now everybody knows that software written cheaply elsewhere by newbies without experience and proper (which means looooooong and expensive) training, will be easily 20 times more expensive, because of the errors which have to be rectified at home (from those few left, that still now how it works). That has been common knowledge for years and still is true today. But since my brothers and sisters of the economy schools do not have a clue about software or hardware development (they don’t, I gave many of them private lessons in excell programming. It was horrible) they probably really do not know about it. Another interesting effect of this is, that IBM seeded hatred against itself. Many fired IBMer will eventually turn against IBM and 100’000 ex-IBMers with a grudge is a lot of influence in the market.

Can Ginni turn the ship around? If she wants, but she will make a lot of gamblers angry, because it would mean to stop the Death March 2015 (said that before). She would have to stop borrowing money to pay for buying IBM shares. Invest IBM’s own money to make better products faster. I don’t agree with Cringely, that they have to be cheaper, but for a premium price you need premium products and services. It’s doable, but not like this. I get itching from the last sentence:

One thing is certain. Rometty will likely breathe a sigh of relief once her hands are no longer tied by it [the Roadkill 2015].

Why are her hands tied by it? Just because Sam had a this idea? And even if she does pull the 20$ off, who believes that after that she can do the right thing? By 2016 the gamblers want even more. It’s a never-ending story, if you are in bed with the gamblers, they will not let you off the hook. That is the reason why Tim Cook did not want to give in to Ican. He knows what happens. Fortunately Apple has so much cash left, that it almost looks like a good idea to give something back and since Apples stock can’t rise indefinitely, one day Apple had to pay a dividend. Every company has to look for its owners, but not for the price IBM is willing to pay.
The only solution for IBM is to throw the gamblers out. Which either means that Ginni looses her job or the situation is desperate enough, that even the most greedy gambler sees the writing on the wall, which means the stock price has fallen, despite the 20$ bucks. In that case the gamblers will leave and try their luck elsewhere. Ginni might still lose her job, but at least she has a chance to convince the remaining share holders that she has the right ideas to save IBM. On the other hand, if the stock price falls far enough, Apple could use its petty cash and buy IBM. Now wouldn’t that be nice?
The next thing that I have not seen to this extent are the management levels. Up to 13 from the shop floor to the boss. Oh my, what happened to KISS? What are these guys between level 2 and 11 doing? But wait, let’s crunch a few numbers. If each of the managers have just 2 others report to them – which would be silly – that would make 8’191 managers. Not that bad for IBM, but the lowest level would have about 100 grunts each. That’s too much. Let’s say it’s 3 per manager. That would make 797’161 managers. Obviously too much. You can’t invent that many job titles. There are probably quite a few dead ends in the reporting chain. Whatever, there must be a lot of spread sheet pushers in IBM.
When I think back about the last ten years, IBM constantly changed. Once it was services, today it’s software, people came and went, it was always a big surprise, who you would talk to next time. Products came and went. Big failures, small failures, name changes, changes back to the original name. It’s a mess and it has been for a decade.
Probably one of the more important reasons why Notes and Domino customers jump ship is, they are just fed up with IBM. Something I have probably underestimated. I should have learned from my own experience, when IBM took very nice prospective customers from me.
Ford once was in a similar position not too long ago. They made more money with financial transactions and forgot that they were a car maker, until it caught up with them. One day the CEO said: „We understand our troubles.“ How about that as a motto, instead of „Be essential“?

PS: I am now reading „A view from beneath the dancing elephant“
Looks like it goes in the same direction.


No really. What kind of evaluation license is this?

I made myself a Smart Cloud Engage(?) test account.
Now what I wanted to do, is invite somebody to work on a text outside „my“ company. First it is rather complicated until you get there. You can not invite somebody from outside by adding him on the document. You have to go through files and invite them first from there. Right there were your new document shows up (aaaarrrghhh).
When you just added somebody and click invite, you are informed, that you are not allowed to do that. The invitation will not be sent. What kind of usability is this?
Wana do that in Google Drive? Add an email address on the document, done. That is how it should work.

IBM you just won my Catch22 special award for annoying usability. If you don’t want somebody do something, tell him first, not after he did everything required.
Could somebody within IBM please call Apple for a course in usability? Might be worth it.