IBM’s strategy to focus on “social networking, mobile computing, data analysis and storage and cloud computing” seems clear. This is a socioecological systems direction that responds to changes in the business environment that can cause some discomfort internally. There are a lot of employees who don’t work in those growth areas. The question is whether employees have had enough foresight to shift their knowledge base and skills, and/or whether career managers have provided sufficient guidance for those employees to make the transition.
IBM’s formula for profit growth has been to cut costs enough to offset declining sales. In the last year, its revenue fell 2.3% while its net income grew 4.7%. If IBM cut enough people, it could meet its profit numbers. [….]
… in April, Rometty announced that in her fifth quarter as CEO, IBM had missed predicted earnings by a nickel and would fire people to cut costs before the end of June. […]
IBM’s statement was short on specific details and long on how layoffs are a natural response to industry change and IBM’s evolving business strategy. IBM said “Change is constant in the technology industry and transformation is an essential feature of our business model. Consequently, some level of workforce remix is a constant requirement for our business. Given the competitive nature of our industry, we do not publicly discuss the details of staffing plans,” according to Bloomberg.
IBM claims that it’s just using the layoffs to shift people from declining business lines so it can invest in growing ones. AP suggests that “some of those employees didn’t fit” with IBM’s plans to invest in “social networking, mobile computing, data analysis and storage and cloud computing.”
As It Shrinks In A Growing Market, Does IBM Have A Strategy? |Peter Cohan | June 14, 2013 | Forbes at http://www.forbes.com/sites/petercohan/2013/06/14/as-it-shrinks-in-a-growing-market-does-ibm-have-a-strategy/.