IBM: Putting Smart Strategy to Work

This case describes how IBM's "Let's Put Smart To Work" initiative is (1) based on IBM's core values, (2) translated into a business strategy, and (3) implemented for companies in a variety of industries. Interviews with senior IBM executives explain how this is done from both a conceptual and practical perspective.

[Video 2-5: IBM Video Case (kerin.tv/cr9e/v2-5)]

Synopsis

IBM began as the Tabulating Machine Company more than 100 years ago. Since then the company has shifted from tabulation machines, to typewriters, to computers, to business services and consulting, to artificial intelligence in response to changes in technology, the global economy, and business practices. Today IBM is positioned as a cognitive solutions and cloud platform provider, it has $79 billion in sales, 380,000 employees, and is ranked 34^th on the Fortune 500.

IBM's strategy is built on three core values: (1) a dedication to every client's success, (2) innovation that matters for IBM and for the world, and (3) trust and personal responsibility in all relationships. The values influence IBM's use of strategic tools such as portfolio analysis and SWOT analysis, which have led the company to focus on a few core brands including IBM Watson, IBM Cloud, IBM Security, IBM Services, and IBM Research. The overall strategy for IBM is called "Let's Put Smart To Work."

To facilitate implementation of the "Let's Put Smart To Work" initiative IBM holds an annual conference called IBM Think. The conference creates an opportunity for IBM employees, partners, clients, and industry representatives and technology leaders to meet and discuss business needs. IBM seeks to be an "incumbent disruptor" and help make businesses smarter. Industry examples include agriculture where IBM Watson helps improve harvest yields, the automotive industry where IBM uses data from IoT sensors to create better experiences for drivers, and health care where IBM AI is used to accelerate research and find new drugs.

The IBM marketing organization is adopting an approach they call "agile marketing" which is based on improvisation, testing and data, and collaboration, and which results in speed, adaptability, and creativity. The details of the approach are articulated in a marketing plan which includes many traditional and emerging marketing tools, including TV, radio, out-of-home and digital advertising, social media, events, and sponsorships. The combination of innovative technologies and changing businesses has created an exciting combination for IBM as it moves forward with its "Let's Put Smart To Work" strategy.

Video Case Questions

1.What is IBM's "Let's Put Smart To Work" strategy?

2.How does this strategy relate to IBM's values?

3.Conduct a SWOT analysis for IBM's "Let's Put Smart To Work" initiative. What are the relevant trends to consider?

4.What marketing tools described in Chapter 2 are prominent in IBM's strategic marketing process?

5.What is "agile" marketing at IBM? Why does IBM use the agile approach?

includes many forms of advertising, social media, event marketing, and sponsorships.

Epilogue

As IBM shifts from its legacy businesses of hardware and software, to new technologies such as artificial intelligence and cloud computing, revenue from the new "smart" businesses has grown to account for more than half of the company's revenue. This "Let's Put Smart To Work" strategy is articulated in a video (youtu.be/eQxr46yaDJM), which suggests that IBM is putting AI into everything and everything into the cloud. IBM's CFO, James Kavanaugh, says that "the company's investments to reposition itself have been paying off" and experts estimate a continued growth rate of 15 percent.

IBM has recently announced the introduction of several new products and partnerships. For example, IBM has been working with the US Tennis Association to develop a technology solution that will help coaches and players analyze and improve their play and prepare for matches more efficiently. Similarly, IBM is working with Australia to develop a national blockchain to enable companies to more easily confirm the authenticity of legal contracts. Other new products include IBM Cloud Direct Link, which provides cloud connectivity in North America, Europe, and Latin American; IBM Travel Manager, which uses predictive modeling to offer customers better travel planning; and IBM Cloud for Financial Services, which enables people to make secure online transactions from any device using any type of international trade format.

IBM also recently announced its collaboration with Microsoft, Amazon, Google, Oracle and Salesforce to promote the frictionless exchange of healthcare data by creating and using open standards in the healthcare industry. Other applications of IBM's "smart" strategy can be seen on its YouTube Channel at www.youtube.com/user/IBM/videos. See, for example, videos about Smart Recycling, Smart Services, and Smart Education. What is one of IBM's most recent inventions? The answer is "Smart" Coffee Drones that fly in public spaces and use AI to predict which people need caffeine!

Sources: Zlati Meyer, "IBM Has Invented Coffee Drones - and They Predict When You Need a Cup of Coffee," USA Today, August 22, 2018; Evan Sweeney, "Amazon, Google, Microsoft and IBM Pledge Support for Healthcare Interoperability," FierceHealthcare, August 13, 2018; Chris Preimesberger, "Tradelt Partners with IBM Cloud for Global Financial Services," eWeek, August 13, 2018, pp. 1-3; Jay Boehmer, "IBM & Travelport Develop Corporate Travel Data Product," Business Travel News, August 13, 2018, p. 3; James Pearce, "CenturyLink Launches Direct Connectivity to IBM Cloud," Capacity Magazine, August 2018; Jeff Benson, "Australia Tapps IBM to Build National Blockchain," ETHNews.com, August 29, 2018; "IBM Give Tennis Player a Competitive Edge with Watson at the 2018 US Open Tennis Championships," prnewswire.com, August 29, 2018; Pushkala Aripaka and Remya Padmadas, "High Margin Businesses Give IBM's Q2 Revenue a Boost," CIO, July 19, 2018, p. 5.