Bob's Gutsy Leadership Blog

Learning from the Struggles of IBM

IBM’s revenue declined by 2.8% in the most recent quarter. The gains it made in its new businesses of cloud computing and data analytics were more than offset by the continued declines in its established businesses. IBM has posted revenue declines in seventeen straight quarters.

IBM’s biggest bet is on cloud services, but it is a late comer to that line of business. Amazon has the dominant market share with Microsoft in hot pursuit. For perspective, while IBM’s cloud services grew 30% this quarter; those of Microsoft have doubled. IBM and Google are battling for the number three and four positions.

IBM shares have dropped 17% since the current CEO took over in January of 2012, while the S&P 500 Index rose 70% during that same period. The basic issue is that while IBM is getting into new categories like web services and analytics, it is late and it really doesn’t bring anything distinctive.

The Marketing Science Institute recently published the results of a massive study of the ability of market leaders to regain market leadership if they lose that position. Data from over several decades was assembled. The study found that hundreds of market leaders had temporarily lost the top spot but quickly regained it. On the other hand, the window for reclaiming the leadership role was narrow.   Few market leaders were able to get back on top if they spent four consecutive quarters being below the top.

So, what should a leader take from this? The longer you are behind, the harder it is to recover and achieve a position of strength. Importantly, to get ahead and stay ahead you need to constantly execute the following:

1.) Continually Face Reality – Too often we convince ourselves that our current state is best possible, even though it is not ideal. With time, that mindset gets easier and easier to adopt as the study above suggests. The fact is we need to continually and objectively face reality and isolate where we must do better.

2.) Seizing Emerging Trends and Fresh Ideas – We need to constantly seek out fresh ideas and learn about new technologies and then aggressively jump on those that we believe will strengthen our position.

3.) A Constant Sense of Urgency – The fact is, you are never finished. Just when you feel the sense of pride on achieving a significant improvement, you need to realize it’s time to put aside that pride and start all over.

Strong leaders don’t take satisfaction from being the leader; they take it from their confidence in their ability to constantly find new ways to stay ahead of competition.

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