IBM’s Rometty Moves Out Hardware Chief, Tells Employees to Step Up

It didn’t take long for IBM (NYSE: IBM) Chief Executive Ginni Rometty to act in the wake of the vendor’s disappointing Q1 2013 performance, making good on the vendor’s vow to take “substantial actions” to fix its recent spotty financial performances, particularly in the past two quarters.

First, responding to a 17 percent Q1 downturn in hardware sales, Rometty assigned a new head of IBM’s Systems and Technology group, moving out Rod Atkins and moving in former corporate strategy senior vice president Tom Rosamilia, the latter assignment according to a published report. Atkins, who had led Systems and Technology since October 2009, was assigned to Rosamilia’s old job. Rosamilia is a 30-year IBM veteran who previously served as Power Systems and System z general manager.

And then, in an internal five-minute video address, Rometty urged the company’s nearly half-million employees to step up, move faster and be more aggressive, parsing her praise and liberally distributing reprimands, according to an account in The Wall Street Journal, which viewed the video as posted on an internal IBM web site.

From the Journal’s report, here’s a sampling of Rometty’s comments:

On new computing models:

• "Where we haven't transformed rapidly enough, we struggled. We have to step up with that and deal with that—and that is on all levels."
• "The first lesson: accelerate our shift to the new computing model to serving new markets, to new clients, to building the new skills we've talked about—and do it now."

On lost sales:

• "As the quarter ended hundreds of millions of dollars of software and mainframe opportunities, they didn't close; and in a number of cases because we didn't move fast enough."

On IBM’s strategy:

• "The wonderful news is our strategy is the right one. Our fundamentals are strong and our future is in our own hands."

IBM blamed some of its Q1 revenue slide on lost mainframe and software sales, which explains what appears to be Rometty’s pique in that regard. Perhaps unwittingly taking a page from HBO television show host Bill Maher’s segment titled “New Rules,” she directed employees to respond to customer requests in 24 hours and if slowed by processes to "engage management, engage leadership, and let's deal with it."

IBM repeatedly has said that it wants to post noticeable jumps in profits by 2015, detailing a path to get there—concentrating on business analytics, its Smarter Planet initiative and cloud computing—that paid off handsomely during Q1, with business unit growth of 7 percent, 25 percent and 70 percent, respectively.

Nearly every word IBM says publicly these days includes some mention of data analytics, Smarter Planet and the cloud. It will have to keep up the drumbeat not only with words but also sales and a transformation of the company culture to shore up its weaker flanks going forward.