Some Marketing Wisdom III: Who says Elephants can’t dance? – Or what can we learn from IBM’s historic turnaround?

This post was written by Charlotte Kräft, Head of International Marketing, itelligence AG

The topic of this post is really important for me on a personal basis: It reflects one of the biggest and most profound Change Processes ever happened in a big company with international reach. I am talking about Louis Gerstner’s achievements to drive IBM’s historic turnaround in the early 1990s. In fact, by having innovative, the status quo questioning ideas and showing real guts, Gerstner laid the foundation for IBM’s massive success for the years to come (see http://www.businessweek.com/stories/2008-06-10/who-says-elephants-cant-dance-businessweek-business-news-stock-market-and-financial-advice).

But since I am dedicated to Marketing and this series is all about Marketing I want to refer to the Marketing revolution Gerstner brought to IBM under the umbrella of this deep change process.

In his book “Who says Elephants can’t dance?” Gerstner presented that when he came to IBM the company was more or less occupied with itself rather than having a consequent market- and customer orientation (see http://behindcompanies.com/2011/08/who-says-elephants-cant-dance/). Hence, Marketing has not been paid that much attention to in the past. In fact, Marketing was decentralized and what Gerstner said had “fallen into a state of chaos”. Every IBM subsidiary all around the world had its own Marketing strategy; there were worldwide more than 70 different agencies IBM worked with and they all interpreted IBM’s Corporate Design differently. “It was like seventy tiny trumpets all tooting simultaneously for attention”. By the way, I like this image a lot 🙂

Interesting for me to know was that Gerstner noted before 1993 (before he actually came to IBM) there hadn’t been a real Marketing function at IBM. The company was solely focused on Sales and Technology. So, Gerstner brought in a Marketing Executive he had worked with before at a previous employer (at American Express) and gave her the task to set up a global Marketing function and fix all issues related to this.

Then, different action steps were consequently and gradually taken:

  • No IBM executive was allowed anymore to have its own Marketing Budgets, to have its own personal agency and the leisure to do activities when he/she wants to do.
  • All of IBM’s relationships with agencies were consolidated in a one powerful global agency relationship supporting IBM all over the world. It was interesting to read how carefully IBM chose that agency and that there was so much exposure to the public that they meet secretly and used aliases (see http://www.forbes.com/2002/11/11/cx_ld_1112gerstner.html.There were a lot of critics on IBM’s radical approach. However, the critics became quiet when IBM launched its first global campaign “Solutions for a Small Planet” which is still regarded as a big breakthrough for defining IBM’s face to the public.

What can we learn from the story?

  1. Marketing is important (!) and has the potential to be underestimated. I think this is true for a lot of industries, not only for the IT-(Services) sector.
  2. Once you are an international company, diverse local flavors have to be taken into account. This is especially true for Marketing since no other corporate function has such an intensely systematic and direct interaction with the market. However, to be global you need a central coordination by all means. You need someone who is the detective of the brand; you need a joint global vision and aims. Gestner elaborates on this a little bit further in his book: the salary of each employee was tied not only to individual and regional targets, but as well to global ones.  His purpose was to ensure that the global vision is lived and breathed by everyone (see http://www.forbes.com/2002/11/11/cx_ld_1112gerstner.html). All in all, to determine the balance between local flavor and global standardization is key and very difficult to attain.

To be also a little bit challenging with Gerstner’s report and by taking into account what I am accompanying at itelligence, here is an issue when you count on ONE powerful Marketing agency doing everything all around the world: After some years of cooperation you observe something which is called ‘organizational blindness’: The agency prides itself of being a strategic partner and doesn’t put efforts in finding innovative ideas, and further developing itself. Therefore, some companies decided to rotate regularly the agencies they are working with always fearing the worst thing which can happen when it comes to Marketing: That you will be regarded as boring, monotonous and not interesting by the market.

Gerstner made IBM dance; he turned it from a static, self-absorbed company to an agile, innovative Global Payer. I truly admire him for this. My mission at itelligence is much easier. itelligence can dance very well, but maybe here and there itelligence has to be changed from dancing waltz to dancing samba 🙂

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