In this article, Larry Gorkin shares a few ideas on how to win in fast-changing markets.
IBM’s recent third-quarter earnings announcement was full of bad news. Profits were far below expectations, revenues continued an ongoing decline, and the company said it would not meet its widely promoted profit target for 2015. Wall Street sent IBM shares down -10%.
These results reflect IBM’s below par response to major shifts impacting the overall IT market. The story highlights the challenges of sustaining growth in the face of rapid market change, with lessons for everyone.
IBM’s experience shows that leaders in fast-changing markets must aggressively manage their business from both defensive and offensive perspectives to ensure on-going progress. Included are to set internal milestones for action, decisively invest in new opportunities, and develop back-up strategies.
As context, the IT market is undergoing big shifts based on fast customer adoption of cloud technology. This change has hurt IBM and other established players whose profits have been driven by sales of on-site hardware, software, and services. Cloud prices and margins are much lower than old IT products, and IBM’s new initiatives aren’t growing enough to off-set legacy declines.
IBM’s challenge has been compounded by its own widely promoted goal to achieve $20 EPS by 2015. The company has aggressively cut costs and spent billions on share buy-backs to meet that target.
Key points include:
- IBM’s results reflect several key missteps
- Respond Decisively
- Establish Objective Oversight
Read the full article, Winning in Fast Changing Markets, on Linkedin.