A View from Beneath the Dancing Elephant – another book

Now this book is different from Cringely’s. It was written by Peter E. Greulich, an insider. He tells the story of the Watsons in IBM and the impact they had on a positive corporate culture. Something inexistent today, as the author believes.
While Cringely relies on information he can gather from the outside, Peter E. Greulich has worked for IBM for about 30 years in various positions, including management. He has many interesting stories to tell, but the essence of the book is his grief with IBM’s current situation and how it came to it. For him it started with the reign of the white knight in the person of Louis V. Gerstner, Jr. who at first was his hero. Later, especially after changing the retirement schema, he started to feel, that IBM was going in the wrong direction. With Sam Palmisano, it got worse. Management started to use rules and tools, that were either incomplete or not understood. As an example he recalls Tivoli Configuration Manager. At first a game changing product, but for the lack of continuous developement it became obsolete.

The development director said, “TCM is a cash cow. Why should I spend money on a product that is nothing but pure profit?” He believed that products in this market were commodities with low margins, and should be left to others to waste their profits on. We never convinced him otherwise.

The cow in „cash cow“ is quite a good example for this. When you got a cow you have still to feed it and you have to look for a replacement – its offsprings normally – while the profit you make with the milk, pays also for growing (cash-)cow. But until the old cash cow becomes a poor dog (meat loaf), it is the duty of the product manager to push the poor dog as far in the future as possible. In the software business that means constant upgrades and enhancements and at least some marketing, until nobody has any new ideas (good ideas that is) to keep the milk flowing. By then, the rising star should be ready to take over and eventually become the next cash cow. That’s the ideal world and it does not always happen but still, Just abandoning a product, just because one thinks it good enough right now, without having the next thing in the drawer, is rather short-sighted.

The other story was with „Lean“, even so he does not mention the word. IBM used Toyota’s „Lean“ initiative in a perverted kind of way. The real „Lean“ wants to free resources by using everyone’s knowledge to eliminate inefficiency AND augment quality. The idea is not to find ways to fire people but to free resources to use them better. That’s one of the main principles of Lean, not to fire people. Greulich recounts how he lived through that time, when more and more of his friends disappeared and how that hurt his and others work. Key people were „resource actioned“ (fired), because that department just had a quota to fill. It works exactly like Microsoft’s performance management. If you have a bad quarter, you are a goner. Does not matter, if your family just died in a train crash. Or in other words, if you had Einstein, Newton, Curie and Pauli on your team, Curie probably would have let go, due to her morning sickness and the resulting slightly lower performance at 7:30 AM. With that IBM became even more inefficient and the quality dropped. To make up for the loss, IBM bought more and more other companies for a lot of money, only to bluewash and crush them. Small example: Nitix. Developing their own products ahead of time with freed resources from a proper Lean program, could have saved and made IBM billions (in the case of Nitix, IBM once had a lot more Linux developers). But that would have cost shareholder-value. Now that’s bad, if the friends at Wallstreet don’t like you anymore because you don’t fill their pockets enough. It might be a wild guess, but if you look a the prices IBM paid for some companies and the number of products that after a few years are still alive, one gets some doubts about that strategy.
This kind of senseless loss of manpower (today: knowledge drain), did not happen 20 years before, when Greulich had a hard time himself as a single parent with three small kids. His friends at IBM and his manager just helped him through this time and he is forever grateful. First, it did not hurt IBM, because the work got done anyway and second, Greulich committed himself even more. If that isn’t a win-win situation? And don’t tell me that isn’t possible today. Many companies all over the world show that you can prosper and accepting a social responsibility.*
The numbers are also different to Cringeley’s. According to Greulich, for every old IBMer (in the US, Europe and so on) let go, three to five Indians or Chinese developers were hired and still they can not match the quality and therefore the speed of the old team. Not even financially that makes sense. As a side note, many big european companies in-source again. Even Apple starts to build computers in the US. Do they probably know something IBM does not? None of all those companies do that because suddenly labor costs dropped below China’s, oh no, they do it because it makes sense financially. More money in the long run!

Worth a read? Definitely. It does give you a point of view of somebody inside. Cringely looks for sensation (that’s his job) and Greulich is just sad. Somewhere in the middle lies probably the truth, but all in all, the pictures match.

A View from Beneath the Dancing Elephant
Rediscovering IBM’s Corporate Constitution

by Peter E. Greulich

* One of the best example came from the union representative at Porsche during an interview at Le Mans. You can be nice to your workforce and demand that extra effort if somebody wants to work for Porsche. That’s the view of the „Betriebsrat„! In early days the enemy inside, today an important asset to the company. No wonder VW wanted one for their american workforce, because it pays off.