If my foresight were as clear as my hindsight, I should be better off by a damned sight.

J. L. Mott, President of the Iron and Steel Association, 1873

IBM's Twenty-First Century CEO Performance

Published July 19, 2021

An Image of 21st Century IBM History: Dancing Elephants, Earnings-per-Share Roadmaps, Divestiture and Breakup Strategies.

IBM's 21st Century Chief Executive Officer (CEO) Performance

1. Arvind Krishna's Performance

As always, the perspectives shared here are not Wall Street quarterly perspectives but a businessman’s perspective of years, decades, and, at times, centuries. So, don't expect to find insights into minor bumps on the business roadmap like one or two quarters of revenue growth.

Image of two chief executives (Arvind Krishna and the exit of Jim Whitehurst) and the tagline: Exit James Whitehurst, the Madness Continues.

Jim Whitehurst's exit is a major pothole

After all, Ginni had some of these positive, short-term growth "irregularities" too, but, after the final results were in, she turned in horrible year-over-year and long-term, revenue growth numbers.

The First 100 Day's Performance

Wednesday, July 15, 2020 marked the end of The First 100 Days for Arvind Krishna, IBM’s chief executive officer, and James M. Whitehurst, the corporation’s new president.

What does this one-hundred-day checkpoint reveal?

Image of two chief executives (Arvind Krishna and Jim Whitehurst) and the tagline: Arvind Krishna's first 100 days.

Arvind missed his chance for change

Is there an IBM “New Deal?” Or is Arvind serving up the same old Gerstner-Palmisano-Rometty (GPR) stuff?

The First Year's Performance

At the end of Arvind Krishna’s first fiscal year as chief executive officer his performance markers were nine downers and a flat note.

It was not a very impressive start. Is Arvind Krishna proving to be evolutionary, revolutionary, or more of the same?

Image of two chief executives (Arvind Krishna and Jim Whitehurst) and the tagline: Arvind Krishna and James Whitehurst First Year.

What happens now that Jim is gone?

Let’s graph Krishna’s 2020 performance, and then put that performance within the context of the corporation’s 21st Century results.

An analysis of the Kyndryl (Newco) strategy

The announcement of the breakup of IBM will only exacerbate the company’s current most-pressing problem, not cure it.

The spike in stock price is a “Wall Street” phenomenon, not a “Main Street” or “stakeholder” affirmation of the decision.

Image of an elephant being torn apart by a sandstorm with the tagline: The Disintegration of IBM:

A John Akers' déjà vu moment

Reality will set in soon enough because when it comes to business fundamentals, Main Street and corporate stakeholders have proven themselves better able to understand long-term realities than Wall Street.

Was Martin Schroeter a good choice as chief executive officer?

Martin’s chief executive track record (CFO) is that of a financially-minded individual whose actions seem to indicate that he has little understanding of what it takes to build, maintain, and grow a sales organization.

From the press release it is stated that Mr. Schroeter was IBM’s CFO from 2014 to 2017.

Image of jet breaking sound barrier with tagline: Getting into business requires a sell ... staying in business requires sales productivity.

Really! After this IBM performance?

Does his track record as IBM's CFO indicate that he was a good choice?

2. Virginia M. (Ginni) Rometty's Performance

Rometty performance Overview and Home Page

Virginia M. (Ginni) Rometty never understood that the individuals in her salesforce who gave their customers one hundred percent could carry only twenty-five percent of the burden. They needed a chief executive officer who could build an organization to provide the other seventy-five percent that makes selling possible.

Slide showing Virginia M. (Ginni) Rometty's eight key performance indicators.

Perhaps her failures over the last eight years can mentor today’s chief executive officers, and if these past mistakes are corrected, all stakeholders should see better corporate performance ahead—if not, they should expect more of the same.

The following key performance indicators examine the Rometty years (2012-19) and answer the highlighted questions:

shareholder value

Questions answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #1:

What were shareholders’ returns during this time frame?
How did these returns compare with a similar investment in some commonly held, lower-risk index funds?

Slide showing Virginia M. (Ginni) Rometty's first key performance (KPI) metric: Maximizing / Minimizing Shareholder Value.

Was Rometty’s pay commensurate with her shareholder performance?

shareholder risk

Question answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #2:

What has been a major side effect of the corporation’s focus on growth through acquisitions instead of internal research and development?

Slide showing Virginia M. (Ginni) Rometty's second key performance (KPI) metric: Minimizing / Maximizing Shareholder Risk.

A Supply-Side Market Strategy

Questions answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #3:

How much money did IBM spend on share buybacks?
From the perspective of market value and share price, was this money well spent?

Slide showing Virginia M. (Ginni) Rometty's third key performance (KPI) metric: The failure of her

An Impotent Dividend Strategy

Questions answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #4:

How much money did Rometty spend on dividends?
Did raising dividends every year compensate for the market’s lack of confidence in Rometty’s leadership and short-term strategies?

Slide showing Virginia M. (Ginni) Rometty's fourth key performance (KPI) metric: The Failure of a Dividend Strategy.

A Pricey demand-Side Strategy

Questions answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #5:

How did the Red Hat acquisition affect market value?
What is the cornerstone of this acquisition’s success?

Slide showing Virginia M. (Ginni) Rometty's fifth key performance (KPI) metric: The Demand-Side Strategy Worked--at a Price

Does the acquisition play to IBM’s strengths?

Revenue and Profit Productivity

Questions answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #6:

How much did productivity fall?

What revenue and profit numbers could IBM have achieved in 2019 if it had kept its 2011 employee productivity in line with inflation?

Slide showing Virginia M. (Ginni) Rometty's sixth key performance (KPI) metric: Revenue and Profit Productivity Were a Disaster.

Revenue and Profit Growth

Questions answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #7:

Was IBM in transition or decline?
How many times did IBM have positive revenue and profit growth in the last eight years?

Slide showing Virginia M. (Ginni) Rometty's seventh key performance (KPI) metric: Revenue and Profit Growth Were in the Ditch.

Historically, was its performance better or worse?

Revenue and Profit Deterioration

Questions answered by Virginia M. (Ginni) Rometty's key performance indicator (KPI) #8:

How much have revenue and profit fallen in the last eight years?
Why did the divestiture of the x86-Server Division impact corporate sales and profitability?

Slide showing Virginia M. (Ginni) Rometty's eighth key performance (KPI) metric: Revenue and Profit Performance Deteriorated.

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