IBM’s Organizational Structural Change Driven by Market Demand and Strategic Planning Case Study

Introduction

Change in structure means modifying how things are done in an industry, market, or country, pushed by economic factors. During an organization’s planning, the top management lays out a strategy for all individuals in the corporation. The system is a guideline to meet the firm’s goals and objectives.

Different factors contribute to a change from the standard way of business operation. Some reasons aim to change technology or demand rates from consumers, who are important stakeholders. This report is based on a case study of the IBM company that was forced to change due to losses. It uses design concepts to analyze how the firm changed its structure to realize new goals.

Change Challenges and Required Organizational Structure Adjustments at IBM

Customers of the IBM company needed services rather than the hardware the company was selling to them. According to the case study by Bivins (2014), it was a difficult moment for workers in the firm since they were running into losses. The employees were told to leave their jobs, and the top managers stepped down.

Change is only sometimes acceptable to many people, especially those who have worked in a department for some time. Some resist change because they have become complacent and are not ready to improve. Other reasons that are unethical and do not want to lose any of their earnings are disallowed (‌‌Nicotera, 2019). In this case, the company had workers willing to change since there was a shift in demand.

The company needed to prepare for the much-needed change and faced challenges. These challenges included the fact that the employees needed more research on transformative change. The firm’s objectives were altered to match the market needs. This was a challenge for employees since they were tasked with adjusting to new targets outside the company’s plan. The organization’s culture had to change to accommodate the dynamic situation of the market (Bivins, 2014). People needed to be more committed and have enough executive support.

Contribution of IBM’s New Organizational Structure to Its Strategy

A change in the structure of an organization leads to a company’s strategy on how to satisfy customers. Profit is the primary objective of a business entity during its daily operation. IBM sought to make money by meeting clients’ needs and keeping the company operational. This led to the modification of the firm’s structure in different areas, which led to the achievement of its strategy in the market.

The sales team was instructed to use templates to keep the customer’s details, including opportunities, projects, and necessary contact information. The details were keyed into the opportunity management system, and the task force ensured that the new owner accepted them (Burnes, 2020). The sales team presented a scripted presentation to every client. That process contributed to the strategy since it aligned with customers’ changing needs.

Applying the Organizational Life Cycle Concept to IBM

A change in the working system was conducted in the IBM company, ensuring a smooth transition among employees. Different aspects of the company changed: mission, primary skills and objectives, roles, and responsibilities. Performance plans for every individual in the organization were developed. The plans were to show an employee’s performance at the year’s end and determine the compensation an individual deserved (Shrestha et al., 2019).

An employee would need to perform according to the standards set by the organization. The objectives were made to match the needs of the trading area. A questionnaire was used to collect data from employees and managers about their new roles and whether they liked them.

Employees were given updates in six months when the task force was operating to implement change. The calendar year for the IBM company was marked with deadlines that allowed everything to be in order by the time of implementation. According to Bivins (2014), the implementation occurred in 1993, so they named it the ‘Big Bang.’ In this case, involving workers, customers, and management in the transition process was effective (Bivins, 2014). There were set deadlines, and this helped make changes in time to enable the organization to fit into the market.

The organizational life cycle is a series of steps that an organization undergoes from when it is created to its decline or termination. IBM underwent these steps from its creation to its decline and had to undergo significant changes to rise again. Like the other companies, different factors influenced IBM’s life.

These factors include business planning, marketing, strategic planning, and financial management. These factors affect a company’s time in the marketplace (Burnes, 2020). If mistakes are made during a particular stage in the cycle of an entity, they lead to reduced periods of life for the firm in the market.

The life cycle of an organization includes four steps: start-up, growth, maturity, and decline. The start-up stage is the period of founding the organization and includes activities carried out. Workers are hired, capital is gathered, and products are processed.

The growth stage allows the company to hire more workers and increase production. In this phase, the business establishes its position in the market. In the maturity stage, professional managers run the company’s daily operations. Operations are smooth, and employees are relaxed since they are used to the company.

The final stage is the decline phase, rebirth (Burnes, 2020). The business reduces its revenue, but owners mostly need to learn. IBM faced this step in the early 1990s. The organization took a step in its rebirth by transitioning from its way of doing business to fit the then market.

IBM’s Change Approach through the Experience Change Model

The IBM company uses a rational-empirical approach in transitioning the company to match the requirements of its clients. This method of change is based on the possibility of predicting people’s behavior. Employees were given different work plans with diverse incentives. Success in using this approach in implementing change depends on the ability to have effective communication between the management and employees.

The IBM firm ensured that new guidelines with different targets were given to the employees. The change could be conducted due to the emergence of an opportunity. Change occurs only sometimes due to a problem arising in the company (Shrestha et al., 2019). The IBM corporation ensured that it implemented a change to seize the opportunity of making money from customers’ needs to provide services.

The rational-empirical approach assumes that people will pay more attention to self-interest. The workers of the IBM company are assumed to follow suit to hit set targets for the organization. Meeting the new set of objectives is checked annually to ascertain the performance of an individual and is awarded based on performance. Given the situation in which the management knew the needs of their clients, it was easier to make decisions that would favor the company in obtaining profits. Employees who could judge the change the company needed were given incentives for this approach.

Resistance to change is always expected in different places of work. Most people feel insecure about welcoming a change in their daily planning and working activities (Cantner et al., 2020). Some individuals fear being exposed in their business and losing their jobs. Others feel afraid since the change must be accompanied by training and application of equipment that might be thought to be complicated and unfriendly before they get used to them.

In the approach used by IBM, people would find it hard to resist change. The first step in change is accepting the need to do things differently because it breaks the status quo and helps build up a new operation. This is because of the need to satisfy customers’ needs and make profits for the company to rebirth. The phase of the company in its life cycle could not allow its workers to resist any change that would save the organization from termination. Any change meant for the company’s good would be highly welcomed.

Overall Assessment of IBM’s Change Management Approach

The IBM company set an example for different organizations across the globe in its implementation of change and revenue collected. If a change is needed and the management fails to perform it, this could lead to the firm’s termination. A change could be needed due to a shift in the current technology and customers’ needs.

Customers should form the basis of an organization setting with their dynamic shifts in demand. Production and services companies today regard clients as critical stakeholders in their organizational setup (Bivins, 2014). An effective customer service department is usually set aside to ensure clients are always treated appropriately.

A complete turnover was completed, and each individual was posted to a new role. According to the case study by Bivins (2014), this meant that their clients were informed of the changes before they took place. This ensured that the loyalty of existing customers was gained to avoid underperformance. The management was well aware of the changes in every department of the organization. Sessions were conducted to pass information effectively through large halls and one-on-one meetings between employees and those implementing change.

Skill development is essential in a company’s growth and managing high-performance levels for a long time. Although the IBM company needed to prepare to conduct change, it used a transition method that favored employees, especially those in the sales team, to ensure its brand image was well-portrayed (Bivins, 2014). The employees were encouraged to keep a profile of their clients.

Conclusion

The implementation of change is always a challenging task for an organization. Knowing the business of key clients of the IBM company played an important role in ensuring a successful change in the company. A company that offers solutions to its customers’ needs is always likely to prosper despite competition in the market.

The IBM firm ensured it took care of its business premises by maintaining service operations. It ensured the availability of services needed within the organization. The management of an entity tends to focus on the need for change externally. If they fail to conduct an internal investigation into the need for change, there is usually a problematic moment in establishing the company in the market.

References

Bivins, S. S. (2014). A transformational change at IBM. Project Management Institute. Web.

Burnes, B. (2020). The Origins of Lewin’s three-step model of change. The Journal of Applied Behavioral Science, 56(1), 32–59. Web.

‌Cantner, U., Cunningham, J. A., Lehmann, E. E., & Menter, M. (2020). Entrepreneurial ecosystems: A dynamic lifecycle model. Small Business Economics. Web.

Nicotera, A. M. (Ed.). (2019). Origins and traditions of organizational communication: A comprehensive introduction to the field. Routledge.

Shrestha, Y. R., Ben-Menahem, S. M., & Von Krogh, G. (2019). Organizational decision-making structures in the age of artificial intelligence. California Management Review, 61(4), 66-83. Web.‌