Your old pal DT here. I thought the time had come to look back over my machinations to see if I was reasonably accurate, or was I simply blowing smoke? Obviously, this is a self-assessment, at a time of my choosing, which makes it about as useful as Checkpoint, (BTW, Checkpoint was pre-ordained. No one got to have a vote, despite what was said at the time by HR), but it’s the best I can do at the moment, (wow, also just like Checkpoint). So let dig right in.
Subject: Sales. My prediction: Move to a BP model, fire a sh-t load of sales people. Grade A. Well this is the easiest A I will give myself. This move to BP’s and fire a kalizzion sales people has been around since about 1872. We just didn’t make it official until a fairly recently. As I have said, the discussions around this became very heated. Think about how many senior sales leaders you may know (B’s, not C’s), have quit in the past few years. They didn’t retire. They left for Salesforce, Oracle, Microsoft, AWS etc. Speaking of C’s, why we call them VP’s is beyond me. Director Deluxe might be a better title. OK. I digress. My apologies. That’s so elitist. (I’m sure Bain/BCG could come up with that idea, sell it to us as part of their transformation mantra, and make a quick $5m). Anyway, I give myself an A.
Subject: Digital. My prediction. Move to digital, find it doesn’t fu----g work and move back to sales people. Grade B. OK, I’m slightly cheating here. I NEVER stated this quite as emphatically at the time, but I did say digital wouldn’t carry the load. I also said that Rometty just couldn’t get her head around all the sellers we had. By 2016 this view had permeated to a few meaningful AA’s I spoke to, “It’s all self-service DT.” “The customer already knows what he wants DT.” Meanwhile a few buddies in the 9-10 range recently told me that they received a well over 15% base pay increase, as IBM attempts to keep the people that Rometty disparaged. Also, why the recent sales reorg? Why not? It was January. So, I am going easy on myself here. (Again just like Checkpoint). So a B.
Subject: Co_Chair. My prediction. Gary Cohn would move through the organization to take a deep look at operations etc. Grade F. I was hoping that he would really dig in and focus on execution. I should have listened to a buddy of mine who said Cohn was here to primarily work with customers etc. Well they were right, I was wrong. Clearly hope wasn’t a strategy in this case. So a big fat F.
Subject: Acquisitions. My prediction. We have no fu----g money so no large scale purchases. Grade A. I said nothing above two billion. The reason is simple, we have no fu----g money. Just to make that clear, we have no fu----g money. Got that? BTW, any acquisitions we do make are so small that they barely move the top line, especially when you consider the growth of the competition. Don’t be fooled by all the announcements. On a revenue level they are very small potatoes. So an easy A.
Subject: Red Hat. My prediction. We overpaid for Rometty’s ego trip (also see Watson Health filed under “ego”), and revenue would not grow enough. Grade B. As I stated at the time, several people I know worked on the RH deal. I was told, and I mentioned it here, that as I didn’t work on it, and therefore didn’t really understand it, I should give it time as it was a good deal. So sure RH grew 19% in 2021, according to 4Q results (19% YtoY), so that's great. Notice we don’t actually say what the RH number is. Had it been meaningful, (like over $10b. Hint, it was nowhere near), we would have shouted it from the rooftops. However, as I said at the time, what a huge amount of resources, human energy, money for that relative minor revenue. So a soft B for DT.
Subject: Layoffs. My prediction. A faster move to 225,000 WW employees. Grade B-. This is a big one. It’s remarkable how low this employment number now is, when you consider at the dawn of the Dark Ages (Rometty AKA The Grim Reaper), we had over 400,000 employees and $110b in revenue. The actual WW number today is ~250,000. (Yes, I know our Annual Report shows ~280,000, but this is a transitional number. Kavanaugh acknowledges the ~250,000 number. Do you really think we hired 30,000 people? If you do, I have a bridge in Brooklyn I’d like to sell you). And if you look at our share of tech spend ten years ago, well I don’t know, and I can't be bothered to look, but clearly it’s much less. We need to get to over $300k per employee in revenue if we’re to focus on high margin software etc. Krishna’s more “kind layoffs” or no layoffs (yeah right), reflects his disposition. Krishna understands the damage done by Rometty to moral and skills (oh the irony). Re target, I was close enough here, that I am giving myself a B-.
Subject: Spin offs. My prediction. Too much time and energy. Grade C. All the focus from Rometty on dumping legacy products caused harm in management time than we gained. Ditto for Krishna. Still waiting to see if I am right. DT needs to improve in this area. Grade C.
Subject. The BoD. My prediction: Useless is as useless does. Another easy A. A lead director who has been on the board since 2006!! A board made up of non-industry people. BoD meetings that make you want to reach for the rat poison and vomit bucket. I mean COME ON. What do you expect? Sh-t, they couldn’t fire Rometty, they let employees down, and most importantly from an, oh I don’t know, do your fu----g job point of view, they failed shareholders miserably. The sad part is the pressure is reduced given the 6% growth in Q4. “See, our strategy of having no idea what the fu-k we’re doing is paying off. BTW, what is this Cloud thing again?” No changes from that sorry bunch. So an A.
Subject: Krishna. My prediction. A good guy, give him time. Grade C. I’ll admit, I’m slightly biased here. As I said, “He’s a great guy to have cocktails with.” Well he’s certainly done some more “bold” things that seem to actually make sense verses Rometty, (not difficult). And remember, he was dealt a crummy hand. However, he has yet to grasp the much thornier issues of investment, dividend, and some AA’s. (Harder decisions are to come). I say “some AA’s” deliberately. A few Rometty sycophants have been moved out. The former CHRO for one, (who turned HR into a War Machine against our own employees, and got us sued so often that even the usually ultra-cautious EEOC couldn't ignore it). Also van Kralingen who was head of sales for about thirty seconds (holy fu----g sh-t!!). The various CMO’s who were so far out out of their depth they needed kids floaties to prevent from drowning. But he still has much to do. Primarily Tony Soprano (Kavanaugh). How much failure do you need before you make a move? Remember he was the “Transformation Exec” at one time. That means “workforce” (Dinobabies anyone?) in case you’re confused. How’d that work out? I am starting to hear rumors however that Kavanaugh might be on his way out. Keep your fingers crossed. Shame he would lose his $10m a year. Whatever WILL he do? Meanwhile, rather cleverly K&K set growth targets so low, short of abject catastrophe, managing 5% growth, then over achieving should not be difficult. So if your objective is mediocrity, then apparently K&K are your guys. So aim low guys, aim low. As for Krishna/IBM/CHRO saying absolutely NO age discrimination at IBM EVER!…..It reminds me of Baghdad Bob saying no American tanks were in Iraq when American tanks were literally behind him. However, and to be fair, I do believe Krishna is a caretaker, stabilize the ship kind of CEO, whereas Rometty wanted to be THE CEO. Then onto politics. And once more, I promise to explain that sentence at some point. (No she was not going to run for office. Good heavens no, nothing so grubby as that). So a disappointing C
Subject Bain/BCG. My prediction. They’re still here. Grade A. They’re still here. Why won’t these fu----s fu-k off? Simple. We keep paying ‘em (and hiring as employees), that’s why. I wonder how well their advice worked out for HP (HPQ, HPE, DCX), Intel, and us. The amount of shareholder value they have collectively destroyed (to use one Wall Street metric), and lawsuits they prompted (for all three companies), is astronomical. Need I say more. They also promoted to the tech world, “De-layering,” “Upside Down Workforce Pyramid,” “Early Career,” (at HP/Intel), “Early Professional” (at IBM), “Reskilling/Upskilling” (seriously, WTF?) and more. So an easy, and sadly predicable A.
Until next time
DT