Managing for the Long Term -- examining how a focus on maximizing shareholder value can threaten companies’ health and financial performance.

"I think it’s hard for a CEO to change his or her spots. Some can, but most can’t. So in most cases you’re going to need a new leader. And the board of directors really has to buy into it, because not only are you changing your strategy, you’re changing your numbers. You must have a story to tell, for example: 'For the next three years, we’re not going to deliver 10% EPS growth. It’s going to be 5% while we invest in the future. And that’s not going to pay off until after three years, so you’ll have to be patient.' You have to be very, very clear about it."

https://hbr.org/2017/05/managing-for-the-long-term#the-error-at-the-heart-of-corporate-leadership

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Public companies are at the beck and call of Wall Street. There is no thought that a company can "deliver shareholder results" and also grow a mature company. Most big public companies manage quarter to quarter only, not for the long term. Older, formerly brilliant companies like IBM cant change with the times due to their 100% being held back by Wall Street, and their old school methods and having to make every decision based on political correctness first.

IBM in particular has become to large and unwieldy to manage effectively when they are trying to transform into a services company, which they absolutely S--- AT.

That's a great plan. Only one problem: IBM has had a 10% annual EPS decline for most of Rometty's tenure. Even 5% growth would be miraculous.

Here are the 3 problems IBM address:

1. The 1950's are NOT coming back. Promoting executives who think 'Ike is swell' has got to stop. I have never seen so many, who are so clueless.

2. Dump the dividend. It artificially props up the IBM stock price and siphons away cash that could be invested in desperately needed research.

3. Forget Watson. Rigging Jeopardy so Watson could win was a neat trick, but no one is falling for that stunt any longer. IBM tells us "Watson means Artificial Intelligence". The world is starting to understand how "Watson means Absolutely Nothing". You can do more with open source at a fraction of the price.

IBM needs to clean house. Putting their CEO out to pasture will not be enough.

Thread regarding IBM layoffs

Managing for the Long Term -- examining how a focus on maximizing shareholder value can threaten companies’ health and financial performance.

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