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A 10 pages term paper on Waking Up IBM: How a Gang of Unlikely Rebels Transformed Big Blue

Executive Summary

“IBM was a has-been. Fujitsu, Digital Equipment, and Compaq were hammering down its hardware margins. EDS and Andersen Consulting were stealing the hearts of CIOs. Intel and Microsoft were running away with PC profits. Today, Big Blue is back on top, a leader in e-business services” (Gary, 2000). This is the story of how the company, which had lagged behind every computer trend since the mainframe, caught the Internet wave. Much of the credit for the turnaround goes to a small band of activists who built a bonfire under IBM’s rather broad behind. It started in February 1994, when a lone midlevel IBM programmer watched Sun Microsystems pirate IBM’s Winter Olympics data for its own rogue Web site. Dave Grossman knew that IBM’s muckety-mucks were clueless about the Web. But he was convinced that if nothing changed Sun would eat Big Blue’s lunch. Frustrated in his attempts to warn executives over the phone, he drove down to Armonk, walked straight into headquarters with a UNIX workstation in his arms, set it up in a closet, and demonstrated the future of computing to a trio of IBM execs. One of them was John Patrick, head of marketing for the hugely successful ThinkPad, who quickly became his mentor. Together, building simultaneously from the top and the bottom of the organization through an ever-widening grassroots coalition of technicians and executives, they put IBM on the Web and morphed it into an e-business powerhouse. People who want to foment similarly successful insurrections can learn a lot from their example.

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           This remarkable story of the turn around of the company happened due to the inventiveness and passion of the lower levels of management and not from the top. The conventional and orthodox methods may be long established and approved but a flash of fresh ideas can bring about an outstanding success story. This method if applied to other corporation can also yield positive results.

           Therefore, it is concluded that develop precisely those skills that will most help the organization achieve its vision. Strategic action learning projects (leadership development program built around real organizational challenges and opportunities) can be used to enhance the success of strategic projects and turn your strategic initiatives into opportunities for leadership and organizational development.

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           At that time of stressful condition when IBM's executives and managers were too busy fighting their unsolved problems, the company's once invincible leadership position was in terrible situation. The company was among the top list of most admired corporations in the mid-1980's but the dreadful situation of it’s descend started in early 1990s. Intel and Microsoft were running away with PC profits. Customers were complaining the company's progress.” By the end of 1994, Lou Gerstner's first full year as CEO, the company had racked up $15 billion in cumulative losses over the previous three years, and its market cap had plummeted from a high of $105 billion to $32 billion. Armchair consultants were nearly unanimous in their view: Big Blue should be broken up.” (Garry, 2000)


Organizational System

           Corporations are both spiritual and material in nature. In their youth, they possess spiritual rather than material assets. In decline, this is reverse. Health is maintained by unifying the spiritual and material assets. The purpose of the business organization is to create real wealth by serving its [stakeholder]. It is a function of leadership to instill and reinforce social purpose.

           It is almost impossible to focus on everything at once. We have to understand which individual, team, and organizational objects (capabilities) are mission critical. Organizations need more people with their eye on the big picture, taking initiative, and producing results. Leadership development programs should help employees:

  • Conquer critical business opportunities & challenges
  • Enhance competitive advantage
  • Increase value delivered to customers
  • Translate strategy into action
  • Develop future leaders
  • Identify new opportunities
  • Management or Leadership

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           Areas of skills and practices are categorized according to the four major functions of management, including planning, organizing, leading and coordinating. Introductory texts in management often organize their topics according to the same or similar categorization. However, the four functions are actually highly integrated when carried out in the day-to-day realities of running an organization.

Focus, commitment, and capability are the three crucial ingredients for attaining results. One can have a great vision (focus) and all the commitment in the world, but if a person doesn’t have the skills for the job, he/she is not going to succeed. Focus, commitment and capability should all be geared to the execution of strategy.

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           Managers maintain the status quo; leaders take their organizations to new heights. The point is not simply to understand the world but to change it (Karl Marx). The ultimate challenge of leaders who are senior managers is to develop the next generation of leaders more capable than themselves (Ulrich, 1998). The core purpose of strategic leadership development is not to build a small pool of successors to senior management, but to create a talent pool of strategic leaders at all levels of the organization, and to cultivate and refine the managerial talents needed to move the organization toward its strategic objectives  (Vicere & Fulmer, 1998). Competencies (skills) without results are useless. Results without competencies will be erratic, unreliable, and difficult to replicate in new situations. By understanding the link between competencies and results, we can identify and develop throughout the organization precisely those competencies and perspectives that will most help the company achieve its long-term strategic objectives (Ulrich, 1999).


           As business has become more competitive, the need to maximize the use of human resources has become a critical factor for success. Many organizations are moving toward a team-based and empowered workforce, pushing responsibility and decision-making downward in the organization and dramatically changing the nature of the management of human resources. The in-depth study of organizational change, with an emphasis on topics related to envisioning change, methods of change, implementing change, the recipients of change, resistance to change, and change agents. The focus should be on understanding change management within the framework of current issues and topics such as transformational leadership, empowerment, “stretch”, and commitment, teamwork, and culture change, and gaining mastery of tools and techniques to facilitate the implementation of large scale organizational change.

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           Leadership development (LD) involves a lot more than a few well-designed workshops. It is crucial, first, to align your leadership development efforts with your organization's vision, strategy, and culture. Secondly, it is necessary to understand what all the leadership development components and options are before committing to particular programs, methods, or LD consultants. Finally, it is imperative that the organization should broaden the horizons to include individual, team, and organizational development in the leadership development efforts. Proper design of leadership development strategy will help enhance the impact, effectiveness, balance, and strategic relevance of LD efforts. One of the executives present during the presentation was John Patrick, who had been head of marketing for the hugely successful ThinkPad laptop computer and was working in corporate strategy. Patrick was quick to see the potential of this new idea and hired Grossman to work with him.

Challenges Anticipated In Future OF Organization

           The purpose of the study is an inquiry into key processes of managerial and organizational life—how individuals, groups, and organizations organize, and how managers lead. An underlying theme of the research is the ethical dimensions of organizational life and management.  Is organizational theory and behavior relevant to the case of IBM current and future prospects? It is examined how organizations interact with other organizations in their environment.

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           The first and most important act of business is the creative act: the creation of new and improve products, services, selling and means of production. Change, youthfulness and energy are requirements until death. (Those who lean toward creativity will be required to sacrifice for the sake of administrative sanity.) The task of leaders is to create or recognize the current challenge, respond creatively, and avoid a condition of ease. Reliance on yesterday's successful response in the face of new challenges leads to decline. (It is an irony of life that satisfaction and security are the enemies of excellence.) The urgency to decide and act promptly leads to expansion and advance. Prompt action must be balanced by deliberate planning. There will always be conflict between promptness and planning. Advancing cultures are socially unifying and become diverse in character. Leaders must act to unify diverse talents and traits. Leaders must actively resist the tendency to attract and promote like personalities and skills. Specialized knowledge and skills and the integration of those competencies must be pursued vigorously. Efficient methods are derived from specialized competence; however, specialized competence leads to inefficient methods. Efficient administration is required to achieve integration and performance as differentiation increases. Unchecked administration inevitably leads to bureaucracy and the decline of creativity and wealth creation. Decisions should be made by those on-the-spot, close to the customer, product or service. The further decisions are removed from the point of action and knowledge, the worse the quality and the higher the cost. Consensus is a sign of maturity and health.

Works Cited

Hamel, Gary. (2000) Waking Up IBM: How a Gang of Unlikely Rebels Transformed Big Blue.Publisher: Harvard Business Review, July-August 2000.

Ulrich, Dave "Intellectual Capital = Competence x Commitment," Sloan Management Review (Winter 1998): 15-26.

Ulrich, Dave. Results Based Leadership (Harvard Business School Press 1999).

Vicere, Albert A., & Robert M. Fulmer. Leadership by Design: How Benchmark Companies Sustain Success through Investment in Continuous Learning (Harvard Business School Press 1998).


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