Irving Wladawsky-Berger

The Decline, Fall, and (Hopefully) Reinvention of a Giant

I often start my seminars on business transformation by discussing why innovation is not an option, but rather an imperative for any company, -  no matter how big, powerful and successful.  Failure to innovate will invariably get a company into serious trouble, perhaps even impacting its ability to survive into the future, especially in times of rapid change and fierce competition.  To bring the innovation imperative to life with a concrete example, I use the IBM near-death experience that I lived through in the early 1990s.

I illustrate IBM’s rapid decline by first showing a Fortune cover  from 1985 about America’s most admired corporation based on Fortune’s yearly survey of company reputations.  IBM was then at the very top.  But, by the early 1990s, the picture had drastically changed.  This is graphically shown in a Fortune cover and article from May 3, 1993: “Dinosaurs? They were a trio of the biggest, most fearsome companies on earth. Here's how earnest executives managed them into historic decline.”  The hapless dinosaurs were IBM, Sears and . . . General Motors.

I was reminded of this 1993 article when reading about GM’s declaration of bankruptcy on June 1.  Luckily for IBM, after hitting bottom the company took the necessary actions and was able to successfully reinvent itself.  Not only was IBM able to survive, but it once more attained a leadership position in the IT industry.  The experience was very painful, even humiliating for those of us who went through it.  But at least it was relatively short and was followed a few years later by a very sweet redemption, including this 1999 Fortune article IBM: From Big Blue Dinosaur To E-Business Animal.

Complex Organizational Systems: Some Common Principles

Last week I attended the second Engineering Systems Symposium at MIT.  The Symposium was co-sponsored by MIT’s Engineering Systems Division and CESUN - the Council of Engineering Systems Universities.   

Chuck Vest, - former MIT president, and now head of the National Academy of Engineering, - gave an excellent keynote address.  He talked about some the grand challenges that the field of engineering faces.  Only 4.5 percent of US university graduates have degrees in engineering, he said, a number substantially lower that in other parts of the world.  Large-scale system challenges, he added, offer us the opportunity to reinvigorate engineering education and capture the imagination and intellect of the next generation of engineering leaders.

Following Vest’s keynote, I participated in a panel on Critical Issues and Grand Challenges, in which we discussed the kinds of complex and exciting societal challenges Chuck told us are needed to inject excitement into engineering.  The panel was moderated by Jim Champy, head of consulting and strategy at Perot Systems and co-author of Reingeneering the Corporation, the best-seller that launched the business process re-engineering revolution in the early 1990s.

Reflections from a "Mutt" on Empathy and Diversity

In his first press conference as President-elect on November 7, Barack Obama talked about the dog he was going to get for his daughters Malia and Sasha.  He mentioned that since Malia is allergic, the family is looking for a hypoallergenic breed.  “There are a number of breeds that are hypoallergenic, but on the other hand our preference is to get a shelter dog, but obviously, a lot of the shelter dogs are mutts like me,” he said.

Obama referred to himself as a mutt because of his mixed racial heritage.  But his remarks got me thinking about my own mixed cultural heritage.  My father Julius was born in a small town in Eastern Poland called Drohiczyn.  My mother, Rachel was also born in a small town, originally called Pruzana in Poland, now part of Belarus.  They came to Cuba in the 1920's and 1930's respectively, where I was born and grew up until the whole family moved to Chicago in 1960.  I thus combine the Eastern European Jewish background I inherited from my parents, with the Latin roots of my first fifteen years in Cuba, with my American heritage of the last several decades. 

My background is not all that unusual for many immigrants to the US, but it is right up there in the mutt, multi-cultural category.  My native tongue is Spanish, my parents native tongue was Yiddish, and since 1960 I have been immersed in English.  I learned Yiddish as a child, both from hearing my parents speak it at home and in the secular, Jewish school I attended in Havana.  I am fluent in Spanish, and speak it often with family, friends and colleagues, as well as with the large number of people living in the US for whom Spanish is their native tongue.

But, English is the language I speak best by far.  From my third year of high school on, my education was totally in English.  I use English almost exclusively in my work, except when I travel to Spanish speaking countries.  While I give talks and presentations in Spanish during such travels, I am clearly much more fluent in English.  I would be really hard pressed to write this blog in Spanish.

How Can “The Best and Brightest” Get It So Wrong?

Last week I moderated a panel on the societal implications of the financial crisis as part of the Westport Library Community Conversation series.  Our panel discussed a variety of topics, and had a lively dialogue with a very engaged, smart and opinionated audience.

I started out by asking each of our panel members to share with us their personal view of the causes of the financial crisis.  What happened?  One of our panelists, Dan Gross, -  a financial and economics writer and senior editor at Newsweek, - recently published a book on the financial crisis, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation.  I asked Dan to go first.

His answer is along the lines of this Newsweek article that came out around the time his book was published.  He writes in the article

“The people who blew up the system weren't anarchists.  They were members of the club: central bankers and private-equity honchos, hedge-fund geniuses and Ph.D. economists, CEOs and investment bankers.  And the (overwhelmingly legal) con they perpetuated on themselves, their colleagues, their shareholders and creditors, and, ultimately, on us taxpayers makes Madoff's sins look like child's play.”

“. . . during the late, great credit bubble, an Era of Cheap Money devolved into an Era of Dumb Money, and then into an Era of Dumber Money. The culture of Wall Street and the rise of the shadow banking system spawned reckless, largely unregulated lending, borrowing, and trading, a financial culture that preferred short-term fees to long-term gains, and that confused liquidity (access to other people's money) with cash on hand.  Looking back, the investors who believed the stories told by Madoff and Stanford—that they could deliver steady, positive, market-beating returns in any type of climate, despite the manifest failure of virtually every other money manager to do so—were obviously foolish.  But our best financial minds also spun tales and theories with great assurance, making seemingly irrational and unprecedented activity seem completely sensible. And we bought them.”

What Makes Us Happy?

What does it mean to be a good company?  Why is it that some companies are able to survive a major crisis that like some mass extinction evolutionary event will obliterate many of their competitors or reduce them to shadows of their former selves?  What is the magical combination of organizational resiliency, culture and leadership that enables such companies to adapt to rapidly changing market environments? 

These are questions I have been thinking about a lot in the last few years, especially as part of my teaching responsibilities at MIT and Imperial College.

A few weeks ago, I came across an excellent article, asking related but much, much tougher questions.  “What Makes Us Happy?” is the title of the article by Joshua Wolf Shenk in the June issue of The Atlantic.  It is based on a study of adult development called the Grant Study.  The study was started in 1937 by selecting a group of healthy, well adjusted Harvard undergraduates and has subsequently followed its subjects for more than 70 years.