IBM at Pains to Evolve

IBM's (IBM) consulting group released a survey last week that spotlighted the most successful growth companies of the S&P Global 1200 index during the past decade. One glaring omission from the list: IBM.

The report's author, Vivek Kapur, a partner in IBM's Business Consulting Services unit, found that the companies best able to maximize growth and shareholder value excelled in three areas -- setting a strategic course, harnessing the necessary capabilities to pursue the course, and convincing the organization to follow it.

His own company "would have been strong on course, moderate-to-strong on capabilities, but conviction needs some work," says Kapur, noting that the latter is partly a function of time. IBM would have ranked high in shareholder return but below average in revenue growth, he added.

In one sense, IBM's absence from the list isn't really a surprise because Big Blue is awash in a multiyear makeover that's transformed the company from a technology hardware giant into a services-oriented company that has jettisoned PCs, hard-disk drives and flat-panel displays, among other things.

Only a month ago, IBM announced it would cut the jobs of as many as 13,000 workers in Europe, and reports emerged this weekend that the company is about to lose its long-standing microprocessor relationship with Apple(AAPL).

Despite the stumbles, IBM is ready to push forward on long-term plans, with investors hoping for marked results. The new IBM -- one led by consultants who study business plans as much as they do technology plans -- is finally taking shape.

The future for IBM is helping business customers get more out of technology through a combination of services, software and hardware. The change of course has been successful, Kapur says, with good adjustments in the company's capabilities. But getting the 130,000-plus workforce to move toward the goals remains a challenge.

Financially, IBM maintains a goal of organically driving sales at a percentage rate of 1.5 to 2 times the U.S. GDP -- implying a growth rate of mid- to high-single digits. Earnings are expected to grow in the double-digit percentages.