Revenues are sagging, profits are falling, customers are defecting--and International Business Machines Chairman John F. Akers is mad as hell about it.
After six years as chairman of the world's largest computer maker, Akers is showing increasing signs of frustration that his efforts to reshape IBM to fit a faster moving, more competitive and cost-conscious marketplace haven't worked. The latest bit of evidence came this week in a memo leaked to the outside in which Akers is quoted as telling a group of IBM managers that employees are "too damn comfortable" and largely unconcerned about losing sales or missing production deadlines.
But Akers' tough talk doesn't impress investors and analysts. Many say Akers himself--not his managers or employees--is to blame for IBM's current problems. In their view, Akers, who is just 3 1/2 years away from IBM's mandatory retirement age of 60, is at fault because he has been unable or unwilling to make the really tough moves--including employee layoffs--required to turn the company around.
"Akers has always talked tough, but talk is cheap," said Ulric Weil, a Washington technology analyst. "When it comes to action, he's a mild guy. He's taken half steps when he should have taken full steps."
Adds a former IBMer, who asked to remain anonymous: "If this were 1985, you could understand Akers' frustration. But this is 1991, and he's still struggling with the problem, not the solution. If he had really been in touch with the business for the last six years, he would have recognized what has to be done. But, like the rest of IBM, he's been living in a dream world."
Akers' frustration underscores the difficulty of managers who have risen from within the ranks of a huge company to change its course once they arrive at the top, management experts say. By the time they have climbed the ladder, these career managers are so much a part of their environment that they can either fail to perceive the need for change or be unwilling to impose the drastic medicine required.
Akers is hardly alone in the challenge he faces. American Telephone & Telegraph Chairman Robert E. Allen, who has spent his entire career at the phone company, has wrestled with some of the same issues Akers faces: bloated staff, increased competition and fast-changing technology.
Although analysts say Allen has so far outperformed Akers, they note that Allen and his predecessors were virtually forced to remodel AT&T as a result of the revolutionary changes brought by deregulation--a definitive impetus for change that IBM hasn't faced.
Akers was in Europe last week and unavailable for comment. But a spokesman for the company said Akers has been delivering "hard-hitting lectures" to his management teams for the last six months to spur them to "get more out of their people."
And some analysts say Akers is, in fact, finally prepared to do the once-unthinkable: ax nonperforming employees. While not calling them layoffs, Akers has told his managers to cut the bottom 15% of their work forces--the equivalent of about 25,000 workers--within the next two years, analysts say.
Akers' latest comments and apparent intent to pare staff aren't winning him a lot of friends within the company's rank and file. Since a version of his speech to the managers first appeared on IBM's internal computer system last month, many rebuttals have been submitted, including one calling for his resignation.
"The fact that we're losing (market) share makes me goddamn mad," Akers, a former Navy pilot, was quoted as telling the managers. "I'm sick and tired of visiting plants to hear nothing but great things about quality and cycle times, and then to visit customers who tell me of problems . . . . The tension level is not high enough in the business. Everyone is too damn comfortable at a time when the business is in crisis."
Until the 1980s, few could have ever imagined that IBM would ever face such a crisis. However, increasing competition from Japan's electronics giants and U.S. entrepreneurial ventures, plus a raft of technology advances, have fragmented the computer industry and gradually broken IBM's virtual lock on it.
"The world as IBM knew it through the 1970s has been completely changed," said Robert Reich, a professor of government at Harvard University. Reich said that while Akers no doubt understands that the market has changed, he is unable to capitalize on the urgency of the situation because Big Blue has been so successful doing what it has for so long.
"The single largest impediment to change in times of challenge is prior success," Reich said. "When times get tough, a manager is always going to hear a chorus of voices urging a return to the practices of the past."
Prior success--IBM is larger than all of its computer-making competitors combined--may indeed be the source of Big Blue's current malaise.