The official line notwithstanding, there is strong evidence that IBM has, in fact, been very concerned about fostering entrepreneurism in its ranks. SPD Management, an internal magazine published by the IBM System Products Division, recently ran an interview with IBM vice-president Mike Armstrong. In the article, Armstrong stressed the ways in which the company is trying to push more responsibility down to line managers and lessen the hold of top-level managers. "Armstrong is working to permit managers to take more business risks without wading through several layers of upper-management approvals," the article observed.
Don Estridge struck a similar note in his speech at Forecast '84 in Tampa. He was talking about his experiences as head of the unit formed to produce the IBM PC. Estridge, a tall, modest, soft-spoken man, observed that the PC was successful in some measure because of luck. When IBM embarked on the project, he said, the company was "not doing well." There was a perception that IBM was getting too big to be totally managed out of its headquarters in Armonk, N.Y. The decision was made to "turn more responsibility over to lower managers than ever in the previous years," and out of this process came the decision to expand the IBUs.
In August 1980, the PC unit was set up. According to Estridge, it was the first such group insulated from Armonk's control. It group insulated from Armonk's control. It started with 12 people, and it started from zero. The only person with retailing experience was a man who had been a bagger in a supermarket.
In contrast to Quigley, Estridge placed a great deal of emphasis on the entrepreneurial aspects of his operation. Indeed, he said that he deliberately set out to mimic the culture of the small entrepreneurial companies IBM was up against. "If you're competing against people who started in a garage," he said, "you have to start in a garage." Among other things, this meant establishing a system that was not going to be confounded by the bureaucracy, that was not going to have checks and balances -- "people watching people." Moreover, since they were competing with hungry people, they would have to be staffed by hungry people. He noted that the biggest advantage of his operation was that "people felt it was theirs," and that "the hardest thing we've had to do is let people make mistakes. If they can't make mistakes, it isn't theirs. . .," he went on, adding, without elaboration, "You can't forget rewards either."
Like any trend or fad, the new embrace of entrepreneurism has produced its buzzwords and catchphrases. To attend a gathering of top corporate executives these days is to enter a giant echo chamber in which snatches of In Search of Excellence drift through the air. At Forecast '84, everybody was talking about "control." Estridge spoke of the challenge within a large corporation to find "a way to have people be owners of their own destiny."
In closing, Estridge noted that his group grew with the success of the PC: By August of 1983, with its expanded responsibilities, it employed 8,000 people. At this point, the challenge was to preserve the entrepreneurial flavor that had so contributed to its success. His solution was to create units within the unit. "We think of ourselves within the IBU as venture capitalists," he said. "The idea of bringing entrepreneurs within a company is an idea that is catching on. It gives you a feeling of the degree to which we are trying to experiment that we have formed 15 of these things. . . . The idea of entrepreneurship in large companies really works."
All of which raises an obvious question as to why Quigley, the official spokesman, would want to downplay the idea of entrepreneurism. The answer has to do with a problem confronting any major corporation that experiments with entrepreneurism -- what might be called toxic envy.
IBM, after all, does a lot more than make PCs. Indeed, the PC accounts for only 5% of the company's revenues. "What about the 800 programmers who update mainframe software in Santa Teresa, California?" asks Tom Peters. "How would they feel about the idea that the incentives and glory are going to those in IBUS?" His co-author, Bob Waterman, goes even further, contending that the issue of fairness is the shoal on which corporate entrepreneurship most often founders. He notes, moreover, that the envy is not only directed at fellow employees in IBU-type divisions, it extends also to relationships with outside entrepreneurs. IBM employees are well aware that a lot of nonemployees got rich off the PC because of the company's decision to go outside for much of the PC's software and components.
L. J. Sevin, a venture capitalist who has been an entrepreneur within and without large corporations, agrees that envy is the central problem of the corporate entrepreneurial relationship. He notes that every operation involves people who do not reap the rewards of the entrepreneur. "Why don't we have stock options?" they ask, and then, "Why should we support these guys?" "Either you become a practiced diplomat, or you've got a disaster on your hands," says Sevin. "Briefly, a part of IBM was entrepreneurial," says Sevin, "and it was breathtaking to behold. But it looks like it was a temporary phenomenon."
Indeed, the PC group has been integrated into the company as the Entry Systems Division, although it still retains some of its independence. The prevailing wisdom among IBM analysts, moreover, seems to be that IBM's long-term objective has always been to capture and bring in-house as much of the micro market as possible. But even it they are right, it does not alter the fact that Big Blue has been forced, however briefly, to inaugurate "breathtaking" changes in the way it does business.
