Monday, July 01, 2002

Cringely vs IBM I found an old Cringely article where he critisizes IBM for ignoring, or crushing, innovation. His advice to Palmisano is
IBM is too centralized. Run the divisions like independent companies. Get new financial systems and run those independently, too. Think of IBM as a holding company with lots of business units, each of which has its own profit and ROI goals.
Like almost every business reporter, he has no understanding of business, and like every technology reporter, he has a warped sense of how the technology business works.

The major advantage big tech companies have is their installed base and established distribution channels, not the quality of their products. Innovative "better" technologies fail because they have no distribution or support, not because their tech's any good. By contrast, big companies are good at selling what they already have and selling stuff that's very similar to what they already have, but poor at making good, innovative tech. In fact, it's the very channel specialization that let's them sell so effecitvely that hampers their ability to sell (or notice) anything novel.

The solution to this dilemma is for big companies to stop investing in R&D, which never makes it to the market anyway, and focus on operating efficiency and scouring the market for new tech to sell through existing channels. IBM is world famous for inventing great things and then seeing someone else walk away with all the profit, and I don't think they can ever avoid this fate. Intel, quite conciously, focused on improving CISC production technology and has squeezed more life out of it than the "innovative" RISC set could ever have imagined.

Cringely suggests IBM should become a bunch of small, independent companies under an umbrella organization, apparantly because conglomerates have yet to fall out of favor in PBS land. A bunch of small independent units might as well be small independent companies unless there is some supracontractual benefit to being together, but presumably you'd need cross-group committees to take advantage of these benefits and then suddenly you're back to Big Blue again.

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