Why and how to divorce a business idea

Image via ibm.com

In early 2002 Lou Gerstner retired after an exceptional nine-year run as Big Boss of IBM. The company grew by about $20 billion in sales during his reign. How much of that was due to the “M” in IBM, more and better “machine” (computer) manufacturing? The answer is simple:
None. Zip. Nada Zero. Z-e-r-o.
IBM Still makes, in its own shops, chips and memory. But it does not “make” computers anymore. Virtually all of IBM’s hearty growth … perhaps more than “all” … came from IBM Global Services.

That’s not me talking. That’s Tom Peters talking in his book Re-imagine. The moral of Tom’s story is twofold:
a. The future is not inevitable, even for the corporate giants such as IBM. b. The future is inventible.

Just before Lou Gerstner took over the reins, IBM was on a watch list for extinction. It’s easy to forget that. Today we know that Lou helped saved the company. The next question is: how did he do it?  In short:
a. Lou saved the company by divorcing an old business idea that IBM primarily makes and sells “machines.”
b. He helped invent a new future for IBM by nurturing the idea that IBM can design, market, and sell services. (For more, please read Lou’s book Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround.)

My 2¢:
Embracing new business ideas usually starts with divorcing some old ones.
Divorcing a business idea can be an extremely difficult thing to do. Even for mature, successful companies such as IBM.

Please remember: divorcing certain business ideas is about saving your assets, not destroying them.
Divorcing a business idea can be an extremely difficult and emotional thing to do in the short-run. But in the long-run, as we can see from the above example (IBM), divorcing a business idea can be just an event in the life of a business—it does not need to define it.

Sep 28, 2012