Book Review Of The Ibm Way

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11/26/2008 |Submitted by:334, Gaurav Kumar 328, Jaybind Kumar Jha 359, Nilesh Chandra Sinha 368, Saurabh Kumar 329, Smriti Jha

Book Review AN INTRODUCTION: Among common masses, IBM is known for its leadership in terms of computer technology. ”THE IBM WAY” by Buck Rodgers, written in 1986, brings out a new face of IBM, in terms of sales, in terms of marketing and in terms of customer satisfaction. The book brings out the importance of sales driven approach and importance of customer satisfaction in the success of IBM. The book starts with description of basic values of IBM which has laid its success story for years. They are as follows: 1) Respect for each and every customer, employee and even the competitors. 2) Providing highest level of customer satisfaction 3) Excellence in delivering the job

IBM AS SALES DRIVEN COMPANY: In IBM, each and every employee of IBM whether he is an engineer, accountant or customer care person, acts as a sales person for IBM by providing maximum satisfaction to the clients. Each and every employee of IBM is associated with customers in a smaller or bigger way, for example, an accountant while interacting with customer for billing information. IBM’s philosophy is to provide maximum customer satisfaction at each and every level of these touch points which helps to build a long term relationship with customers and in turn, helps in increasing the sales. IBM lays lot of emphasis on training its employees to enable them to serve the customers in best possible way. IBM is one of the few companies which give lot of importance for building long term customer relationship, not only merely acquiring new customers. This is evident in IBM’s way of paying its employees where the employees are paid not only for acquiring new customers but for retaining the old customers also. SUCCESS MANTRA FOR IBM: The success of IBM has not been because it has been a great technology solution provider but because of a long term supporter to its customers with continuous partnership in order to make

them use the technologies in most effective manner, thus, resulting in a long term healthy customer relationship. All the IBM customers see IBM as a partner, not as a manufacturer or solution provider and that has been reason behind IBM’s commendable growth over the years.

BUCK RODGER’S WAY OF LEADERSHIP: Further, Buck Rodger’s talks about his own leadership style and his role and qualities as a sales and marketing manager. According to him, the following qualities are very important in order to be a leader: 1) A leader must know his priorities and should work only on a certain number of tasks based on the priority at a time 2) A leader must been enthusiastic

3) A leader must create a healthy atmosphere for his co-workers. 4) A leader must be able to motivate others

================================================================= “Everybody thinks selling” has been IBM’s dominant theme since its earliest days. And to ensure that the above said theme holds good IBM recruits the best minds from approximately 350 colleges across the country, focusing on 100 top schools. Its recruitment program is truly a selective talent search. The newly recruits are sent for extensive training program before they go into the field. What representatives say and do, and how they say and do is very crucial for the company’s image and credibility. IBM’s training program is well funded ,planned and structured ,so by the time training finishes, trainees has the skills to meet the customer with confidence. Trainees spend time with marketing people on customer calls to get a feel for the business. A customer won’t judge a salesperson on what he knows, but on how well he communicates what he knows. The instructors at training programs are the company’s top sales staff that not only understand the selling techniques but also have the keenest perceptions and business acumen that is second to none. The trainees are taught to work as a team.

The IBM Culture:

Teaching the structured sales call is a fundamental part of IBM marketing training. The features, functions and benefits of the product are clearly articulated and demonstrated. Trainees learn questioning techniques and listening skills, how to manage objections and ask for the order. Not only does IBM bring its sales and technical people into the training centers; it invites customers as well. Their participation creates a real world atmosphere because they discuss specific problems affecting their businesses. When a customer is receptive, a sales career seems like a piece of cake. It doesn’t require discipline to make calls when everything is going well. However this is not the case always. When a sales representative makes enough calls he will have doors slammed in his face sooner or later. Rejection hurts all of us, but when a sales rep gets shot down several times it takes discipline to keep going .The best and most effective discipline is self imposed. One thing that makes IMB unique is the dress code for its employees. Everyone who calls a customer or prospect for IBM wears a suit including service people who repair typewriters or computers. IBM believes that the way you get dressed affects the way you get perceived and the way you get perceived affects the way you get treated by your customer. At IBM it’s vitally important for all levels of management to have some form of one to one communication with its sales force. Its matter of finding out, firsthand, what’s going on and it does wonders for the salespeople’s morale. Every field manager stays in close touch with people in remote locations to boost their morale. Every year at IBM the total field force is required to answer a questionnaire that asks things as: are you being challenged by your job? What work pressures do you have? Do you think IBM is still practicing respect for the individual? Etc. This information is reviewed at each level of management from the branch office to the summit. If a problem seems to have a pattern, action is taken. Apart from annual surveys, every three month surveys are conducted on sales representative on customer satisfaction. These surveys help uncover both positive and negative trends.

Future Oriented Marketing: While selling tries to get the customer to want what you have, marketing tries to have what the customer wants. IBM’s marketing strategies are future oriented. Unlike short-sighted people who deal almost exclusively with today’s problems, programs, motivations and sales results IBM

believe that while today’s actions are essential ,the impact of these actions on the future must be predetermined. IBM is a master of balancing its long term and short term goals without sacrificing acceptable profit levels. Also there are external factors which are to be taken care of. Changes in government regulations, policies, inflation, unemployment, etc can have devastating effects on a company if the company does not make proper provisions for it. Each time an operating or a strategic plan is developed, a set of environmental assumptions should be made. We must look down the road as far as we can and build as many safeguards as possible into our plans. Moreover we should also be aware of what’s happening within our own organization. Trouble may be brewing which might not get reflected in numbers. We must probe around, talk, listen and observe the people to know what’s happening in the organization. Also changing attitudes about sex, marriage, family roots, and religion have to be considered while making plans. The customer is perhaps the best source of information for long term planning. To survive we must understand the customer’s problems so that we can provide solutions that withstand hard scrutiny over a period of time. A company should talk to its customers at the initial stages of planning and take their opinions on designs, price and packaging. IBM has a large staff of people who study the marketplace in order to determine future needs of specific industries. IBM’s marketing people are responsible for discerning the existing opportunities for new products. Once marketing identifies what they believe the new opportunity should be, the development and manufacturing staffs take over. One of IBM’s most intellectually challenging, exciting and difficult changes has been the development of alternate channels of distribution. Throughout the company’s history, products were always sold via the direct interface of marketing reps and system engineers. The challenge for any company is to make its sales force even more productive and to deploy them as intelligently as possible.

Solution minded selling: It’s not the product that is important to the buyer. The solution to the problem is what matters to the customer. There may be multiple ways to solve a single problem and in the process there might be many new products innovation. The success of IBM’s marketing team lies in their ability to understand the prospect’s business so well that they can actually identify the loopholes and then come up with the solution which will make sense to the customer. Also the marketing

representatives should be fully aware of their product line so that they could identify if any of the product actually fits into the clients requirements. The approach by IBM has never been of the kind where in the salespeople try to create illusion of needs if the customers don’t need the products. However the belief at IBM is that the field people have to be combination of analyst, technologist, consultant and salesman and they should be able to figure out what quality, pricing the competitors are offering. Another important point is to know the customer pretty well before calling them. It shows that effort has gone into gathering the information that requires some research and hence increases customer satisfaction. The success lies in having the expertise to serve to the customer’s present and future needs. One of the methodologies which IBM follows for its sales force is arranging role –play sessions where the representative act as both salesman and the customers and they come to know the actual problem the customer might face. The only way to get to a customer’s problem is to listen to him. The listening skills can be very important in getting a business as this puts the customer under the impression that their concerns are being heard by someone. When it comes to providing effective business solution, it becomes necessary that the company has specialized set of resources for each industry. These people bring expertise and insights which the normal salesman may never bring. These specialized resources will try to gather as much information as possible about the industry they are looking into. They will act as if they are going to be the market leaders in that particular industry. It is believed that this will add to the increase in cost of running the business. However, the quality of work achieved by the specialist more than pays for the added expenses.

Being responsive to the customer: In order to win the new business it is very important for the sales people to showcase their customer. Instead of salesman explaining the value propositions of the product, if another satisfied customer tells that the end result of a particular product was tremendous then it will be always better. IBM has traditionally focused on value added selling where in they realize that having the fine products alone is not enough. After sales service is going to be as important as pre-sales efforts. That was the reason IBM was able to get the business form many banks because they gave them the confidence that they would be able to cater to the long term needs and educate the employee of the banks and hence work closely towards innovating the product or a solution.

However big the company might be, it should always act small in the sense that it should be gentle, kind and helpful. It should try to give that personal touch to each customer which the traditional small stores used to provide. So that the customer could not yearn for the good old days when there were no monolithic giants operating in the market. The company should avoid having to make ‘End zone saves’ and for that the company should always be in touch with their customer even when they have nothing to sell. Neglecting an established account is as great a marketing sin as not following up on a bonfire lead. IBM focuses on the program of reconciliation which comes handy whenever they lose any customer. First of all the cause for the loss is identified and then the solution is sought. The solution can be new approach, redesigned program, and change in equipment or shift in personnel. True partnership lies in viewing the business relationship in the long run. If a company views it form a selfish vantage point then it has no right to expect loyalty from other party. Any customer would prefer a partner over a vendor and that’s where the success if IBM marketing team lies. They always projected their staff as the staff of the client side. The quality of a company’s relationship to its customers is affected by its morality and expertise. That is the situation when the highest level of customer-partner satisfaction is ensured.

Compensation Model: IBM understands the fact that being concerned for your marketing people is important but paying well to them is equally important. Company understands from its very inception that fair compensation is an important part of fair treatment. Company don’t want its people to get frustrated and restless because it has them reaching for carrots they can’t quite grasp. At IBM, the compensation strategy has to accomplish several things as if it has to provide employees with a sense of security, besides providing security for the employee, the pay package must include strong incentives and motivation, in addition to salary and commission, IBM likes to sweeten the lives of especially deserving employees with awards and rewards. Pay packages for the whole marketing department is designed in such a way that about one half of the total income is derived from their guarantees or base pay. The key factors determining a marketing personals salary are increasing value of experience, expertise and maturity which in turn is measured by the annual performance appraisal. The appraisal is done by the manager and he let the employee know about his performance throughout the year, other thing is the goal and objectives for the upcoming year and any performance modification that is needed to achieve

them. Company had never laid off anyone because of cutback of programs, departments, products or budgets; but a person will be discharged regardless of his position if he violates company’s ethics, or fall down on the job and fails to respond to assistance in correcting his performance.

Sales target: Each year people are provided with quota that is allotted to them after a number of considerations. Everyone has to cover up his quota by the end of year, there are provisions for those who just missed by a narrow margin to complete it in next year. Two basic types of quotas each person must deal with are- product and installation, they decide the incentives that the rep will get at the end of year. Company has nothing to do with world situations because quotas are set considering everything, and are generally covered by the end of the year. Commissions are given to rep for their performances, getting customers but, commissions are deduced from their salary if the company loses the customer. Sounds harsh but the simple reason is to keep the rep prompt enough to look after the old customer. Company believes in giving awards and rewards to people who perform outstanding, and these awards is distributed by every level of the line management throughout the company, the higher the manager’s position of the manager the bigger money he has in his kitty. Company encourages the employees to come up with innovative ideas to improve the administrative processes, enhance products and reduce costs on the manufacturing floor and such similar ideas of use to company. Employees were involved, to realize that their ideas count and will be respected. There were awards like Eagle award for marketing reps, Corporate Technical Award and IBM Fellows for technical people. Company devotes a great deal of time to find out ways to give the people incentives in such manners that it just don’t fulfill their monetary wishes but, also motivates them for further development in their work.

Entrepreneurship: The entrepreneurial spirit with which a person starts a business is needed throughout the life of the business but, it is generally observed that even the gigantic organizations with great reputation finds it impossible to sustain that one quality- entrepreneurship. People start becoming very calculative, in place of having trust in self they trust the figures produced by others, though

it is needed but the trust in self should not go off. For a company to continuously grow risk takers are important not only at the top of the organization, but throughout all levels of the company. Nurturing of the new generation is equally important for the growth of any company and for this each manager is given only ten to twelve people under him so that they can be nurtured properly. To promote the sense of entrepreneurial spirit in its sales and marketing divisions, company’s management must take its share of risk and give the salespeople a sense of territorial proprietorship, should be as much authority and responsibility as much they can handle as quickly as possible. Motto of most of the ambitious employees is to move up and move on. The company should facilitate them by giving proper opportunities so that they can relate to the company. Salary hike is a momentary thing; they should be given opportunities to find what is within them, what they can do and how well they can do. Talents in the people in organization should be uncovered before it drives away.

Key Learning: The key learning from the book was that any company should not just act as a vendor or service provider. Rather it should be complete end to end solution provider and try to develop true partnership with the customers. Another important point is being responsive to the customer and appropriate actions should be taken once the feedback from the customer is recorded. The effort which should be put in order to retain the customer should be as important as the pre-sales effort. Also the role of field people should not be limited to only salesman; rather they should be the mix of consultant, analyst and salesman. The marketing strategy of a firm should be based on future needs and not just the present requirements of the customer. Appropriate awards and rewards should be given to the employee who performs outstanding.

Where we can apply these learning: The learning acquired after reading this book is of paramount importance in the present business context. This book gave a different perspective altogether about the relationship the company should share with the customers. One of the best examples where these learning could be applied is of hospitality industry because the revenue completely depends on the customer satisfaction and the long term relationship.

Hospitality industry is one where there is fierce competition and there is little to distinguish one hotels product and service from another. Hotels that attempt to reduce the price of the services in order to gain the larger market share run the risk of having a negative impact on hotel’s medium and long run profitability. So the strategy should be to develop customer loyalty by providing unique benefits to the customers. The customer’s experience with the products and services is considered to be the most important factor that influences his/her perception about the company.