Broken Promises

Once the world's most admired corporations, IBM stumbled badly in the early 1990s. At the depth of the crisis, the company suffered its first ever operating loss and eliminated nearly 200,000 jobs. What went wrong? Contrary to popular wisdom, the authors argue that the root cause of IBM's difficulties was not that it fell behind in technology, but rather that it disregarded its customers and misled its employees.
In this book, Mills and Friesen draw on extensive interviews with IBM executives, access to company files, and surveys of the company's customers to explain why, despite its advantages, IBM's executives failed to maintain its leadership. The authors show that IBM developed an overly optimistic strategic plan based more on pride than on reality; made a financing decision that eventually crippled its industry-leading marketing franchise; destroyed its long-term relationship with customers, to whom it had guaranteed high-quality product and close service support; broke its implied commitment to employees of lifetime employment security; and executed a massive corporate reorganization that left the subsequent strategic crisis unresolved.
Telling the story of IBM's downfall in the context of the company's history, the authors also outline the challenges that lie ahead for current leadership, even in the face of IBM's apparent rebound.
Broken Promises is a cautionary tale of strategic miscalculation, managerial error, and a loss of confidence that demonstrates for executives at any large company the risks of neglecting customer and employee relationships in the face of large-scale change.

G. Bruce Friesen is a knowledge manager in the Enterprise Transformation Initiative at Andersen Consulting.