John Akers says that he does not foresee an immediate improvement in business and that he intends to continue pressuring his employees to perform better. In yet another revealing interview, this time in the July 15 issue of Fortune magazine, which hits the newstands next Monday, the chief executive of IBM says that the company …has not been sufficiently demanding of itself regarding those folks who aren’t doing the job. He went on to say that …there has been a very low level of separations for poor performance, and that level will…and must go up. He believes that the situation is creating a healthy tension, and told the magazine that it is his responsibilaity as chief executive to yell at managers from time to time. He claims that he is uncomfortable communicating to IBM people in the press, it’s not the way he should do it, but the rewards of doing so are …that the facts of the environment are now more clear, to more people. Akers believes that the overwhelming evidence …is that IBM people welcomed this, particularly those who are doing a whale of a job. He does not foresee an immediate improvement in business and there will only be an uptick when customers decide to start investing again. He was quoted as saying I have no way of knowing what’s going to happen. The results so far at IBM this year remain disappointing, and I’ve seen no sign of it improving. Also, Akers says that …IBM miscalculated when it thought the strength it displayed in the early 1980s could be maintained through the decade… and the success of the personal computer wasn’t sustainable. Pre-tax profit margins and returns on equity in the mid-20s in 1984 also were unsustainable. Akers says that IBM missed a beat in mid-range systems, and both the AS/400 and low-end 370s were late because the company was preoccupied with five different systems and it had to decide which horse it was going to continue to ride in the mid-range. IBM lost share in the personal computer business, partly because it was late with laptops and partly because …price pressure in the industry is coming increasingly from so-called clones that are market share on price. Akers said that IBM’s investment in a lot of people in marketing did not produce the expected results – I would have expected more rewards than we’ve gotten, and that …we’ll see more people leave IBM this year than ever before in history.
