EBOs at IBM by Group 3

Emerging Business Opportunities
at IBM
Group 3:
Menachery, Shibin Paul
Aung Thet Paing,
Denis Desjardin,
Ghaffar, Rahim
Shafkat Alimov
How did the EBO management system evolve over time?
• On September 12, 1999, EBO got strategic attention when

CEO Gerstner demanded three senior executives to find out
the sources of growth problem;
• By December, 1999, six root causes of problems with starting
new businesses were identified;
• In addition, ”three horizons of growth” model was developed
and the model required each horizon’s business to be
managed differently according to their distinct features;
• Moreover, both corporate and group level recommendations
for developing an infrastructure to grow EBOs were
introduced by the team;
• IBM’s businesses were classified into H1,H2 and H3 businesses
and seven H3-corporate EBOs were identified.
• What was accomplished during the Thompson era?

– With the assignment of Thompson, an excellent strategist, a skilled operating
executive as well as the most respected executive throughout the
organization, the EBO program gained huge credibility;
– By meeting with managers EBO strategy was communicated throughout the
US and later expanded worldwide;
– Responsibilities were consolidated: Harreld from Corporate Strategy Dept.
and Donofrio from Technology Dept. started directly report to Thompson;
– The seven EBOs were developed to get each of them on sound footing;
– Initial EBO management system was developed and refined: implemented
very consultative and developmental monthly review meetings; established
follow up and one-on-one interactions; established collaboration with Finance
Dept. in identifying expenses and revenues for each EBOs; project milestones
got much more emphasis over financial aspects; the EBO system was
documented and standardized in certain level.
– However, the improvements were mainly based on Thompson’s personality
and the methodology was mainly informal.
• What was accomplished during the Corporate

strategy era?
– EBO management system was strengthened and
formalized:
• the monthly and quarterly reports to senior management were
refined;
• product-development process was revised and adapted to more
uncertain EBOs;
• Best practices started being shared by formal EBO Leader Forum;
• Detailed guidelines (EBO Leader’s Guide) were published to
identify next EBOs;
What are the key elements of the current
EBO management system?
Four key elements of EBO management system are as follows:
1. Leadership:
– In contrast to conventional approach, IBM assigns
experienced leader to EBO;
– The leaders have to have ability to navigate IBM’s complex
matrix organization and secure cooperation and support;
2. Strategy development:
- reaching to “strategic clarity” by obtaining necessary
customer knowledge, learning the market and identifying existing
and needed capabilities is very crucial;
- strategy is considered as a moving target, therefore it went
through development stage over and over again;
What are the key elements of the current
EBO management system?
3. Resources:
- Relatively easy access to the resources for EBOs: no comprehensive
financial calculations required to secure funds;
- However, comprehensive market analysis, technology assessment
and organizational fit highly emphasized;
4. Tracking and Monitoring:

- were based on milestone reporting focused mainly on nonfinancial
objectives such as marketplace acceptance, external perception,
ecosystem development, internal execution and resource building;
- three color rating (red, yellow, green)was implemented to evaluate
the progress in three areas such as, clear strategy, executable model
and winning in the market place.
What is your evaluation of the system?
Merits:
• The system protects EBOs and helps them to get progress by
detaching them from traditional IBM culture and structure;
• Also, it increases the flexibility of the group which is crucial in new
business implementation;
• Puts the EBO into the center of strategic focus and allocates
management attention;
• By changing certain organizational standards, the system
eliminates barriers to secure funding on-time and helps the
organization to be quick to the market;
• Motivates people by avoiding routing tasks and gives them
opportunities to reach big targets;
What is your evaluation of the system?
Demerits:
• The system itself does not create a room for creativity
which is very crucial in IT business, even in IBM the long
term success of grows primarily depends on how well it can
fill the pipeline of emergent businesses rather than
successfully implementing initial small number of EBOs;
• Difficult to implement in big scale, i.e. when number of
EBOs are many;
• Transition of businesses from H3 to H2 category is not
defined possible making the overall management
inefficient.

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Emerging Business Opportunities

• On September 12, 1999, EBO got strategic attention when

• What was accomplished during the Thompson era?

• What was accomplished during the Corporate

4. Tracking and Monitoring:

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