IBM’s Rometty: CEO Succession Done Right

by James Mack | January 6, 2012 12:51 pm

IBM’s Rometty: CEO Succession Done Right

dowleadersig 247x300 IBMs Rometty: CEO Succession Done Right[1]This week, Virginia (Ginni) M. Rometty became the ninth chief executive in the 100-year history of IBM. Considering the legacy she inherits, it’s a tall order to successfully lead the iconic company into its next era.

One thing’s for sure: IBM (NYSE:IBM[2]) handled the transition about as well and as seamlessly as possible for a publicly traded $200 billion dollar company that is under a constant microscope.

Rometty succeeds Samuel J. Palmisano, the legendary former chief who redefined what IBM is and what it stands for, but more on his reign in a bit.

The truth is, any corporation, especially one as well-known as IBM, wants to promote from within. Show me a company that says it wants to “bring in fresh blood” and I’ll show you a company that is either plagued by internal strife, lacks innovation, or both. There are rare exceptions, but generally speaking, bringing in a CEO from outside is only necessary if the previous regime has fundamentally failed to do its job.

The appointment of Meg Whitman as CEO of Hewlett-Packard (NYSE:HPQ[3]) a few months ago is a prime example of a company whose leadership had made significant errors in the past few years and was in need of a new direction.

Hewlett-Packard’s ridiculous 2010 acquisition of Palm for $1.2 billion immediately comes to mind, but the $30 billion in market cap the company lost during the short reign of Whitman’s predecessor, Leo Apotheker, is what really sticks out.

Rometty, on the other hand, is clearly qualified to lead IBM: Her résumé could be a template for a course titled “How to rise through the ranks and become your company’s CEO.”

Lesson #1: Take Your Time and Pay Your Dues

Paying your dues includes earning the respect of your colleagues — the type of respect that can only be garnered through years of work in the trenches.

Ginni Rometty began her career with IBM in 1981 as a systems engineer in its Detroit office. She worked her way up through a number of leadership positions, including General Manager, Americas Global Services; General Manager, Global Insurance and Financial Services; and most recently as Senior Vice-President and Group Executive for Sales, Marketing, and Strategy.

Lesson #2: Exercise Leadership As You Rise

It sounds simple, but there’s a lot that goes into being qualified to lead others. There’s often a huge emphasis on having a sterling education, and Rometty qualifies, having graduated with honors from Northwestern University.

But the leadership skills needed to rise to the top really have nothing to do with education. Rometty is known for being smart, savvy, and, most of all, innovative. She is credited with playing a key role in the integration of PricewaterhouseCoopers Consulting after IBM acquired it in 2002.

Rometty has also garnered many leadership accolades through the years, including making Fortune‘s list of the “50 Most Powerful Women in Business” for seven consecutive years.

One widely overlooked trait needed to navigate the path to the top is the ability to avoid controversy while still championing the causes you believe in. Rometty has been a vocal leader for women in the workforce, including sponsoring the Women’s Executive Council and leading IBM’s Women in Technology and Leadership Councils. She’s also a frequent speaker at industry events.

Lesson #3: Be Part of Your Company’s Success Stories

It helps to be in sync with your predecessor when he or she has been as successful as Sam Palmisano.  He led IBM through nearly a decade of prominence while redefining the direction of Big Blue in a way that smartly repositioned the giant for a new world.

Another home-grown talent, Palmisano joined IBM in 1973 as a salesman and worked his way up, holding many of the same executive positions that Rometty would later helm during her rise.

Palmisano’s decision to sell off IBM’s PC business in 2004 was extremely controversial at the time. After all, the PC business is what had defined the company up to that point.

It proved to be the right decision — and so did the decision to aggressively expand IBM’s consulting unit, building on the integration of its PricewaterhouseCoopers acquisition a couple of years earlier.

That, along with making IBM one of the pioneers in cloud computing, has defined Palmisano’s legacy.

Ginni Rometty has been intimately involved in each of those success stories. That’s what makes her as much of a sure thing for IBM as it gets.

There’s no guarantee she can replicate the great run of her predecessor, of course, but I wouldn’t bet against her, especially since she’s leading an innovative, forward-thinking technology icon.

Hewlett-Packard’s Whitman must be pressing her nose against the glass with envy.

Endnotes:
  1. [Image]: http://investorplace.com/dow-leaderboard/
  2. IBM: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBM
  3. HPQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=HPQ

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