New IBM CEO Arvind Krishna: ‘We will hit a new normal sometime this year’

April 6, 2020, 10:30 AM UTC

Arvind Krishna takes over as CEO of IBM this morning. An accomplished technologist who has coauthored 15 patents, Krishna’s challenge is to lead the 109-year-old company into a new era of growth after a long period of stagnation in revenues and earnings.

Given the similarities in the two men’s backgrounds, IBMers are hoping Krishna can perform the same magic at their company that Satya Nadella has at Microsoft. But first, Krishna, like every other CEO, has to deal with the coronavirus. I talked with him Sunday night as he was preparing for the new job.

“The first thing I have to worry about is all of our employees and clients and all our businesses…that we can continue, that we have resilience. We have to maintain a healthy balance sheet, healthy cash flows.”

When I asked if he was seeing a negative impact on the IBM business, Krishna said: “I am more worried about the future than right now. We do such mission-critical work that we tend to see lag. If some of the more dire predictions on GDP come true, I don’t think we would be immune to that.”

But Krishna said he firmly believes the company is finally poised to grow once the crisis has passed.

“From every prediction I can see, this crisis will last a number of months, not years. We will hit a new normal sometime this year. And we have to be able to grow when we come out of the crisis.”

Krishna also said he believes the crisis will hasten other companies’ move to the cloud and to A.I., as well as their embrace of “hybrid cloud” solutions—with some functions operating in the public cloud and others running on private clouds. It’s that turn toward hybrid clouds that IBM hopes will allow it to compete with the market leaders in the public cloud business—Amazon, Microsoft and Google.

In a letter to employees, Krishna also talked about the need to create the right culture at IBM, which has struggled in the past with its reputation for bureaucratic stodginess.

Today, he said, the company needs people who say, “Hey, my mind is plastic, I can expand it, I can learn more.” People who are more resilient in the face of obstacles and the face of challenges. Today we would call that an entrepreneur. You need to adapt, you need to change, you need to keep learning. That’s a big change from hiring for all the skills you need. You want to hire for people who have a growth mindset.

You can read the full text of Krishna’s letter to the IBM staff here.

Subject: My first day as CEO — our journey together

Hi everyone,

I’m writing to you for the first time as your new CEO in the midst of a global public health crisis unlike any other that we have faced. This global pandemic is affecting everyone and has disrupted the rhythms of our daily lives.

Our first priority is your physical health and mental well-being. We are also cognizant of the impact COVID-19 is having on IBMers’ families, friends, communities as well as our clients. During this challenging time, we all need to have empathy, solidarity, and understanding for each other.

This crisis is also changing how many of us work. I’ve been particularly impressed to see how fast so many IBMers have adapted to new ways of working, including virtually and in new settings, which I know can be sometimes challenging.

At the same time, there are many IBMers who remain at our essential locations to carry out mission-critical work. I had the opportunity to spend time with some of you at our site in Poughkeepsie the other day. I want to share my deepest thanks to each of you for your resilience and commitment to IBM.

If there’s one thing that this public health crisis has brought to light it is the ever essential role of IBM in the world. We are the backbone of some of the most critical systems of the world. Our technologies and services help banks run credit card transactions, businesses run supply chains, telcos connect customers, healthcare providers improve patient care, and companies and cities tackle cyberthreats.

I believe we can make IBM the most trusted technology partner of the 21st century. For this to happen, we have to ensure that IBM continues to innovate and lead in the transformational journeys our clients are on. Hybrid cloud and AI are two dominant forces driving change for our clients and must have the maniacal focus of the entire company.

IBM has already built enduring platforms in mainframe, services, and middleware. All three continue to serve our clients. I believe now is the time to build a fourth platform in hybrid cloud. An essential, ubiquitous hybrid cloud platform our clients will rely on to do their most critical work in this century. A platform that can last even longer than the others.

The fundamentals are already in place. Our approach to hybrid cloud is the most flexible and the most cost effective for our clients in the long term. Coupled with our deep expertise, IBM has unique capabilities to help our clients realize the potential of a hybrid cloud business model.
In addition, IBM is an innovation powerhouse. If you look at all the tectonic forces shaping the future of technology—cloud, AI, blockchain and quantum—IBM is leading on all fronts.

To get there, we have to take a series of specific actions. Let me highlight a few:

  • First, we have to deepen our understanding of IBM’s two strategic battles: the journey to hybrid cloud and AI. We all need to understand and leverage IBM’s sources of competitive advantage. Namely, our open source and security leadership, our deep expertise and trust, and the fact that we enable clients to build mission-critical applications once and run them anywhere.
  • Second, we have to win the architectural battle in cloud. There’s a unique window of opportunity for IBM and Red Hat to establish Linux, containers and Kubernetes as the new standard. We can make Red Hat OpenShift the default choice for hybrid cloud in the same way that Red Hat Enterprise Linux is the default choice for the operating system.
  • Third, we all must be obsessed with continually delighting our clients. At every interaction, we must strive to offer them the best experience and value. The only way to lead in today’s ever-changing marketplace, is to constantly innovate according to what our clients want and need.

To help bring all of this to life, I’m announcing a series of leadership changes:

  • Jim Whitehurst, in his new role as President, will head IBM Strategy as well as the Cloud and Cognitive Software unit, where he will oversee the foundational technologies that are driving digital transformation among our clients. Jim brings his extensive leadership experience, strategic thinking and operational expertise.
  • Bridget van Kralingen will become Senior Vice President of Global Markets. In this role, she will succeed Martin Schroeter, who has elected to retire after 28 years with IBM, and will continue to lead global industries and integrated accounts. Bridget brings a stellar industry reputation and world-class client engagement skills to this role. She will focus on simplifying our go-to-market strategies across all business units as well as strengthening IBM’s client-centric culture.
  • Paul Cormier will become the CEO of Red Hat. Paul is a long-standing Red Hatter. His deep engineering skills, product expertise and industry vision make him the right leader to fuel Red Hat’s continued technology innovation and growth.
  • Howard Boville will join IBM from Bank of America on May 1st to become Senior Vice President of Cloud Platform, overseeing the IBM Cloud. He is a proven strategist and expert in the realm of cloud and has played a critical role in developing the financial services ready public cloud with IBM.

Culture is everything. It’s what drives capability in any organization. One of my key priorities will be fostering an entrepreneurial mindset across our business. This is about being nimble, pragmatic and aiming for speed over elegance. And, it’s about being comfortable with ambiguity and continuously adapting to shifting circumstances.

All of this also needs to be complemented by a growth mindset. This is based on the understanding that we all have an enormous capacity for growth. But also, that learning is a continuous process—not an episodic event. It’s a mindset driven by a quest for knowledge and passionate curiosity.

You can also count on my leadership to further establish IBM as the gold standard in good tech. We’ve earned the trust of our clients and society for more than a century. Today, more than ever, trust is our license to operate. Our values, long-standing commitment to diversity and inclusion and responsible stewardship are some of the reasons why so many IBMers are so proud to work at IBM. It’s why IBMers feel comfortable bringing their whole selves to work. And, it’s something we have to protect and nurture if we want to attract the best talent in the world.

Character is of the utmost importance. This is especially true in novel, landscape-scale crises like the one we’re facing. As your new CEO, I want to remain transparent and open. I want to hear both the good and the bad. I will also do my best to continue to listen and to learn from everyone.

IBM is a strong company. In our 109-year history, we have weathered countless storms and seen many crises unfold before our eyes. Today, we are financially strong, and we have a loyal client base. When this crisis ends, I’m confident that IBM will emerge strong and we will be focused on growth. Few companies have the trust, credibility and cumulative wisdom to change the fabric of society through technology the way that IBM can.

I love this company. In my 30+ years with IBM, I have seen first-hand the tremendous talent and dedication that IBMers possess. For all these reasons, I’m truly honored and humbled to be your CEO and to lead an iconic, storied and innovative company like IBM.

I look forward to listening and learning from all of you. To that end, please join me in my first CEO office hours session on my new Slack channel #Join-Arvind. I will be online and ready to exchange ideas.

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