Interview with Peter E. Greulich

Pete, why this book? Why now?
“IBM is one of America’s great corporate success stories. But anyone, who has worked for the company in the last few decades, knows there is a systemic problem. Financial analysts, though, seem to lack the insights into the corporation’s current processes or its history of successes and failures to put their finger on that problem.

"I believe this book documents—for both the financial and non-financial mind—how IBM’s previous human relation practices were the reason for its 20th Century successes, and how its current human resource policies are the reason for its 21st Century shortcomings.”
Do you have a simple example of how the financial analysts are getting it wrong?
“Sure, read any article about IBM over the last few years and they will focus on IBM’s declining quarterly revenue.

"The last flurry of articles focused on its twenty-one quarters of falling revenue. The real problem isn’t a quarter-to-quarter revenue problem. IBM’s problems are well into their second decade. It has a seventeen-year productivity problem that spans the tenures of its first three 21st Century chief executive officers.”
But talk to any financial analyst and they can easily document that IBM is a profit-generating, cash-flow machine?
“The question shouldn’t be if IBM is generating profits but how has it been generating profits, and are it profits optimized?

"A financial analyst that is concerned with the viability and long-term health of a corporation should be examining if financial engineering—sacrificing the long-term viability of the business for short-term profits—isn’t putting the company at risk and reducing its competitiveness.”
How would you summarize IBM’s core problem?
“IBM’s 21st Century executive team has been investing in paper instead of making people more productive, processes more effective and products more valuable.”
Let’s change the topic. What a great book cover!
“When I received the first draft of the book with the full cover, a young man was passing by my table and saw it. His eyes lit up and he said, ‘Cool, a book about robots.’ The comment did give me pause. (laughing)

"The cover art blends the best of a company that spans two centuries: the 20th Century IBM found success in Watson’s [IBM’s traditional founder] belief in the word THINK—captured in the image of Rodin’s The Thinker; and the 21st Century IBM could find success in a different Watson [IBM’s AI offering]—symbolized in the robot metamorphosis.”
It reflects some creative talent.
“I wish I could take credit for it but it was the combination of a great creative team here in Austin, Texas (TLC Graphics) and the wonderful artistic talent of AliveCreations™ utilizing the feedback from IBMers around the world.”
Do you think IBM can make its Artificial Intelligence initiative successful?
“In the ’60s IBM invested $5 billion to build the mainframe. If it makes a comparable investment in Artificial Intelligence in the 21st Century, I believe it can.”
What kind of investment would that take?
“To build the mainframe, IBM invested 11.5 times its 1964 net income. To make an equivalent investment today as a percentage of net income, IBM would have to invest $137 billion in Watson and find a CEO that understands how to release the great talent and energy of his or her employees.”
What is getting in the way of that investment?
“In 1996, IBM’s Deep Blue won its first chess match against Garry Kasparov, but since then the corporation has invested $190 billion in share buybacks. IBM’s corner office has been investing in paper instead of people, processes and products.

"Where would the company be today if instead of investing in paper, the company’s executive team had invested that money in new leading-edge artificial intelligence? Where would the company be today if it also still had a CEO who understood how to embolden and empower individuals to work together for the common good?

"IBM needs a new leader who will make the right investment choices."
The share buybacks, though, are supposed to maximize shareholder value?
“That is the story but for IBM shareholders, the numbers don’t add up.

"Since 1999, IBM has spent an average of $9.2 billion a year—a total of $166 billion—on its stock; yet, since 1999 an investor would have been better off owning an index fund that tracked the Dow Jones Industrial Average (DJIA) or a large-company stock fund. Have IBM’s shareholders received a good return on that money? Most should realize they haven’t.

"In one respect, a stock is like any product: if there is no demand, reducing supply isn’t the solution. The company needs to invest in leading-edge products that stimulate demand for its stock, not focus on reducing the supply of stock.

"I mean, it is just paper!”
How did you come up with the title, THINK Again?
“As I write in the Introduction, THINK has always been associated with IBM. THINK Magazine was the pet project of IBM’s founder and for the twenty-one years he wrote its monthly introductory editorial—over twenty-one years he wrote more than two hundred and fifty editorials. He was a thinking man.

“As I put myself in this chief executive’s shoes and considered IBM’s 21st Century performance two words came to mind: THINK Again!”
How did you improve this new book over your last book about IBM: A View from Beneath the Dancing Elephant?
“I listened to all the IBMers that talked to me about A View from Beneath the Dancing Elephant.

“The first thing they suggested was to prove early in the book that IBM is on the wrong path. The data was there but it took my fellow IBMers to encourage me to find it and present it clearly and convincingly. The Seeking Alpha community was the foil that I used to scrub that data and find objections—an example of amazing knowledge-industry workplaces that are forming worldwide.

“A second major suggestion was to close the book on a positive, how-to-fix-it note. This was probably one of the most challenging chapters I have ever written in my life, but I found inspiration in the writings of some of America’s greatest industrialists: Owen D. Young of General Electric Corporation, George Ed Smith of Royal Typewriter, Julius Rosenwald of Sears, Roebuck & Company, James Cash Penny of J. C. Penny Company, and John H. Patterson of NCR Corporation to mention a few.

“There were many other suggestions too numerous to mention here, but probably the most constructive and funniest comment I got was 'Lose all the elephant metaphors!'

Published 2017-08-19.
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Books by This Author

THINK Again: IBM CAN Maximize Shareholder Value
Price: $9.99 USD. Words: 61,500. Language: English. Published: September 1, 2017. Categories: Nonfiction » Business & Economics » Corporate & business history, Nonfiction » Business & Economics » Management & human resources
THINK Again is about IBM, its leaders, its employees, its shareholders, its customers, its supportive societies, and one-hundred years of their unique interactions. IBM has had its great, good, and bad moments; and, in this century, some of its ugliest. But there is still hope.
A View from Beneath the Dancing Elephant: Rediscovering IBM's Corporate Constitution
Price: $9.99 USD. Words: 42,610. Language: English. Published: July 31, 2014. Categories: Nonfiction » Business & Economics » Corporate & business history, Nonfiction » Business & Economics » Management
If Lou Gerstner’s Who Says Elephants Can’t Dance? is the yang, this book is the yin—that quintessential opposing and balancing force. It is an IBM employee-owner’s perspective; it captures the views of those that will determine IBM’s 21st Century permanence. Its premise? IBM must rediscover its Corporate Constitution—its basic beliefs of Respect, Service and Excellence.