how ibm develops global leaders

Michael Bazigos, PhD Strategy and Change Executive, IBM Talent

12 May 2011ay 0

How IBM Develops Global LeadersMETRO Association of Applied PsychologistsMETRO Association of Applied PsychologistsNew York, NY

© 2011 IBM Corporation

This document is an incomplete representation of the presentation without the speaker’s accompanying comments.

How IBM Develops Global Leaders

We began as a small company in a different era, and have been in b i f 100business for 100 years

International Business Machines

1924

Tabulating Machine Corporation

1893

© 2011 IBM Corporation2


Insert slides re: changes from annual report


1970 1980 1990 2000


Years ago, we saw change coming, and began changing the business mix g , g g, g g gto higher-value, more profitable technologies and market opportunities



Today we run a business model that delivers long-term valueToday, we run a business model that delivers long-term value and high performance

Key objectives over the next five years:G th k t h 30% f hi• Growth markets approach 30% of geographic revenue

• Software becomes about half of segment profit

• $100 b in free cash flow$• $70 b of capital returned to shareholders

• $20 b in spending on acquisitions


* Excludes acquisition-related and nonoperating retirement-related charges.

** 2000 & 2001 exclude Enterprise Investments and not restated for stock-based compensation. Sum of external segment pre-tax income not equal to IBM pre-tax income.


Business strategy

GROWTH CLOUD BUSINESS SMARTERGROWTH MARKETS

CLOUD COMPUTING

BUSINESS ANALYTICS

SMARTER PLANET

Approach 30% of geographic revenue by

$7 billion in revenue by 2015




2015


We became a globally integrated enterprise, improving productivity and t i thcapturing new growth



M j M k t G th M k tMajor Markets vs. Growth Markets


Source: 2008 IBM Annual Report


LEADERSHIP FOR GROWTH MARKETS



20 countries for selected market expansion and growth

IT Market Size & GrowthIT as a % of GDP

Market Expansion

Russia

RussiaMacro-economicBusiness EnvironmentPolitical EnvironmentHuman CapitalPhysical Infrastructure Russia

ChinaSouth Korea

Czech RepublicPoland

Economic RecoveryGovernment Effectiveness

Mexico

Saudi Arabia

China

VietnamUAE

Thailand

Philippines

India

Taiwan

AustraliaBrazil

ChileSouth Africa

Thailand

IndonesiaSingaporeMalaysia



IBM is expanding into new markets and creating branches in established countries

2015

74

2010

56Countries with ff

2000

42

Market Expansion

2015

45574

2010

26156

Branch Offices

Countries with IBM offices

2000

9542

Riga MoscowP

455

74

261

56

Branch Offices

IBM offices

95

42

455261Branch Offices 95

MonterreyCasablanca

MumbaiCairo

D b i

KarachiTunis

ZagrebBudapest

Warsaw

Islamabad

Sofia

Prague

Istanbul

Bucharest

Lahore

Kiev

DelhiBeijing

GuangzhouShanghai

SeoulBusan

GuadalajaraBarranquillaMedellin Valencia

Caracas

Mexico City

BogotaCaliQuito

LimaArequipa

Fortaleza

BrasiliaRecife

Salvador

Dubai

Kuala Lumpur

HanoiBangkok

Singapore

Jakarta

Bangalore Manila

Northern Territory

Mendoza

Tucuman

Santiago

Antofagastaq p

CordobaSao Paulo

Porto AlegreMontevideo

Buenos Aires

Belo HorizonteRio de Janeiro

JohannesburgCape Town Durban

Victoria ACTNSW

QueenslandNorthern Territory

Western Australia

Wellington

Auckland

ChristchurchTasmania



IBM has invested in growth markets in infrastructure & skills for long t thterm growthA Globally Integrated Enterprise

Poland

Czech Republic Slovakia

RussiaResearch Lab

Global Delivery Center

Cloud Computing Center

Software & Hardware Lab

Innovation Center

China

Romania Hungary

Egypt

Turkey

MoroccoMexico

South Korea

Telecommunications

Natural Resources

Cloud Computing CenterMicro-financing Hub

Vietnam

Philippines

Malaysia

SingaporeBrazil

IndiaRail

HealthEnergy

Finance

South AfricaAustralia

Argentina

RetailPeruPeru



IBM has become a globally integrated enterprise in order to capture th b t th t iti d i fit bilitthe best growth opportunities and improve profitability



Global Enablement Teams

Program links small teams of global executives to IBM country leaders and their teams in emerging economies

Deepen global mindsets

Enable competence in cultural adaptability

Better connect local country h l b lteams to the global company

agenda

Consistent with our philosophy f l d d l i l dof leaders developing leaders,

leaders developing themselves


Khazakhstan


Eighteen countries have been commissioned across three waves

1 2 3WAVE 1• Egypt

K kh t

WAVE 2• Chile

C h R bli

WAVE 3• Argentina

C l bi• Kazakhstan

• Mexico

• Nigeria

• Czech Republic

• Indonesia

• Malaysia

• Columbia

• Hungary

• Philippines• Nigeria

• Poland

• South Africa

• Malaysia • Philippines

• Saudi Arabia

• Slovakia• South Africa

• Vietnam

• Slovakia

• Thailand



Program Results

Positive reaction to program by both GET members and country leaders

Increased knowledge and capability in:g p y– developing strategy and–executing strategy

Country leader behavior change Country leader behavior change

Business continuity during times of challenge and change



Corporate Service Corps A global training ground to develop

leaders in strategic emerging markets

Short-term assignments that engage IBMers with communities, governments and non-governmental organizations

Since July of 2008, we have sent more than 1,000 IBMers globally to 20 countries

IBM clients launching or considering similar programs: Deere, Dow, Corning, FedEx, JP Morgan Chase, g, , g ,Novartis, Pepsi

US Agency for International Development (USAID) collaborating


Development (USAID) collaborating with IBM to help smaller companies create their own programs


The growth agenda has been infused throughout the talent management process

Topline organization redesign: Growth Market Unit (GMU)

Deep dive reviews of leadership talent pipelines

Chairman involvement in GMU leadership developmentChairman involvement in GMU leadership development

Competency model revalidation (next section)

University partnerships

Assessment Centers: “Global Development Centers”

Mobility assignments



Linguistically diverse teams can either build incredible solutions... or t t t f b bblconstruct a tower of babble


Patented IBM translation technology at the League of Nations, Geneva, 1931


Enter n.Fluent…

Translates English to and from:– ArabicArabic– Chinese (simplified and traditional) – French– German

Italian– Italian– Japanese– Korean – Portuguese g– Russian – Spanish

Crowdsources translation corrections to improve the software in real time

More secure than external providers

Next step: speech-to-speech


Next step: speech-to-speechtranslation (“MASTOR”) in beta


COMPETENCIES



The IBM Leadership Framework



In 2010 IBM announced a new set of nine capabilities called “IBMers at our B t”

Embrace challenge

Best”

Partner for clients' success

Collaborate globally

Act with a systemic perspective

Build mutual trustIBMersat our

Influence through expertise

Continuously transform

Best

Communicate for impact

Help IBMers succeed



Act with a systemic perspective

IBMers are systems thinkers. We help our clients, our colleagues and the world understand and design the essentialunderstand and design the essential dimensions of any system – how it senses, maps and analyzes information, detects underlying patterns, and translates that knowledge into belief and

Thinking Systemically

Gathering data to identify roottranslates that knowledge into belief and action. We help others see this end-to-end view, synthesizing information from many dimensions – whether the system in question is technological economic

Gathering data to identify root causes

Making timely and effective d i iin question is technological, economic,

societal, cultural or natural. This systemic view allows us to frame problems properly, and to take the right action in the right way at the right time It also lets

decisions

Acting decisively, taking risks when appropriatethe right way at the right time. It also lets

us anticipate the impact of our actions on others. Knowing all this, we act wisely while boldly taking the right risks.

pp p



Competencies Explain Most of What Matters to PerformanceRelative contribution of competencies to performance

© 2011 IBM Corporation26All underlying correlations statistically significant. Odds of a chance finding are less than 1 in 100. Data sources:Senior leaders’ 360-degree competency ratings (“Total Others”) and performance ratings by their manager

Factors Influencing Performance Ratings Breakdown of the 56%

Competency Portion


Does a 56% explanation matter? Compared to what?

LINKAGE r % variance explained

Smoking and lung cancer after 25 08 < 1%Smoking and lung cancer after 25 years*

.08 < 1%

Antihistamines and reduced nasal discharge*

.11 1%

Ibuprofen and pain reduction* .14 2%

Height and weight of US adults* .44 19%

SAT (verbal) and freshman GPA** .47 22%

SAT (math) and freshman GPA** .48 23%SAT (math) and freshman GPA

IBM Competencies and executive performance

.75 56%


* Hogan, R.T. (2011). Issues, controversies, and advancements in workplace assessment . Panel discussion at the 2011 Conference of I/O Psychologists, Session #193.

** http://fairtest.org/sat-i-faulty-instrument-predicting-college-success


IBMers at Our Best: Creating the Future of IBM

LeadershipCapabilitiesExpertise + +

Leadership Competencies:

B h i i IBM

Career Capabilities:

Th b d lifi i

Job Role Expertise:

C bi i f kill Behaviors unique to IBMersthat distinguish the

company.

The broader qualificationsto grow and flourish in achosen career at IBM.

Combination of skillsand behaviors

required to perform aspecific job at IBM.



SELECTING FOR GROWTH



Approach

New scoring process was used to retro-score MD incumbents and place them into three categoriescategories

– Recommend– Needs Development / Not at this time– Not recommended

Two assessments were then made– Comparison of utility gains for prediction of new selection method vs. “Acme” firm’s

predictionspredictions– Revenue dollar utility of the incremental gain in selection accuracy



Populating the MD role with superstars begins with accurate identification

Identifying Superstar MDs

History 15%

20%

R suggests an multi-billion 3-year gain

for MDs10%

15%

enue

CA

GR

for MDs using the

new, robust assessment

0%

5%

3-Ye

ar R

eve

-5%

0%Not recommended Needs development /

Not RecommendedRecommended

Assessment Status


Assessment Status


Our stress test retro “selected” top 39%. Resulting success rate of 82% is in line ith ( d d ) i d t b h k h di i i ti t th 40% l lwith (and exceeds) industry benchmarks when discriminating at the 40% level.

82%

IBMBenchmark


Source: “Business value of employee selection”, Wayne Cascio, 11/2009, NYC to METRO Applied Psychology Association


External estimates of executive success rates

82%

90%

60% 61%

70%

82%

70%

80%

50%

60%

40%

50%

60%

33%

20%

30%

40%

0%

10%

Peter Drucker ti t (1985)

Hogan, Hogan & K i (I )

Old (BEI) MDd ti (2002

Actual IBM MD assessment (2002 2009)

Jack & Suzy W l h (2007)

New IBM MD t


estimate (1985) & Kaiser (In press) recommendations (2002-2009)

(2002 - 2009) Welch (2007) MD assessment(2009)


Q ti ?Questions?



Michael N. Bazigos, PhD

[email protected]@columbia.edu

www.bazigos.com

Connect with me on :http://www linkedin com/in/bazigoshttp://www.linkedin.com/in/bazigos
