On a drizzly day in late May, IBM CFO Mark Loughridge welcomes a visitor to the company’s Armonk, New York, headquarters by offering him a printed PowerPoint deck. Nothing new in that — executives of all stripes, and particularly in finance, like to work from a script.
What is different, however, is the first page. It features three magazine covers spanning the years 1984 to 2006. In the aggregate they form a reverse bell curve, with IBM lauded at the two extremes of that period, but derided as a dinosaur on the cover of a 1992 issue of Fortune.
For Loughridge, this is more than just a history lesson. Having joined IBM in 1977 as a development engineer, he has not only endured its fall from grace and subsequent resurgence, he has helped propel it. Now, as both CFO and senior vice president for finance and enterprise transformation, he must preserve and extend IBM’s return from the brink of extinction.
Not that he would ever put it that way. Calm and self-effacing, Loughridge seems the very embodiment of a prevailing corporate modesty that, as one IBM insider quips, can be summed up by the slogan “There is no ‘I’ in IBM.”
Indeed, even as the company was preparing to celebrate its 100th anniversary, the vibe at headquarters was as far removed from Silicon Valley metaphorically as it was literally. The whisper-quiet halls, lined with exhibits that commemorate Big Blue’s technological milestones, had gained a few centennial-specific additions overnight, yet no one seemed to notice. As employees made their way to the company cafeteria at noon, conversations were muted and polite. By every indication, “Think,” a company motto as old as IBM itself, was anything but an empty slogan.
Going forward, the designers who concoct the historical exhibits that line IBM’s hallways will have to do some impressive thinking of their own. When the company was focused on hardware, there was an embarrassment of riches to choose from, everything from typewriters and cash registers to microchips and mainframes. Today, with 83% of its revenue coming from software and services, those hallway displays seem likely to consist of little more than photos of smiling customers.
The important thing, of course, is that IBM’s current profitability, stock performance, and uncanny ability to meet its targets give it plenty to smile about. As Loughridge explains, it didn’t necessarily have to turn out that way.
Twenty years ago, IBM was being written off as a dinosaur. Today, you are number 18 on the Fortune 500 and about to crest the $100 billion revenue mark. While many people are familiar with the broad outlines of the comeback, just how bad did it get?
Many people say you’re never as good as your good press or as bad as your bad press, but in the case of this Fortune cover, we were identified as the biggest of the three dinosaurs [the other two were General Motors and Sears, Roebuck], and we deserved to be. We had hit the wall in a big way. We brought in lots of new management talent, including Lou Gerstner as CEO and Jerry York as CFO. They took over a ship that was listing in a fog and taking on water. And that was made worse by the fact that, organizationally, we were hampered by some trappings of a day gone by.