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IBM

As a student of corporate history, I gain an interesting perspective on the longevity of firms.  Very few firms in existence today were in existence 100 years ago.  One exception is IBM.  Warren Buffett has recently taken a large stake in IBM, which is testament to the fact that this firm is still very successful. 

Why has IBM been so successful?  There are at least three reasons.

1. It has innovated and responded to the needs of its customers – small, medium and large business enterprises.  It started out with punch card readers and counting machines, moved on to mainframes and PCs, and today it provides firms with business solutions, consulting and software. IBM was once the market leader and main innovator in the PC and laptop market, setting industry standards along the way. But it quickly realised that this was not going to be a profitable business in the long-run and that its customers (businesses) were going to need integrated software and consulting solutions to compete in an increasingly complex environment.  Today, it is known more for its business services and software solutions rather its computer hardware.

2. IBM has always placed great stress on having well-educated and highly-trained managers.  Good managers are essential if any business is to succeed.

3. I am a great believer in Armen Alchian’s argument that success is partially (or wholly) down to serendipity.  IBM tried something, and it worked because they just happened to have the right service or product at the right time for the right customer – the product or service was a success due to chance not managerial foresight.

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