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IBM boss spells out a better future

Forget the multinational, 'global integration' is now the way to go for large organisations, according to Sam Palmisano
Written by Colin Barker, Contributor

The normally taciturn Sam Palmisano, the chief executive of IBM, aligned himself this week with those who predict a backlash against large multinational companies, such as IBM itself.

In what the Financial Times described as "a rare public intervention", Palmisano expounded on the theme that multinationals need to change and indeed stop being multinational companies, in order to prosper.

Palmisano's remarks came less than a week after IBM announced a massive $6bn (£3bn) investment in India.

In his open letter, published on Monday, Palmisano called for "a new kind of organisation — at IBM we call it 'the globally integrated enterprise'," something he prefers to multinationals, which many "mistakenly project onto 21st century global reality".

"I believe the globally integrated enterprise is a better and more profitable way to organise business activities," said Palmisano, who went on to outline his plans for this new kind of organisation, although he was short on specifics.

Shifting to this model, Palmisano says, "presents big challenges for leaders". He outlined two of them. The first is skills, where Palmisano says the biggest problem will be "securing a supply of high value skills".

Secondly, "a company's standards of governance, transparency, privacy, security and quality need to be maintained even when products and organisations are handled by a dozen different organisations".

The latter challenge is one that IBM has come across before, such as when it faced the public humiliation of seeing executives in subsidiaries, in different parts of the world, facing corruption charges over government contracts.

As Palmisano pointed out, "the alternative to global integration is not appealing: left unaddressed, the issues surrounding globalisation will only grow... People may ultimately choose to elect governments that impose strict regulations on trade or labour, perhaps of a highly protectionist sort".

IBM's employees may scratch their heads in wonder at this latest intervention from Palmisano, who has overseen a downgrading of their pensions during his time in office.

Palmisano has portrayed himself as the quiet man of IBM. He rarely speaks in public and even more rarely speak to journalists. When he has wanted to give a piece of his mind in the past he has used the same technique that he used this time, talking only to one newspaper and then with no journalists present.

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