#5 on Fortune Magazines “Most reputable companies”

 

International Business Machines

            International Business Machines (IBM) ranks 5th on the “Fortune 50 Most Reputable Companies” list with corporate headquarters in Armonk, New York. IBM manufactures computer hardware and software, provides Internet hosting services, and information technology consulting services.

IBM was founded in 1911 as the Computing Tabulating Recording Company (CTR) with the merger of three companies, the Tabulating Machine Company, International Time Recording Company and the Computing Scale Company. CTR would later adopt the name International Business Machines in 1924.

IBM’s beginnings are that of counting machines and time keeping devices. In the 1890’s, a wave of new immigrants coming from Europe and the rest of the world besieged the offices of the US Census Bureau. Realizing their current traditional methods for counting and tabulating were insufficient, the Bureau sponsored a contest for anyone to devise a better method and machine.  German immigrant Herman Hollerith won with his Punch Card Tabulating Machine and would later form the Tabulating Machine Company in 1896. In 1888, jeweler Willard Bundy invented the first time piece and a year later, his brother Harlow Bundy would form the Bundy Manufacturing Company, consolidated into the International Time Recording Company in 1900.

Throughout its history, IBM has been a global leader in the development of new technology. For example, in 1952 Arthur L. Samuel programmed an IBM 740 computing device to play checkers and “learn” from its experience making it the first computer capable of artificial intelligence. In 2011, IBM created a super computer nicknamed “Watson” after one of the company’s founders, Thomas J. Watson. “Watson” had incredible computing power, competing with human champions on the popular trivia TV game show “Jeopardy”, and winning.

Financially speaking, IBM has always been a profitable and sustainable company. In 2012, total assets were $109B and total liabilities amounted to $96B with $33B in total debt. Total revenue for 2012 was $104B with $82B in operating expense, and $15.9B in profit.

The company’s early motto was “THINK”, coined by President Thomas Watson in 1911, representing the drive to always be thinking about how to solve problems and create new products. This motto would later be used in the company’s product line of laptop computers, the “Thinkpad” and a product line of desktop computers called “ThinkCentre”. More recently, the company is promoting itself as a source of environmental sustainability using technology to promote energy efficiency and to connect people throughout the world.  IBM’s marketing of the phrase “Let’s build a smarter planet” promotes the company’s forays into urban management solutions, mobile accessibility for consumers and businesses, data and business analytics, national energy grid efficiency and “smarter” media and entertainment delivery. It also portrays IBM as a grand, globally involved corporation, with a nod towards environmental and ecological sustainability and responsibility.

IBM is one of the largest employers in the world with over 433,000 employees globally and their corporate culture encourages innovation and personal career building. On their (Why IBM?, 2013) web page, working at IBM means working with the “best and brightest” and employees are encouraged to “be an innovator” and “Collaborate with like-minded people in an environment that embraces individual differences, and rewards your best work.” On their (Our values at work being an IBMer, 2013) web page, they list three core values “Dedication to every client’s success. Innovation that matters, for our company and for the world. Trust and personal responsibility in all relationships.”

IBM also has a special Corporate Service Corps program used for community outreach and volunteer charity projects. In line with its motto “Let’s build a smarter planet”, IBM presents these events and projects as opportunities for employees to receive leadership training and development, and to develop new markets and global leaders. Smart.

IBM’s contemporary competitive edge stems from its sheer size and global market reach. Regarded as a common household name for computers and technology, IBM has a century long record of computing innovation. IBM leverages this reputation by targeting corporate and government customers (large enterprise), seizing opportunities to unify large and disparately located data and identify critical functions in large systems – building best practices and methodologies to lead the industry.

As the company has grown, it has chosen to slowly sunset its consumer manufacturing programs and sell them off (hence being considered within the Information Technology Services industry rather than the Computers industry with the likes of Apple). First and foremost was their product line of high performance, robust laptops, the “Thinkpad” which they decided in 2005 to sell to a Chinese company, Lenovo. Lenovo kept the brand name and has successfully sold the product line ever since. “Lexmark”, the company’s printer and printer supply program, was divested in 1991. IBM continues to manufacture and market its server product lines and has made significant investments into mainframe and supercomputing research projects (Chess competitor Deep Blue in 1997, Watson in 2011).

These supercomputing endeavors are in line with its efforts to grow its large enterprise and governmental markets, offering cloud services and business analytics, but they also promote an idealistic artificial intelligence – one that pits “man against machine”. IBM proudly supports the philosophy that machine is better than man at solving large complex problems with programs like Deep Blue and Watson.

That’s not to say IBM in any way shirks its corporate and social responsibilities. Surely it would be impossible for a company of this size to hold high regard among the world’s corporate executives with irresponsible social practices. Employing 433,000 people incurs a shared responsibility beyond the executive boardroom to ensure compliance with local customs and laws.

Fortune magazine outsourced the Top 50 Most Admired Companies survey data gathering and reporting to Hay Group Incorporated. In order for IBM to be included in the list, it had be one of 1400 companies; those in the Fortune 1000(largest US companies ranked by revenue), non-US companies on the Fortune 500 list ($10B or more in revenue) and the top foreign companies operating in the US. This list was then sorted by industry and pared down to the largest 15 companies for each international industry and the 10 largest for each US only industry. A total of 682 companies in 32 countries were then surveyed, including 3,855 executives, directors and security analysts. According to the CNN Money web page regarding how the results are compiled, (How we pick them, n.d.) “To create the 58 industry lists, Hay asked executives, directors, and analysts to rate companies in their own industry on nine criteria, from investment value to social responsibility.”

Each participant was asked to select the 10 companies they admired most, choosing from a list made up of companies that finished in the top 25% in 2011 plus those that finished in the top 20% of their respective industry, and any company could be chosen from any industry.

IBM was ranked 5th amongst all industries (1st in its own Information Technology Services industry) due to its 7% year over year increase in revenue, and to its revenue growth in what are referred to as “BRIC” countries, (Brazil, Russia, India, and China) countries with high growth and expanding economies utilizing its practices of business analytics, cloud services and “Smarter Planet” technology ideas.

Of the nine categories used in the survey, (Innovation, People Management, Use of Corporate Assets, Social Responsibility, Quality of Management, Financial Soundness, Long Term Investment, Quality of products/services, Global Competitiveness) IBM ranked 1st in all but two of them, People Management(3rd) and Quality of Management(2nd). These results are compared to companies within the same Information Technology Services industry as IBM, but considering the competition, (Accenture and Unisys) these results are an enormous indicator of the respect and admiration the world’s executive level employees have for IBM.

Ranking 5th amongst the world’s most reputable companies while employing 433,000 people globally, in addition to creating such grandiose technology to challenge the best human minds of the 21st century, is something only IBM could accomplish.  From creating the first timekeeping devices in the 1880’s, to enhancing energy grid efficiency with analytical software, IBM has consistently and intuitively progressed the human race forward with innovative and effective solutions.

References

Corporate Service Corps. (2013). Retrieved from IBM.com: http://www.ibm.com/ibm/responsibility/corporateservicecorps/

Deep Blue. (2013). Retrieved from IBM.com: http://www-03.ibm.com/ibm/history/ibm100/us/en/icons/deepblue/

History of IBM. (2013). Retrieved from IBM.com: http://www-03.ibm.com/ibm/history/history/history_intro.html

How we pick them. (n.d.). Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/most-admired/2012/faq/

IBM. (2013, February). Retrieved from Wikipedia.com: http://en.wikipedia.org/wiki/IBM

Our values at work being an IBMer. (2013). Retrieved from IBM.com: http://www.ibm.com/ibm/values/us/

Time Clock. (2013, February). Retrieved from Wikipediea.com: http://en.wikipedia.org/wiki/Time_clock

Why IBM? (2013). Retrieved from IBM.com: http://www-03.ibm.com/employment/whyibm.html

World’s Most Admired Companies. (2013). Retrieved from CNN Money: http://money.cnn.com/magazines/fortune/most-admired/2012/full_list/