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In January, IBM’s John W. Thompson was handed a very big baton in what has been a historic race: the redemption of Big Blue. As general manager of North American sales, Thompson is now responsible for steering the company’s largest geographic profit center through the final stages of an arduous trek to success.
In 1987, at $175 per share, IBM led the industry. Taking this for granted, the company clung to its closed-architecture philosophy– whereby it was the sole developer of the software for many of its products–believing the market would follow. They were wrong.
In 1993, IBM stock crashed to $41 per share. “The market changed, we didn’t, and customers no longer perceived us as responsive to their needs,” says the 47-year-old Thompson. The arrival that year of Louis Gerstner as CEO marked a change. IBM stopped ramming products down customers’ throats and began listening to what they wanted. IBM had already seen such strategy work. In 1990, as vice president and general manager of the Midwestern area, Thompson implemented a customer-oriented strategy that raised the failing region to No. 1. His abilities were quickly recognized by the new regime.
In 1994, Thompson became general manager of IBM’s Personal Software Products division and took charge of OS/2, the company’s desktop operating system, which despite critical acclaim, had suffered. OS/2 was the first desktop operating system to combine 32-bit power with a graphical user interface. IBM, however, failed to give the product market identity. Microsoft, with its 16-bit software, worked hard to cut deals with distribution channels, independent software vendors and original equipment manufacturers–shutting out the competition.
Then in 1995, Microsoft, reigning with 80% of the PC market and a $200 million advertising budget, hit with Windows 95. “Our focus with OS/2 had been on trying to do it all for everyone–corporate, consumer, small business,” he explains. “We were running down dead-end streets.”
The West Palm Beach, Florida, native instructed his 1,200 employees to focus on their record of success: targeting medium-to-large enterprises that used technology in customer service applications. “We examined the directions these clients were taking and redirected to follow,” explains Thompson. Clients were headed toward networks–the Internet and corporate intranets. In September of last year, IBM released OS/2 Warp 4.0. The supercharged 32-bit operating system boasts voice recognition, a Web browser and a Java runtime environment.
“The toughest hurdle was skepticism,” says the Florida A&M School of Business and Industry alum who, armed with a master’s in management science from M.I.T., joined IBM in 1971 as a marketing representative. To confound skeptics, Thompson staged a worldwide telecast launch to announce the strategic repositioning of OS/2 as “network-centric.” Under Thompson’s leadership, OS/2 and its accompanying software generated over $ 1 billion in sales annually for IBM. At last count, over 15 million copies of OS/2 were in the marketplace.
Thompson’s sales and marketing savvy has served him well. When Louis Gerstner decided last December that further restructuring was necessary, Thompson was handed North American sales, a division responsible for $32.5 billion in sales for 1996.