A Topic We Just Can’t Seem to Abandon

Posted on Jan 4, 2012 | One Comment

We know we’ve covered the importance of “planned abandonment” before. But as Peter Drucker once wrote, “What has been learned earlier has to be repeated again and again, and applied again; it has to be reaffirmed or else it is forgotten.”

So let us repeat: Abandon stuff, all ye who enter business—products, processes, policies, distribution channels—for everything eventually becomes obsolete. And do so before you want to, let alone before you have to.

When we last addressed this topic, our focus was on Hewlett-Packard. At the time, HP Chief Executive Leo Apotheker had announced a plan to spin off the company’s PC business. We suggested that this might well be a smart move. But this line of thinking was generally met with skepticism—and, in fact, Apotheker was ousted just a few weeks later. The word now is that HP, with Meg Whitman at the helm, will be keeping its PC business after all. 

For contrast, let’s consider I.B.M. Last weekend, the New York Times published a farewell to its chief executive, Samuel J. Palmisano, who has just stepped down after nearly a decade of leading the company. The tech giant, the Times declared, has become “so consistently successful, I.B.M. is almost boring.”

But getting there hasn’t been easy. One of Palmisano’s toughest decisions, in fact, was to exit the PC business. The company sold it off to Lenovo of China in 2004. “If you decide you’re going to move to a different space, where there’s innovation and therefore you can do unique things and get some premium for that, the PC business wasn’t going to be it,” Palmisano told the Times.

Palmisano’s decision wasn’t popular internally—abandonment, as Drucker noted, always creates “enormous resistance”—but the gamble paid off.

“Abandonment comes first in the turnaround strategy,” Drucker wrote in Post-Capitalist Society. “Until it has been accomplished, nothing else gets done.” 

What, if anything, should HP (and the rest of us) learn from I.B.M.’s approach to abandonment? 

1 Comment

  1. Sergio
    January 5, 2012

    There’s a helpful practice defined by Charles Handy called the Sigmoid Curve. The idea is to anticipate an prepare for change despite current successes. This is just one of many forms of continuous improvement practice. The Japanese automobile industry’s version was Kaizen which was key to their competitive success in the 1980s. In the software development world, Martin Fowler introduced the practice of Refactoring, which has become a key practice for achieving software development agility. Refactoring is defined as a “disciplined technique for restructuring an existing body of code, altering its internal structure without changing its external behavior”.

    IBM’s decision to exit the PC business is an example of continuous improvement, and the risk and rewards associated with it. More valuable than the reward that comes from change is nurturing a culture for change within the organization. IBM may have encountered severe resistance in shedding the PC business, but the next time an opportunity presents itself and requires drastic change from the IBM, their culture will be better suited to support it from the start. So lessons learned are more agility in seizing new opportunities and potentially less risk in doing so when you nurture a culture of continuous improvement.

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