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Small businesses can apply IBM's approach to tackling outdated organizational structures by first recognizing the need for change. This involves identifying outdated practices and acknowledging that they are hindering progress. Next, they can invest in new technologies or strategies that align with current market trends, just like IBM invested in a new technical architecture for its mainframe product. They should also be ready to adapt to market changes, even if it means participating in price wars or making other difficult decisions. Lastly, leveraging their unique strengths, such as agility and flexibility which large corporations often lack, can help them stay competitive.
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IBM had been a pioneer and the dominant player in the "mainframe" world for years. Come 1992, however, the space was much more competitive and IBM was struggling. It seemed unthinkable to lower prices at a time when the business was already losing so much money. But Gerstner was convinced this was the only way. What he saw that others did not was that IBM was "milking" a dying product line. The days of premium pricing on their mainframe were dwindling, and it was a matter of time before competitors inched them out. The only way to stay in the game was to participate in the price war. Luckily, IBM also had a trick up its sleeve to maintain profitability through the price changes. Several years prior, IBM had made a billion-dollar investment in new "technical architecture" for its mainframe product. IBM's size and many years in the business enabled them to make this crucial investment that greatly increased the product's profitability relative to competitors.
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Learn from one of the best turnaround leaders of our time, Lou Gerstner of IBM. Take a page from Gerstner’s playbook on how to reinvigorate a quickly...
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