IBM’s New Chief Virginia Rometty

Breaking the Glass Ceiling

Case study

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This case was written by Punithavathi Srikant, Amity Research Centers
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discussion rather than to illustrate either effective or ineffective handling of a
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 412-001-1
IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

Author: Ms. Punithavathi Srikant

IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

Abstract: US technology pioneer IBM had made a historic announcement in October 2011 that its 30-year
veteran Virginia Rometty (Rometty) would become its new CEO. Rometty had broken the proverbial glass
ceiling in the 100-year-old company as its first female leader. She had opened up opportunities for women
in corporate boards. It was a radical change and would have far reaching implications in the empowerment

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of women. But in the corporate sector and in the other higher echelons of power, women representation

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was far from rosy. It was found that only 15% of board positions in Fortune 500 companies were held by
women.

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A positive note was made by McKinsey & Company in 2007 that the women’s presence in boards had
improved the financial performance of the companies. Diversity in corporate boardroom would prove
beneficial to the company as women managers would bring in differing perspectives to any issue. While
more women had joined the workforce, the situation had not improved much in the top senior-level
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positions. Many issues were to be addressed including the ‘leaky pipe line’. Statistics had revealed that very
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little progress had been made to crack the glass ceiling and it was expected that appointments like that of
Rometty would bring in more visibility and encourage the tech floodgates to open for women. The case
study attempts to analyse the challenges ahead for Rometty and if she could really break the glass ceiling
and set a trend for women in executive positions in future.

Pedagogical Objectives

The case study helps to understand and analyse:

 How Women Executives were Breaking the Glass Ceiling
 Virginia Rometty’s Tenure at IBM
 Virginia Rometty’s Challenges in Spearheading IBM’s Growth.

Case Study

“The time is right for women in business. Learn to avoid the remaining obstacles and the glass ceiling will
cease to exist! Honor your talents and act like a woman – a smart woman – who knows how to jump over
business obstacles, even in heels.” 1

– Nancy Clark, CEO and Founder of WomensMedia2

"If you think you can, you can. And if you think you can’t, you’re right."3
– Mary Kay Ash, Founder, Mary Kay Cosmetics4

1 “Expert advice for working women”, http://www.womensmedia.com/new/Nancy-Clark-quotes.shtml

2 A US media company focused on promoting women in the workplace.
3 Zahorsky Darrell, “Inspirational Women in Business”, http://sbinformation.about.com/cs/development/a/womenbiz.htm
4 A trusted global name in skin care, makeup and body care.

“© 2012, Amity Research Centers HQ, Bangalore. All rights reserved.”

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

Alex5 and Rand6 both board members in their respective companies were always hard pressed for time to
socialize and had finally decided to go for a game of Golf in Cypress Point Golf Course in California, USA.
They were avid Golf players and their interest in the game had brought them together as they were radically
different in their attitudes and views. Alex a strong supporter of women empowerment tried his best in
initiating many positive changes in his company. On the other hand Rand was rather conservative and tried
to block initiatives brought forth by other members in his company’s board. Alex was trying to putt the ball
in the golf course and started conversing which was his habit for many years. “Of late women in C-level
executives have gained prominence and they were proving their critics wrong”, said Alex. To this Rand
replied, “Only few have proved lucky and they were basking in that glory”. Alex tried to convince him stating
the evolving role of women in corporates and how they were progressing in every sphere of their activity.

Since last century, IBM the technology giant was in the fore front of its business. Its range of activities
included providing technological supplies and solutions all around the world. This global provider of cutting
edge technologies had talented work force that helped to build a smarter planet. Being the second largest
technology company it had earned a reputation of initiating many changes in its organisation to keep pace

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with its rapidly evolving information technology field and services.

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In October 2011, IBM had announced a change of guard by appointing Virginia Rometty (Rometty) in place

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of present CEO Sam Palmisano (Palmisano) who would assume charge as its chairman. Rometty’s choice
was gaining significance as she was the first woman to lead the IBM board. She had a successful tenure in
IBM and that included the prestigious integration of PricewaterhouseCoopers (PwC) into IBM in 2002.
Rometty would be taking the captainship of $100 billion corporate behemoth and her challenges were
many. She had to lead IBM amidst stiff competition, focus on its research and development and steer IBM
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for its future growth. The case study analyses the breaking of glass ceiling by women executives,
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Rometty’s tenure in IBM and the challenges ahead of her in leading IBM to the future.

Women Executives: Breaking the Glass Ceiling

Rand commented, “Women’s representation was always poor in corporate boards. And it had been like that
for long”. From the year 2000 onwards, many women had started breaking the glass ceiling in executive
positions. New Zealand had its first woman prime minister, Central Bank in Finland its first women
President, and World Health Organization had its first woman Director-General to name a few.7 It had
always been a perpetual topic to be debated about women’s role in corporate boardrooms. In the United
States, where more than 50% of women were graduates, 50% hold executive positions and 80% of the
purchasing decisions were made by women.8 But only 15% of the board seats at Fortune 500 companies
were held by women CEOs.9 It had been found that only 12 Fortune 500 companies were run by women in
2011 compared to 15 in the year 2010.10 Another positive development was the elevation of Beth E.
Mooney who was expected to head KeyCorp, the first ever woman chief of a top 20 U.S. bank 11 (Exhibit I).

Further a survey by Governance Metrics12 and the Deloitte Global Center for Corporate Governance13 had
stated that only 12.3% of women hold corporate board seats in the US in November 2011.14 Catalyst

5 A fictional character.
6 A fictional character.

7 Lockwoo R. Nancy, et al., “The Glass Ceiling: Domestic and International Perspectives”,
http://www.nawbola.org/images/glass_ceiling.pdf, June 2004
8 Crowe Kimberly, “The Missing X Factor on Corporate Boards”,

http://www.boardmember.com/MagazineArticle_Details.aspx?id=6233, 2011
9 ibid.
10 “Women CEOs”, http://money.cnn.com/magazines/fortune/fortune500/2011/womenceos/, May 23rd 2011
11 ibid.
12 An US based Independent research and rating firm for corporate governance research, executive compensation data

and investment risk analysis.

13 It provides the latest research and information on leading governance practices for directors and board committees.

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

Census of 2010 had brought out several facts. In the year 2010, women held 15.7% board seats, 14.4% of
executive officer positions and 7.6% of top earner positions.15 It was found that there was at least one
woman executive officer in more than two thirds of companies.16 Even in countries like Europe the situation
was similar. Countries like Spain, France and Norway had quota systems to further the cause of women
empowerment and bring gender parity in the board room. To further the cause of women empowerment,
European Union’s justice commissioner had asked it’s publicly listed companies to appoint more women
directors or else they would face imposed quotas if their norms were not adhered to. A comment made by
Elizabeth Dole, a former US Secretary of Labor and Transportation was very relevant in this context. “My
objective as Secretary of Labor is to look through the 'glass ceiling' to see who is on the other side and to
serve as a catalyst for change.”17

Exhibit I
Women CEOs in Fortune 500 Companies
CEO Company Fortune 500 Ranking

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Bartz, Carol A. Yahoo 365
Braly, Angela F. WellPoint 42

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Burns, Ursula M. Xerox 121

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Elsenhans, Lynn L. Sunoco 68
Jung, Andrea Avon Products 226
Kullman, Ellen J. DuPont 84
Meyrowitz, Carol M. TJX 119
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Mooney, Beth E. KeyCorp 417

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Nooyi, Indra K. PepsiCo 43

Rosenfeld, Irene B. Kraft Foods 49
Sen, Laura J. BJ's Wholesale Club 221
Woertz, Patricia A. Archer Daniels Midland 39

Source: “Women CEOs”,

http://money.cnn.com/magazines/fortune/fortune500/2011/womenceos/,May 23rd 2011

“But, were the women qualified enough to head the top notch position in companies”, asked Rand. The
argument on whether there were enough qualified women to lead the Corporates did not hold water. This
aspect made an expert on women empowerment, Mary Ann Jorgenson to comment, “I have found that
people who say there aren’t enough ‘qualified’ women to fill the needs for board members often have a very
narrow definition of qualified, they are thinking of current and former CEOs, CFOs (and possibly others in
the C-Suite), and already-seated board members. But experience tells us that the primary qualification is
really honed business judgment.”18 She continued, “As for the response that people don’t look beyond their
same-sex peers, that’s just another version of the same response—they aren’t looking for business
judgment, the kind that’s built through years of experience in the trenches. Many women have the kind of
analytical, problem-solving skills and the collaborative approach required for dealing with critical business
challenges as well as for providing effective monitoring at the board level.”19 Women brought these

14 “Women in the board room: A global perspective”,

http://www.corpgov.deloitte.com/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/NwNor/Page%
20Copy/Home/Women%20in%20the%20Boardroom%20-%20November%202011.pdf, November 2011
15 “Women Breaking Through Glass Ceiling”,

http://www.careercurve.com/documents/CC_Press%20Release_Women%20Break%20Glass%20Ceiling.pdf, November 8th

2011
16 “Women Earn Their Way to the Top”,

http://www.careercurve.com/documents/WomenEarnTheirWayToTheTop_CC_PointOfView_2011.pdf, 2011
17 “Elizabeth Dole Quotes”, http://womenshistory.about.com/od/quotes/a/elizabeth_dole.htm
18 “The Missing X Factor on Corporate Boards”, op.cit.
19 ibid.

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

attributes to the boardroom and would enrich the decision making process. But there were other factors
which had proved inhibitive for the progress of women executives.

Motherhood was considered as a deterrent for women’s growth in corporate world and this was echoed by
Adrian Wooldridge, a writer for The Economist, “The fundamental problem here is that being a very high-
powered business executive these days is exceptionally demanding on people’s time … and you do get a
very high dropout rate of women in their 30s.”20 He added more to validate his point. He said the quota
system would not work effectively but the real issue was bringing in more women back to the service after
they had raised their children. For this to happen there should be empathetic women in top rungs of the
work force who would identify with the problem and give a serious thought about utilising this latent talent
pool.21

Another highpoint was the study conducted by McKinsey & Company in 2007, which had revealed that the
presence of women in board rooms had a positive effect on the over all performance of the company.
Companies with more women representation in boards were found to be outperforming than those with

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lower representation of women in boards (Annexure I). Diverse and inclusive boards were in a better
position to deliver the goods as the diversity in the board brought out fresh perspectives and ideas to a

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problem and resulted in a better decision. Even the financial results were found to be high. There was a

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42% higher return in sales, 66% higher return on invested capital and 53% higher return on equity
compared with their rival companies.22 There were valid reasons to promote more women into executive
positions. (Exhibit II).

Exhibit II
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Reasons for Promoting Women Leaders

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 Women were leaving corporate America nearly twice as fast as men.

 Ignoring women meant ignoring a crucial talent pool.
 The one-dimensional model of career progression and compensation was outdated and ineffective.
 Women offered a unique and valuable business perspective.
 Women leaders attracted new female talent and invigorated women working below them.
Source: Einhart Nancy, “Survival Tactic: Recognize Your Female Talent”,
http://www.fastcompany.com/articles/2001/01/act_fineline.html, December 31st 2000

Alex took a fast stride to reach the next pit and pitched a ball. Rand followed Alex grasping his breath and
added sarcastically, “How about women CEO’s position globally”. To this Alex replied the global situation
was the same as in the US except for some Scandinavian countries (Annexure II). A study conducted by
CareerCurve Workforce Solutions23 had established that glass ceiling might exist in the workplace and it
was not to the level of barrier it had used to be.

Many executive women considered themselves as professional business people and they found no glass
ceiling which could inhibit their growth.24 But still women activists think that women were always
discriminated in their workplace. Discrimination in workplace could include lower pay and would be marked
by fewer advances in salary structure. Issues like discrepancies in hiring practices, training, development
and in promotional opportunities did pose a challenge to women workforce and these factors revealed the
glass ceiling which hindered women to progress further.

20 “The Missing X Factor on Corporate Boards”, op.cit.

21 ibid.
22 Lowrie-Chin Jean, “Are they Andrew Holness's 'Lucky 13'?”,

http://m.jamaicaobserver.com/mobile/columns/Are-they-Andrew-Holness-s--Lucky-13--_10255641, November 28th 2011

23 CareerCurve is a talent consulting and coaching firm providing workforce solutions focused on leadership development,

performance enhancement and career transition.

24 ibid.

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

The major factor which had to be considered for lack of women in corporatedom was the ‘leaky’ talent
pipeline.25 Women entered the workforce (53% of new hires) in large numbers and in the next level of
managers it had dwindled to 37%.26 Further up in the hierarchy, only 26% of vice presidents and senior
executives were female whereas in the executive committee it was only 14%.27 Moreover nearly 62% were
in staff jobs that did not lead to a CEO position.28 This was in marked contrast to 65% for men who could
hold jobs in executive committees. That was the state of affairs for women progression in corporates.
Experts claimed that it was the responsibility of the Government to plug the leaky talent pipeline and bring
out more talented women into limelight. Barbara Krumsiek29 in her 2010 report on Examining Cracks in the
Ceiling had said, “The number of women and minority board members and executives has remained
essentially flat over the past several years, demonstrating a clear disconnect between diversity initiatives
and outcomes.”30 Sheryl Skaggs, a sociology professor at the University of Texas-Dallas had commented
on advantages of having women in board rooms. She said: “Women bring different perspective to the
playing field, which often helps bottom line. They bring different problem solving strategies, different
networks offer different opportunities to companies.”31 Sarah Palin, after being chosen Republican Party’s

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US Vice Presidential candidate in August 2008 had remarked that, “It was rightly noted in Denver this week
that Hillary left 18 million cracks in the highest, hardest glass ceiling in America. But it turns out the women

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of America aren't finished yet, and we can shatter that glass ceiling once and for all.”32

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Then what is prohibiting women to reach the top echelons of power? asked Rand. To this Alex replied that
was a paradox. The glass ceiling that had prevented women to achieve was considered as mockery by
many women themselves. What had made many women to reach top contenders posts in the Fortune 500
companies were through hard work, talents, leadership skills, mentors, supports systems and good luck.
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Rand retorted, “More than that they had to overcome their mindset and the glass ceilings were inside their
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brains! They should strive for visibility in the board room through their own merit”. “A good example was that
of Rometty who had reached pinnacles of glory through determination and skill”, replied Alex.

Virginia Rometty: Life and Growth at IBM

Virginia ‘Ginni’ M. Rometty (Rometty) was the eldest daughter of four of the siblings of a divorced single
mother who grew up in a Chicago suburb. Her mother single handedly raised them and wanted them to be
high achievers. They proved themselves right. Rometty’s two sisters were able to reach senior positions in
Accenture Consulting and Coca Cola respectively while her only brother was the CEO of Allenberg Cotton
Co, one of the largest cotton traders in the world.33

Rometty, IBM’s 30-year veteran was a technocrat with a bachelor's degree in computer science and
electrical engineering from Robert R. McCormick School of Engineering and Applied Science at
Northwestern University. That was considered a rarity in those days to major in both. She passed out in
1979 with high honours.34 Soon after her graduation in 1979, she joined General Motors Institute (now

25 Barsh Joanna and Yee Lareina, “Unlocking the full potential of women in the US economy”,
http://www.mckinsey.com/client_service/organization/latest_thinking/unlocking_the_full_potential.aspx, April 2011
26 ibid.
27 ibid.
28 ibid.
29 Barbara J. Krumsiek is Chair, CEO and President of Calvert Investments, Inc., a leading investment management firm

headquartered in Bethesda, Maryland.

30 “Move up the Corporate Ladder Stalls for Women”, http://www.diversebusinessnews.com/?p=1837, October 12th 2011
31 “Move up the Corporate Ladder Stalls for Women”, op.cit.
32 “Authors: Sarah Palin Quotes, Famous Sarah Palin Quotes Quotations Sayings”,

http://www.allgreatquotes.com/sarah_palin_quotes2.shtml
33 “Global Players: Virginia Rometty, CEO-designate, IBM”,

http://www.thomaswhite.com/explore-the-world/global-players/virginia-rometty.aspx
34 ibid.

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

Kettering University), in an internship program where she met her husband Mark. In General Motors she
was involved in application and systems development

Later in 1981 Rometty joined IBM as a systems engineer.35 This career move turned on to her advantage as
she would become the first woman to lead the IBM in its 100-year history. Rometty was chosen by IBM from
its ranks and it was an honour for her to lead the company in which she had served for 30 years in various
capacities. Her long reign in IBM had helped her to prepare for this prestigious post. IBM with revenue of
$100 billion in 2010, a corporate behemoth with more than 425,000 employees worldwide had a reputation
of grooming its own people to lead the company.36 She deserved to be elevated to this level echoed many
of her well-wishers. Experts were of the view that her training and mentoring in IBM had made her suitable
for this assignment. She was known for her hard work and commitment to meet challenges. She was
quoted as saying, “I learned to always take on things I’ve never done before. Growth and comfort do not
coexist.”37

It was an irony that Carly Fiorina’s (Fiorina) decision, then CEO of Hewlett Packard (HP), not to buy the

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offer of PricewaterhouseCoopers had brought Rometty into limelight. PricewaterhouseCoopers (PwC) was
forced to divest its Consulting Services business as there was a conflict of interest between its Auditing

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Division and the Consulting Business. Fiorina declined to buy PwC consulting business and it was

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subsequently acquired by IBM for $3.9 billion. It was said to be one of its largest deal ever.38 Rometty, a
general manager then was instrumental in PwC integration with IBM. To bring this integration smoothly, she
had to face many challenges and the important one was to convince experienced PwC consultants to stay
with IBM. IBM was considered then as a technology services company and its cost-cutting culture was
different from PwC. In the integration process Rometty helped the senior consultants of PwC to have their
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say in their travel budgets and eventually she had retained nearly 90% of PwC’s senior consultants. Then
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she was made the Managing Partner of their Business Consulting division. In 2005, she became the Senior
Vice President of the group and her achievements there included a raise in the profit by 42% in her first two
years.39 “She’s an engaging woman - great with customers, customers just love Ginni”, said Fred Amoroso,
who was her boss in the financial-services consulting division.40 Later she rose and headed IBM global
sales in 2008.41 In 2009 she was the overall in charge of strategy and business development. She was
voted as the most powerful women in business by Fortune magazine and was slated to become a likely
successor to Palmisano.

Palmisano commented on her caliber, “She brings to the role of CEO a unique combination of vision, client
focus, unrelenting drive, and passion for IBMers and the company's future.”42 There was an anecdote about
Rometty how she was thinking twice to take on a responsibility in her career. When said, she needed some
time to mull over on taking up the new responsibility, her husband questioned her, “Do you think a man
would have ever answered that question that way?”43 And that made her to realise her potential. “What it
taught me was you have to be very confident, even though you’re so self-critical inside about what it is you
may or may not know, and that, to me, leads to taking risks,” She added.44 And all her endeavours were
successful said Alex trying to take a swing with his golf club and hit it right.

35 Tremmel Vaughan Pat, “Virginia Rometty Chosen for Top Job at IBM”,
http://www.northwestern.edu/newscenter/stories/2011/10/rometty-ibm-ceo.html, October 26th 2011 
36 “Fortune Magazine Names IBM Top Global Company for Leaders”, http://www.mcpressonline.com/survey-

results/fortune-magazine-names-ibm-top-global-company-for-leaders.html, November 7th 2011

37 “Quote from: Can This IBMer Keep Big Blue's Edge?”, http://1click.indiatimes.com/quote/0b0DfJC7MH7Z9?q=IBM
38 “IBM names 1st woman CEO”, http://www.omaha.com/article/20111027/MONEY/710279954, October 27th 2011
39 “IBM names Rometty first female CEO”,

http://www.crainsnewyork.com/article/20111025/TECHNOLOGY/111029928, October 25th 2011

40 “Ginni Rometty becomes IBM's first female CEO”, http://articles.timesofindia.indiatimes.com/2011-10-

27/hardware/30327674_1_sam-palmisano-ibm-veteran-ginni-rometty, October 27th 2011

41 “Global Players: Virginia Rometty, CEO-designate, IBM”, op.cit.
42 Brbaklić David, “IBM’s First Female CEO Ever”,

http://www.brandingmagazine.com/2011/10/26/ibms-first-female-ceo-ever/, October 26th 2011

43 Miller Cain Claire, “For Incoming I.B.M. Chief, Self-Confidence is Rewarded”,

http://www.nytimes.com/2011/10/28/business/for-incoming-ibm-chief-self-confidence-rewarded.html, October 27th 2011

44 ibid.

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

Later Rometty had led the operations of building IBM’s Global Delivery Centers in China and India, and had
gained personal knowledge in leading large-scale complex transformations. For three years until 2009, she
had served in the board of American International Group Inc. and was instrumental in increasing the
government rescue amount to the value of $182.3 billion.45 She was inducted into sales promotion of IBM in
2010 which included marketing and strategy. Industry insiders said that she not only held responsible
positions in IBM, she was also made to acquaint herself to global connections so as to make her lead a
multinational company in future. She had commented her long tenure in IBM as challenging and what kept
her growing, “Every day I get to ‘Think’ and work on everything from digitizing electric grids so they can
accommodate renewable energy and enable mass adoption of electric cars, helping major cities reduce
congestion and pollution, to developing new micro-finance programs that help tiny businesses get started in
markets such as Brazil, India, Africa. After 30 years, I’m genuinely excited to get up and apply those
problem- solving skills in ways I would never have imagined when I was sitting where you are.”46 She would
assume her new position as CEO of IBM on January 2nd 2012 and would be responsible for revenue, profit,
and client satisfaction in its 170 global markets. “But she had to face a multitude of challenges buddy!”, said

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Rand running up a short course.

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Leading from the Front: Challenges Ahead

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Rometty created history in IBM by becoming its first woman CEO and with Meg Whitman as the head of
Hewlett Packard it was expected that they would make a great pair in leading these two technology
companies to the future. She would be taking over charge in January 2012 while Palmisano would continue
as IBM’s Chairman. Rometty’s responsibilities included IBM’s worldwide results, its global strategy,
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marketing and communications. Palmisano was putting forth the thoughts, aspects and factors which went
into making Rometty as an ideal choice for the CEO position. He elaborated, “Ginni Rometty has
successfully led several of IBM’s most important businesses over the past decade – from the formation of
IBM Global Business Services to the build-out of our Growth Markets Unit. But she is more than a superb
operational executive. With every leadership role, she has strengthened our ability to integrate IBM’s
capabilities for our clients. She has spurred us to keep pace with the needs and aspirations of our clients by
deepening our expertise and industry knowledge. Ginni’s long-term strategic thinking and client focus are
seen in our growth initiatives, from cloud computing and analytics to the commercialization of Watson. She
brings to the role of CEO a unique combination of vision, client focus, unrelenting drive, and passion for
IBMers and the company’s future. I know the board agrees with me that Ginni is the ideal CEO to lead IBM
into its second century.”47That sums up the abilities of Rometty said Alex. And hearing from Palmisano it
sounded so credible he commented further.

Experts were of the view that Rometty was leading the Company at a special moment. She herself reflected
on this aspect. Rometty said: “There is no greater privilege in business than to be asked to lead IBM,
especially at this moment. Sam had the courage to transform the company based on his belief that
computing technology, our industry, even world economies would shift in historic ways. All of that has come
to pass. Today, IBM’s strategies and business model are correct. Our ability to execute and deliver
consistent results for clients and shareholders is strong. This is due to Sam’s leadership, his discipline, and
his unshakable belief in the ability of IBM and IBMers to lead into the future. Sam taught us, above all, that
we must never stop reinventing IBM.”48 She emphasised her ideals as, “Don't accept inevitable. That
means, you've got to keep reinventing. We're in an industry in which you constantly have to make new

45 “Ginni Rometty becomes IBM's first female CEO”, http://articles.timesofindia.indiatimes.com/2011-10-

27/hardware/30327674_1_sam-palmisano-ibm-veteran-ginni-rometty, October 27th 2011
46 “IBM's Rometty Breaks Ground as Company's First Female Leader”,

http://news.businessweek.com/article.asp?documentKey=1376-LRUA8R1A74E901-6HJ5G2BD8B8KV67V79BOHGBTKF,
October 26th 2011
47 “Virginia M. Rometty elected IBM president and CEO”, http://www.ibm.com/ibm/sjp/announcement.html, October 25th

2011
48 Poeter Damon, “IBM Elects First Female Chief Executive, Palmisano to Remain Chairman”,

http://www.pcmag.com/article2/0,2817,2395277,00.asp, October 25th 2011

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markets.”49 She sounded optimistic that IBM’s growth engine was at the right track under Palmisano. And
she was right said Rand as IBM was doing too well in all its frontiers of activity. But would she fit into IBM
scheme of things he asked while playing his air shot. Rometty’s past track record would come in good stead
replied Alex and I assure you that she would take IBM to great heights he remarked.

IBM had already made significant progress in its businesses of PCs, printers and hard disk drives and had
increased its stake in high-value businesses and technologies. And it had expanded its realms into
developing countries like China, India, Brazil and Russia. IBM had wanted to focus on its Smarter Planet
strategy50 in future and it was natural for Rometty to align her style of management towards that strategy. It
had increased its pre-tax earnings, earnings per share (EPS), and free cash flow. Its EPS had gone up by
five times with the generation of $100 billion in free cash flow.51 Since 2002 it had increased its shareholder
value by over $100 billion through its market capitalization and dividends paid.52 Analysts had opined that
Rometty would strive to work towards continuing growth and this would be an enormous challenge in fragile
economic situation. She should work towards living up to high expectations that were expected of her.53
This made Useem, Director at Wharton’s Center for Leadership and Change Management to comment of

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the challenges ahead for Rometty. “The challenges ahead for Rometty, 54, who has been with IBM for 30
years, are huge. The company has 400,000 employees and more than $100 billion in revenues. While

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making sure that earnings from existing lines of business continue to rise, she also has to ensure that the

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company is building the new and innovative lines that will increasingly come to define it in the years ahead,”
he said.54 Would her home grown talent as an IBMer make her shine as a Technology leader also? asked
Rand. “Certainly she would”, replied Alex continued playing his favourite shot.

Rometty would be under intense scrutiny as she takes on the big blue into its next trail of growth. Trade
Educational material supplied by The Case Centre

experts were of the view that Rometty’s task would be to make IBM fare still better. Wall Street analysts had
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commented that in her position as CEO even her past achievements would hold little water as IBM’s
continuing growth had to be accelerated. They were of the view that the strategies which proved successful
earlier might not work in future also. It was IBM’s business model of acquiring technology service
companies to expand its business which had proved worth all along for IBM. It was considered that future
acquisitions of smaller companies would be hard as other competitors would try to follow time tested IBM’s
model.55 Another aspect which needed to be given thought was the raising wages in several overseas
locations and the intention of operating in overseas may not be viable in the long run taking into
consideration IBM’s inherent cost reductions drive.56 She had to keep pace and balance with the rapidly
changing technology scenario and focus on core areas of research and development for IBM’s long term
growth and sustainability.57

Another key issue that needed to be addressed by Rometty was about Mega-vendors. In this regard,
Ovum’s58 Chief Analyst, Carter Lusher commented, “Rometty’s appointment also turns up the heat in the
competition between what Ovum calls ‘mega-vendors’. Mega-vendors are those select few technology

49 Hempel Jessi, “IBM's new chief: ‘Don't accept inevitable’”,

http://tech.fortune.cnn.com/2011/10/25/ginni-rometty/, October 25th 2011
50 It meant that intelligence is being infused into the systems and processes that enable services to be delivered; physical

goods to be developed, manufactured, bought and sold; everything from people and money to oil, water and electrons to
move; and billions of people to work and live.
51 “Virginia M. Rometty elected IBM president and CEO”, http://www.ibm.com/ibm/sjp/announcement.html, October 25th

2011
52 ibid.
53 Martin Colette, “What Does it Take to be IBM's First Female CEO?”, http://www.forbes.com/sites/work-in-

progress/2011/11/04/what-does-it-take-to-be-ibms-first-female-ceo/, November 4th 2011

54 “Inside Job: Changing of the Guard at IBM”,

http://knowledgetoday.wharton.upenn.edu/2011/10/inside-job-changing-of-the-guard-at-ibm/, October 26th 2011

55 “Global Players: Virginia Rometty, CEO-designate, IBM”,

http://www.thomaswhite.com/explore-the-world/global-players/virginia-rometty.aspx, November 22nd 2011

56 ibid.
57 ibid.
58 Ovum provides clients with independent and objective analysis that enables them to make better business and

technology decisions.

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

vendors that can sell to enterprise and public sector organization an integrated and optimized IT stack, from
hardware through system software to applications. The goal of the mega-vendor is to harvest more IT
‘wallet share’, i.e. secure a greater portion of the organisation’s IT spend.”59 This would pose a challenge to
IBM in future.

Many experts were of the view that under her leadership IBM had to reinvent yet again in the coming
decade, as it had done before during the reigns of Louis Gerstner in 1990s and Palmisano during the
2000s.60 IBM’s globalisation challenges were needed to be met as most of its employees were outside US
and nearly one quarter of IBM employees were from India. David Hsu, a Wharton management professor
had outlined the challenges for IBM in the near decade, “Providing business services and data analytics is
getting to be a more competitive space, as many of IBM’s peers have been reorienting themselves to
compete in these domains. Given the quick pace of information technology evolution as it relates to
business services, Rometty will [need to] recognize and respond to external threats and opportunities in
these markets…. Moreover, since Palmisano is handing off management responsibilities at a time when
IBM has been doing relatively well, Rometty may face resistance in deviating too much from the status quo.

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Hopefully this does not constrain her in exercising bold leadership should the opportunities arise.”61 He
added, “There can be a virtuous cycle of leadership in research and development and in commercialization

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of products and services. If IBM can serve more growing markets and interact with varied customers to

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meet their needs, it will be easier to fund ongoing R&D, which in turn will allow the company to successfully
compete in the global marketplace.”62

Meanwhile Rometty had set her priorities and said, “I’ve been head of strategy at IBM and together with my
colleagues built our five-year plan, my priorities are going to be to continue to execute on that.”63 In her
Educational material supplied by The Case Centre

commencement speech at her alma mater she emphasised on students to seek challenges. “You have the
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skills that can be applied to some of the world’s most significant challenges,” she said.64 Further added that,
“I know that is what has always drawn me to, and kept me at IBM. IBM’s long- standing mantra is ‘Think.’
What has always made IBM a fascinating and compelling place for me, is the passion of the company, and
its people, to apply technology and scientific thinking to major societal issues.”65

Experts saw the appointment of Rometty as a strategy shift in IBM’s policy to focus on business problems
rather than on technology.66 They were of the view that IBM should change from an outsourcing services
model to an operating expense-based cloud computing services model.67 As David Tapper, Vice President
of outsourcing and offshore services for IDC, a market researcher headquartered in Framingham, Mass
puts, “The challenges Rometty faces are every bit as treacherous as the ones IBM faced as it transitioned
from the mainframe computing era to the PC era. Systems integration technology consulting is becoming
more embedded in delivery of operations through a SaaS (Software-as-a-Service) model so customers may
not need as much system integration services anymore and IBM has a very big systems integration
technology consulting service.”68 On Rometty’s role in bringing about the change, he commented, “She has
got ramp up time, but at the end of the day, she has to tackle these issues head on.”69 He further added

59 Lusher Carter, “IBM appoints Virginia Rometty as CEO, expert comment”,

http://ovum.com/press_releases/ibm-appoints-virginia-rometty-as-ceo-expert-comment/, October 27th 2011
60 ibid.
61 “Inside Job: Changing of the Guard at IBM”, op.cit.
62 ibid.
63 Hymowitz Carol and Frier Sarah, “IBM’s Rometty Breaks Ground as 100-Year-Old Company’s First Female Leader”,

http://mobile.bloomberg.com/news/2011-10-25/ibm-names-rometty-to-succeed-palmisano-as-its-first-female-chief-
executive.html, October 26th 2011
64 Jahan S Rizana, “IBM takes a new road”, http://arabiangazette.com/ibm-takes-road/, October 26th 2011
65 ibid.
66 “IBM takes a new road”, op.cit.
67 “New IBM CEO Rometty Faces Treacherous Cloud Computing Services Transformation”,

http://internationalbig.com/2011/10/new-ibm-ceo-rometty-faces-treacherous-cloud-computing-services-transformation/,
October 26th 2011
68 “IBM takes a new road”, op.cit.
69 ibid.

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IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

that, “My belief is IBM has to build a distinct business unit like a cloud unit that pulls it altogether and moves
the old business model to the new business model.”70

Alex was vehement and said, “Sure, Ginni Rometty would rock the boardroom of IBM and take it to the next
level. She would make the Elephant dance again!” To this Rand retaliated, “Better watch out. Do not be
over positive. Remember the stint of Carly Fiorina as CEO of Hewlett Packard? Let us wait and watch!
Then they happily continued with their play.

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70 ibid.

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12
Annexure I

oards_ (2004-2008).pdf
Women Corporate Presence Versus Company Performance

Source: “Bottom Line: Corporate performance and women’s representation on boards”,

http://www.catalyst.org/file/445/the_bottom_line_corporate_performance_and_women's_representation_on_b
412-001-1
IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

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13
Annexure II
Women Occupying Global Board Rooms

Source: Catalyst, “Changing workplaces. Changing lives”,

http://www.catalyst.org/publication/433/women-on-boards, May 2011
412-001-1
IBM’s New Chief Virginia Rometty: Breaking the Glass Ceiling

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