CEO Ginni Rometty just explained her thinking on that deal last year where she divested IBM’s unprofitable chip business, not by selling it, but by paying $1.5 billion to its partner GlobalFoundaries to take the business off her hands.
When asked to name the biggest business lesson she learned over the past year, Rometty told Fortune magazine:
I’d say the biggest lesson – or reminder – was the importance of moving to the future, making decisions for the long term and betting big. That’s something everyone says, but it’s easier said than done.
When it comes to managing for the long term, we sold our semiconductor manufacturing operations last year. We did it in order to move to higher value. We actually shrank the company while many voices were calling out for top-line growth. And it’s doubly hard with something that has been part of your company for more than half a century.
While chip research and development are critical, chip manufacturing was no longer core to IBM’s future. We’ve done this before – with PCs and commodity servers – and no doubt we’ll do it again. It’s what you do when your goal isn’t just short-term results, but successfully leading your industry in the future.
So what does she see as core to IBM’s future? The super smart computer that can talk and reason like a human called Watson:
Watson learns. He is being trained by experts in healthcare and in an increasing number of industries and professions. The bet we have placed on Watson isn’t merely the size of the investment – now in the billions. The truly big bet was in opening up Watson to the world – putting him on the cloud, making Watson’s APIs open and available to the world’s developers, entrepreneurs and businesses – building an open ecosystem.
Rometty’s vision is that in the future, EVERY DECISION humans make will be done in conjunction with such a smart computer, like the movie “Her” or the Kim Stanley Robinson’s bestselling sci-fi book “2312.”
She’s likely right.
In fact, Microsoft CEO Satya Nadella has a simiar vision. Where he’s guiding Microsoft to usher in that world for consumers and employees, Rometty is trying it to big companies and industries, especially, health care.