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Another Perspective


When Oxford Was Obnoxford

It was December 1208 or 1209. New Year's Day in England was March 25; the month after December 1208 was January 1208.  Somebody bumped off a young woman who lived in Oxford.  The villagers blamed university students, and, led by their mayor, hanged two.  The remaining academics blew town right away, many moving east from their ford on the River Thames to a bridge over the River Cam.  That is how Oxford University gave birth to Cambridge.  They were the sole universities in England for 600 years, providing an organizational model for many academic institutions and some commercial companies.

Cam bridge
Cambridge Bridge
The bridges over the River Cam were crossed
when townies chased scholars out of Oxford in 1209

The University of Oxford got its start a couple hundred years before the establishment of its rowing rival.  The village, well outside the reach and largely beyond the influence of London, became a home for schools, not yet colleges, engaged in training theologians for the holy and lawyers for those less so.  They were chartered and influenced by the Roman Catholic Church, but nevertheless retained some independence.  They were governed by canon law rather than civil law, a fact that made the hanging of two clerks, as students were known in those days, even for alleged participation in a murder, extralegal.

At the time, however, there wasn't much the Church could do to intercede.  England's King John had a falling out with Rome.  England was under an interdiction for five years beginning in 1208.  John, who didn't accept the Church's choice for Archbishop of Canterbury, was excommunicated by Pope Innocent III.

The last thing college masters, nominally supervised by bishops, wanted was to fight the political establishment.  They had a lot to lose, including the tax exemptions and other legal perquisites.  Eventually, John caved, apologized to the Pope in writing and thus ended the sanctions.  By 1213 the hubbub in Oxford had settled down to some extent and the University of Oxford enjoyed a rebirth.  A couple years later John make another important compromise when he signed the Magna Carta, sharing power with other nobles and putting England on a path that would eventually lead to democracy.

(The town-gown tensions never completely faded in either Oxford or Cambridge, and are still evident today.  Recently, an American visitor to Oxford enjoyed the courtesy of access to much of Balliol College, one of the oldest components of the university, even as others reported that much of Cambridge University was off limits to outsiders.)

It got its official charter in 1214 and returned to the organizational model that has served it for the past 900 years.  That model has been copied elsewhere, not only in academic institutions but also in private and public research organizations.  Increasingly, it seems that the Oxbridge model might be a good way to manage high technology companies that have moved away from equipment manufacturing and toward the creation of software and interactive facilities that directly serve consumers of information and other media content.

IBM might be headed in that direction, but it would have to change quite a bit to metamorphosize from its old top-down authoritarian management model.  In the distant past, the pre-Gerstner era, what IBM may have characterized as divisional autonomy may have been that only in the imagination of Armonk's managers and their public relations apologists.  In practice, IBM had fared poorly because top management relinquishes its grip on divisional managers not so much to improve creativity and inventiveness but to basically slack off.  Gerstner reversed the trend, instilling new discipline on the company, but his management plan turned out to be a one-trick pony.  Gerstner's brilliant insight was that IBM could provide services to its customers, largely supplant their internal technical corps, and achieve great growth in revenue and profit while giving user organizations improved value for money.

King John
King John of England
The controversial monarch who reigned after Richard the Lionhearted
had spats with the Pope and England's barons,
in both cases eventually reaching compromise

As the Gerstner regime moved into services, customers were spending a third or more of their information technology budgets on what became packaged and sometimes ad hoc services delivered by IBM.  Gerstner's IBM persuaded customers that it was safe and indeed prudent to trust IBM's personnel with the support, maintenance and even the applications development efforts that had formerly been done by a combination of user company employees, specialist consultants and independent software vendors willing to tailor their offerings to users' requirements.  As it turned out, IBM had a valid point.  Users who turned to IBM for services got satisfactory results from the computer systems they owned, rented or paid for as part of their services contracts.  This boost in IBM's business allowed Big Blue to contemplate disposals that would otherwise have been unthinkable, such as the sale of the company's disk drive manufacturing business and its PC division, and continues to allow IBM to sell off its X86 server production and chip fabrication.  But rapid growth in services as IBM's customers transformed in-house efforts to outsourcing is now over; organic growth of this aspect of IBM now occurs at a slower pace.

But along the way, it has become clear that IBM does not have divisional leaders who are able to lead the invention of new modes of computing and sell their groups' development up the line at IBM headquarters.

Unfortunately for IBM, its shareholders, and its customers, much of the growth in information technology during the past several years has come from companies that appear, at least to outside observers, to far more closely resemble Oxbridge-type universities than traditional manufacturing concerns.  Apple has allowed invention to bubble up from its various design and development groups in the form of the iPhone and iPad.  Google has turned its concept of data monetization, its vast mapping and geolocation prowess, and its love of gadgets from robotic automobiles to wearable cameras into appealing products and services.  Amazon has opened up the work of groups that built its infrastructure for use by others, along the way becoming a computer services powerhouse, a media distribution goliath, and an admired creator of computing tablets, media terminals and, soon, phones.

IBM has somehow managed, or perhaps mismanaged, to invent little of what is shaping the future while boasting that it is the world's most prolific registrant of patents.  There is, it seems, a difference between helping patent attorneys pay for their children's education and getting tens of millions of people to talk to a robot named Siri.

The Oxbridge governance model involves a brilliant blend of delegation and management.  The universities at Oxford and Cambridge began as colleges that shared styles of teaching, student accommodation and picturesque dining halls with hard wooden chairs while retaining great price in each variation on the college theme.  The colleges, then and now, compete with each other in many ways.  Yet all of them share in a greater pride that is part of their membership in the surrounding University.  University College, Balliol, and Merton may each claim to be the oldest and finest at Oxford and their students may battle in sports and argue in pubs, but when the big boat race against Cambridge is underway, they are all wearing dark blue.  Perhaps more importantly, every college including each of its students is perpetually aware of its privilege and good fortune in relation to the surrounding town, country, and perhaps world.

Balliol
Balliol College Dining Hall
England's good and great, among others,
have dined at Oxford's colleges for nine centuries

More often than not, the colleges and their students are grateful for their elevated positions.  They learn early in their university days, if they don't arrive with the knowledge, that the important measure of their careers and indeed their lives comes from the outside world.  School grades are important, to be sure, and good assessments by teachers and other authorities are vital, but the students must look past these measures at all times and remain aware of their position in the outside world.  The truly intelligent students, the ones that will bring glory to their schools (and themselves) must never let the gown separate them from the town.

Traditional industrial companies, including IBM, often have several divisions, each with its local management.  There is bound to be inter-divisional competition for budget funds and other corporate rewards.  And company employees are likely to have pride in their divisions and the company as a whole.  But in traditional industrial organizational models an individual's career is overwhelmingly governed by the employees' relationships with superiors and perhaps to their ultimate bosses at surrounding corporate levels.  The outside world often appears separate, even out of reach from within their roles at work.  This can reduce employees to cogs in a vast machine.  This attitude may be tolerable for a worker on an assembly line whose output is a well-performed mechanical task.  But it isn't going to foster the atmosphere of creativity and invention and participation in society that is needed to make an industrial company great.

At IBM there is unquestionably an ongoing effort at every level to improve the capability of IBM's hardware and software products.  But a great deal of that effort has been devoted to reducing the cost of the same basic technology that IBM has been offering for decades.  This would be worthwhile and commendable if the functionality and value provided by IBM's offerings was a significant determinant of the success of the company's customers.  But that is rarely the case these days.  What used to work for IBM worked in a different time and place.  What works now, what fuels the revenue and profitability of companies in the information technology realm, are services based on myriad tiny transactions, whether eyeballs spotting small ads on an iPad screen or on-the-move purchases of low value goods and services.

IBM has achieved visible, inventive leadership in that low-value transaction universe in only one truly important services area: mobile phone funds transfer.  IBM's work on behalf of mobile telecommunications services providers in Africa and Asia is, perhaps improbably, the brightest star in IBM constellation.

Lately IBM has been forced to share some of its revenue with other services providers, notably in India, but the game is still young.  IBM can, if it is smart enough and lucky, too, fight back and overcome its rivals before they take root.  IBM can also try to bring its third world offering to wealthier realms by finding ways to sell its inexpensive mobile payment services into markets that currently are not monetized.  Amazon can sell books over the air but so far nobody is successfully selling single copies of newspapers or individual articles or single 30-minute television shows into mobile markets.  IBM, overwhelmingly an employer of personnel in third world countries, has, astonishingly, failed to bring its accomplishments in that geopolitical segment to the ever-hungry markets in the post-industrial states.  The company's failure stems from its inability to get ideas to bubble up from its various divisions.

In the Oxbridge model, the movement of innovation from students and colleges up to the university and out to the surrounding world seems to have a few key ingredients.  One is respect by the higher-ups for their subsidiary colleagues and its concomitant willingness to offer praise and encouragement.  Another is humility, acceptance that a valuable new idea might come from a venerable old researcher or it might come from an undergraduate with a lively mind .  .  .  or from somewhere else but noticed by one of the many scholars whose métier is observation.  A third is a willingness to take modest risks, to try out an idea that might fail even if that failure becomes a small public embarrassment.

It is time for IBM's managers and directors to shake up the company, to get it to be more than the museum of the mainframe.  The company's shareholders and customers are tired of putting up with a company that's run by a bunch of pompous Ashmoleans.

— Hesh Wiener April 2014


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