Palmisano Hands The IBM Reins To Rometty

October 31, 2011 Timothy Prickett Morgan

The drama is over, and Ginni Rometty, who has spent the past three decades at IBM, is going to be the next president and chief executive officer at the company. Rometty, who is 54, beat out her colleagues Mike Daniels, who is 56 and who runs Global Services, and Steve Mills, who is 60 and who runs Systems and Software Group, for the job. Sam Palmisano, who has held the president position since 2000, the CEO job since 2002, and the chairman job since 2003, will remain chairman of the board at the request of Rometty and the board.

Rometty graduated from Northwestern University in 1979 with a bachelor’s of science in computer science and electrical engineering, so don’t think she is some kind of tech pushover. (Penn State Nittany Lions, 34, Northwestern Wildcats, 24.) After graduating, she put two years in at General Motors and then became a systems engineer in IBM’s Detroit office. She worked her way up through the tech ranks and eventually joined IBM’s Consulting Group, a precursor to the Global Business Services piece of the Global Services giant, in 1991.

IBM chairman Palmisano and future president and CEO Rometty on the bridge of the Big Blue mothership.

A little more than a decade later, it was Rometty who spearheaded the $3.5 billion acquisition of the IT consultancy practice of accounting PricewaterhouseCoopers, and it was her who made that merger work, with IBM retaining the top talent of the consultancy as well as the business relationships that PwC built. In the wake of that PwC acquisition, she was named general manager of the GBS group. In July 2009, she was put in charge of IBM’s sales and distribution business–what the outside world experiences as the IBM sales teams and the PartnerWorld channel organization–and the following July she was named general manager of IBM’s sales, marketing, and strategy operations–the third leg of the stool that is the now IBM Company, with Global Services and Systems and Software Group being the other two legs.

I have been thinking that after the re-convergence of Global Technology Services and Global Business Services under Daniels and the merger of Software Group and Systems and Technology Group under Mills back in July 2010 that Palmisano might be thinking of sticking around longer than the traditional 60-year-old retirement age for IBM CEOs. All of the top brass of IBM are roughly the same age, and IBM needs time to get its bench warmed up to take over the company in 2015 or so. After reading Palmisano’s letter to the company’s employees, you might draw the same conclusion as I did, which is that Palmisano won’t be chairman for more than a few years. Here’s that letter:

Dear IBMer,

I have exciting and important news to share with you.

The IBM Board of Directors has elected Ginni Rometty president and chief executive officer of IBM, and a member of the board, effective January 1, 2012.

Starting with the new year, Ginni is our leader. At the Board’s request, as well as Ginni’s, I will remain as chairman. My job will be to help her in whatever ways I can, wherever and whenever she seeks my time and counsel.

The time is right for this transition, given the success of our transformation over the past decade, the soundness of our strategy and the strong performance of our business. And Ginni is ready. Together with the board, we have worked closely to ensure a seamless leadership transition.

I don’t need to tell you that Ginni is an exceptional leader–a forward-thinker, passionate about our business, steeped in our values, and expert in the disciplines that are critical to our future success. Throughout her career–and especially as leader of Global Business Services and in her current role, Ginni has been a driving force behind the integration of the IBM company–from the integration of PricewaterhouseCoopers Consulting, to the integration of our solutions for clients, to the largest-scale integration of all, the global integration of IBM. She has spurred us to deepen our relationships with clients, bringing them unique expertise from IBM and greater knowledge of their businesses and industries.

We see this not only in our near-term results, but also in the speed and agility with which we are executing our GMU strategy and other growth initiatives. These initiatives–from Smarter Planet and cloud computing to analytics, which Ginni identified as a growth area when she led GBS–are, of course, key to our 2015 roadmap.

Beyond that record of leadership, Ginni understands the character of our company at a deep and personal level. She knows it is unlike any other company in its capacity to change the world. She also knows that a company committed to moving to the future must never stop changing. She shares my belief that IBM is positioned for a second century even more remarkable than our first. I cannot think of a better leader to launch that journey than Ginni Rometty. I know you will give her all the support you have so generously provided me over many years.

As for me, ten years as CEO are plenty. I have always seen myself as the temporary steward of a great institution, and my goal has been to hand over to a future generation a better IBM than the one I entered. When I think about the privilege of spending my career here, with the remarkable women and men with whom it has been my honor to work–and to turn over the CEO role at the conclusion of our centennial–I feel like the luckiest guy in the world.

My charge to you, as fellow IBMers, is never to forget what this company is, what it can be, and what our world can be as a result. We have been at the heart of one of the most extraordinary eras of change in human history–and what lies ahead promises to be even more radical, and even more transformative. We have witnessed the emergence of a truly global economy and society. We have seen the flowering of a new age in science and technology. We have seen the dawn of an era in which intelligence is being infused into all the ways our planet works. And we have watched, and are helping, billions of people better their lot in life by entering the middle class and modernizing their nations.

People everywhere are living through this time, but very few are blessed with the chance to shape it. I have seen how important that is as I’ve traveled around the world this year, sharing perspectives on our centennial. I have learned from students in Beijing, venture capitalists in Silicon Valley, scientists in India and leaders of business, government and academia in many countries that there is intense curiosity about IBM, not only as a story of business success, but as an emblem of something deeper.

What I have seen is a widespread hunger to fill a vacuum that I think we all feel now–the need for leadership, the need for hope. Hope that we still have institutions and enterprises, leaders and employees, scientists and global citizens who keep moving to the future, who keep reinventing themselves, who keep driving progress–and who do so while preserving those fundamental values that must be preserved.

I believe that IBM’s history offers people everywhere a credible basis for this hope. It’s an object lesson in the hard work of progress. And I believe IBM’s future, under Ginni Rometty’s leadership, will deliver richly on that promise.

As I said, after January 1, I will be available to help Ginni and the entire leadership team in any way I can. And long after I step aside as chairman, I’m sure you know that IBM and IBMers will always own my heart.