Leadership in Action > Disruption by design

The story behind how IBM Chairman and CEO Arvind Krishna made the crucial decision to restructure the company and create greater stakeholder value.

Disruption is now the rule, not the exception. The rapidly changing landscape demands a CEO with business acuity, technical know-how and a curious mindset. “You have to be a continuous learning machine,” says IBM Chairman and CEO Arvind Krishna, an engineer by training who switched to the company’s business side in the early 1990s. “You’re surrounded by really smart people. Listen to their questions—that makes you learn.”

Krishna’s broad view of the global business landscape and personal comfort with change—his family moved often during his school years—led him to a momentous decision in 2020: He would accelerate IBM’s hybrid cloud growth strategy by spinning off the business unit that manages IT infrastructure into a new public company.

Separating the two businesses would give each one greater agility and independence, qualities Krishna knew would be essential for IBM to achieve its transformative goal: to win the hybrid cloud battle. IBM would now have the flexibility to tailor any combination of infrastructure and cloud-based AI services to a client’s specific situation. “IBM can meet clients’ needs at every stage of their digital journey, from being highly reliant on data centers to receiving all their support through the cloud,” says Sharath Sharma, Americas Leader, Strategic Transformations and CEO Services at EY. “The visionary thinking required for a CEO to choose to split their company is quite extraordinary.”

You’re surrounded by really smart people. Listen to their questions—that makes you learn.

Krishna believes a more nimble delivery of IBM’s prowess in computing, particularly AI, will set it apart in the intensely competitive cloud services business. “The data available through the cloud far outstrips humans’ ability to use it,” says Dave Padmos, Head of Technology, Media and Entertainment and Telecommunications Services for EY Americas. “Having IBM’s AI solutions running on its own platform is intended to give customers more value.”


Such transformative change can succeed only to the extent that the CEO can cultivate faith throughout the organization in the company’s offerings and strategy. Krishna’s expansive outlook grounds him in the perspectives of both IBM’s salespeople and its vaunted and influential engineers—all of whom are essential as the company splits in two. “In the end, you have to motivate people,” Krishna says. “A lot of engineers are motivated to get the technologies they’re inventing out to millions and millions of users. And people in sales get excited when they can bring a lot of value to their clients.”


Such change also requires a partner to help manage the complexity. “As IBM’s journey partner, EY brings to bear its deep understanding of how spinoffs and mergers work and how to manage all the triggering events,” Sharma says. “We excel at managing the convergence of many triggers.”


Despite the operational and technological complexity inherent in mapping IBM’s transformation, Krishna advises CEOs not to get bogged down in technology, but to keep the focus on value. “Don’t just be the smart person; don’t just be the person who can apply technology for technology’s sake,” Krishna advises. “You’ve got to understand what the value is and why somebody might be interested in making a commercial offering out of it.”

This is part of Leadership in Action — a master class series featuring prominent CEOs highlighting the decisive moment where bold decision-making has made a material impact on their company and career.


At EY, we believe that digital transformation is there to unlock human potential, and accelerate new and better ways of working. 

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