Jeff Kagan: Can New IBM CEO Re-Ignite Watson AI Growth?

Jeff Kagan  |

Every time a company changes its CEO, many changes always follow. Some of those changes are positive. Some are mistakes. I expect this to happen at IBM as Ginni Rometty steps down and Arvind Krishna steps up as CEO. Let’s take a look at the challenges he faces and what we can expect as investors, customers and workers.

I have been following IBM for quite a long time. They have had more ups and downs than most companies. They have transitions from one growth wave to the next about who they are more times than most people realize.

A couple of years ago, I gave a speech at the IBM World of Watson event in Las Vegas. I talked about how AI would change the world as we know it. This was at the beginning of the general uptick in the AI marketplace we see today.

Watson is AI, and IBM had been a leader in this new space for several years. A few years ago, IBM was trying to build the Watson brand like Kleenex did in the tissue industry.

While that was a good plan, now it seems like new competitors and lots of AI news are so noisy that IBM Watson is getting lost in the crowd.

IBM Watson needs to get back on the AI, Blockchain growth curve

Today, we are several years later in the AI growth curve. Today, IBM is still a leader in the artificial intelligence, Blockchain and cloud. Watson is a still a great example of AI. In fact, here in Atlanta, on top of a tall office building, the IBM Watson logo is still there.

Being an early leader, however, does not mean IBM Watson will continue to lead. There have been many advances and changes with Artificial Intelligence. AI has begun its global growth wave.

And IBM has been growing in several different sectors, and it’s getting a bit confusing. Who is IBM today and what path are they taking toward tomorrow?

So, while IBM was one of the first to the AI parade, now that this is becoming an important growth and transformational technology, they should be positioned well for explosive growth.

IBM needs to be able to talk to the marketplace in plain English

If that is the case, then why are they not growing at the same rate as AI in general?

The reason is IBM is a brilliant company full of scientists. And this group finds it difficult to translate what they are doing in plain English to the marketplace full of investors and customers in a way they can understand.

If they are to be a continuing leader in AI, they must solve this problem. They must have the ability to be both scientists and plain spoken communicators, talking in everyday language so everyone can understand.

If they can bridge this growing gap, they will successfully transition the growth wave they are on and lead going forward.

Ginni Rometty guided IBM into AI with Watson

Rometty guided IBM into the AI business with Watson. However, she struggled with many bumps in the road. One of them is being able to connect with ordinary investors, customers and the marketplace in general.

Krishna will now take the flag and continue in the race. As a new CEO, he may have the ability to put IBM on a more rapid AI growth path. If he can do this, then he will be a success.

That is one of his key challenges going forward.

When IBM started on their AI journey with Watson, there was little competition. In fact, there was little talk at all about this new technology in the mainstream.

Today, there are more competitors and many are also big, brand name companies who are now overshadowing them. In fact, there are more large and small companies in the Artificial Intelligence game than you realize.

Arvind Krishna must put IBM Watson back on AI growth curve

IBM is a leader in business, in computing and in AI with Watson. They should be at the top of everyone’s mind.

However, due to their lack of understanding of how the marketplace things and acts, lately they seem to be stalled. The AI growth wave seems to be passing them by.

The growth wave says every opportunity grows, crests then falls. This has been the path of IBM for decades. They always have the next growth wave before the current one falls.

Think about the growth wave like the waves at the ocean. When you are in the water, the waves wash by. If you are trying to ride the wave, you must have perfect timing.

If you are just standing there the wave will pass you by and leave you behind. However, if your timing is right, you can catch the wave and ride it in. And you must continue to do this time and time again. That is success.

Every CEO tries to catch the next growth wave

The challenge every company faces is catching the next growth wave and riding it in. No growth wave lasts forever. Some are short and others are long, but they all have a finite lifespan.

So, it’s important for every CEO and every company to understand this and to create the next growth wave, time and time again.

This is the disconnect at IBM. This is what Krishna needs to focus on. This is the problem he needs to solve.

IBM has done well over quite a long period of time. However, they ultimately became so big and stuffy that change didn’t happen fast enough anymore. That’s why they seemed to thrive then struggle, over and over again, decade after decade.

Investors, workers and users want to be involved with them when they are on the growth curve. So, IBM needs to be more limber.

Over the last decade the stuffy IBM of the past gave way to a newer and younger thinking and acting company under the guidance of Rometty. No more suits and ties. Today, it’s jeans or slacks and open collar shirts, even T-shirts.

However, while the company is positioned well, and while it is now in the AI business, it still has not broken through and they are not riding the new AI growth wave like they should be. Not yet anyway.

Will IBM Watson AI grow under Arvind Krishna?

I think Rometty did a great job repositioning the company from yesterday to today. The next challenge is to raise the profile of IBM in the rapidly changing AI marketplace and retaking their stalled leadership position.

In my view, this is where Krishna should be focused.

He's starting with a great company. They are in a leadership position with a great new technology thanks to Rometty. They were leaders in AI before the growth wave came.

However, today things are different. All of a sudden, every company is in the AI business. All of a sudden, AI is being talked about as a life changing technology for individuals, companies, governments and more.

Today, many other companies seem to be capturing the imagination of the marketplace across many different areas of AI. (For example, see my editor's article yesterday on how a British company is using AI in an effort to isolate a potential cure for the new China virus.) And in this noisy, chaotic world, IBM is quiet.

IBM is a great scientific company. Now they need to become a clear speaking company before it’s too late. Being a great technology company does not translate easily into a powerhouse of public relations success.

IBM needs to clear up their leadership messaging before it’s too late. This needs to change and quickly. This is one of the primary challenges Krishna faces.

If Krishna can reignite IBM Watson AI growth engines and better talk to the marketplace, he will be a big success.


Jeff Kagan is an Equities.com columnist. Kagan is an Industry Analyst and Influencer focused on Wireless, Telecom, Pay TV, Cloud, AI, IoT, Digital Health, Health Tech and Healthcare. Email him at jeff@jeffKAGAN.com. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan.

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Equities Columnist: Jeff Kagan

Source: Equities News

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer. The author of this article, or a firm that employs the author, is a holder of the following securities mentioned in this article : none

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Symbol Name Price Change % Volume
IBM International Business Machines Corporation 151.10 0.40 0.27 3,343,514 Trade

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