IBM 2005 Annual Report Download - page 10

When it comes to the second question — on what
basis are we integrating?
— the answer lies in our
core values. For the IBMers who shaped these values,
they are much more than vague aspirations. They
are, in fact, a set of decision-making criteria that
guide how we organize and run the company.
A little more than a year ago, tens of thousands of
IBMers came together to turn our values into
dozens of specific actions and changes
— many of
which we implemented in 2005. I’ve described some
of them, such as the deal hubs, in this letter.
These steps to transform our company were
crucial, and that work will never stop. But being a
values-managed company applies at the top, as well.
That’s why, at the beginning of this year, I decided
to disband the senior leadership structure that had
been in place in IBM for more than a decade,
and to replace it with one based on simpler, clearer
criteria for our top positions.
First, we formed a new group of IBM’s senior-
most leaders who will be accountable for the
performance and execution of our business. Second,
we created a broader group that will focus specifically
on integrating IBM on the basis of our values. Both
groups met for the first time about a month ago
to discuss how to bring to bear all of IBM’s capability
to drive marketplace results. I know from the team’s
energy and commitment that this move was the
right thing to do.
Innovation that Matters
These days, you’d have to look long and hard to
find a company that doesn’t say it is committed to
innovation. But innovation of the sort I’ve discussed
here
— the kind that’s grounded in the integration of
business and technology, that draws on multi-faceted
collaboration and that functions in a truly global
way
— is devilishly hard.
For all the reasons I’ve shared with you in this
letter, I believe that IBM has an unmatched ability
to deliver this sort of innovation. We are the
only company that couples broad expertise across
industries and business processes with deep technol-
ogy capability. We have a unique understanding
of information technology’s potential and future
trajectory, because we’re at the forefront of creating
both. We are rapidly becoming a model of global
integration
— leveraging economies of scale and
expertise for the benefit of our clients and our own
operational effectiveness. And while many companies
consult or offer piece-part technologies and services,
we are distinct in our ability to integrate the right
technologies, expertise and partnerships in ways
that enable our clients to be truly special.
“Innovation that matters” is, finally, central to
IBM’s identity
— to why our employees choose us;
why our partners and clients look to collaborate
with us; and why you, our owners, invest in us. And
interestingly, this same vision is showing up more
and more these days among companies, governments,
educators, healthcare practitioners and communities
around the world.
For IBM, this is gratifying, and hopeful. As we
enter a promising new era, I am proud of the world-
wide IBM team for bringing us to this point
— and
I am grateful to you, our shareholders, for your
support as we have repositioned the company to be
the innovation leader. I and my colleagues are
delighted and challenged by the prospect of advancing
this work, and by what, together with our clients,
our partners and you, we can do to lead it.
Samuel J. Palmisano
Chairman, President and Chief Executive Officer
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The selected references in this letter to the company’s financial results: (1) excluding the effects of
the divestiture of the company’s PC business, (2) excluding non-recurring items, (3) excluding the
Global Financing Business and (4) at constant currency are non-GAAP financial measures and are
made to facilitate a comparative view of the company's ongoing operational performance. See the
company’s Form 8-K dated January 17, 2006, Attachments II and III, for additional information on
the use of these non-GAAP financial measures.