The other transition

“IT’S a normal transition”, says Ginni Rometty. Indeed, her promotion to be chief executive of IBM, announced on October 25th, was both planned and smoothly executed—two things that are anything but the norm in the tech industry these days (think Yahoo! and HP, for starters). Ms Rometty’s forthcoming promotion had been hinted for some time, internally and increasingly externally, in particular during this summer’s celebrations of Big Blue’s 100th birthday.

Yet the transition is also exceptional. In January, when Ms Rometty will take over the executive reins from Sam Palmisano, who will remain as chairman, she will become one of the corporate world’s most powerful women. IBM boasts annual revenues of more than $100 billion and a market capitalisation exceeding $210 billion—a fraction more than its old rival, Microsoft, and second only to Apple among tech firms. Ranking 18th in the Fortune 500, IBM is smaller than its rival HP (which is 11th and run by Meg Whitman), but far bigger than the next largest firm run by a woman, 39th placed Archer Daniels Midland, whose chief executive is Patricia Woertz. Indra Nooyi, arguably the world’s best known female boss (for now), runs PepsiCo, which holds 43rd place.

Still, the transition is likely to be smooth, not least because “change at the top does not mean a change of strategy”, insists Ms Rometty. She worked directly with Mr Palmisano to develop the firm’s “roadmap to 2015”, which states among other things that IBM wants to double its earnings per share by that year and to increase the share of its revenue coming from growth markets such as China from 21% to 30%.

Ms Rometty also played a key part in two moves that have made such an ambitious growth strategy seem possible: the acquisition of the consulting arm of PricewaterhouseCoopers, which she helped integrate, and the development of IBM’s delivery centres for IT services in China and India. IBM’s growth strategy, Ms Rometty points out, is in its early phases, so in no need of being changed—at least for now.

Mr Palmisano’s legacy, says Ms Rometty, is that “he taught IBM to remember how to constantly reinvent itself”. He changed IBM’s portfolio, shedding slow-growing commodity businesses such as personal computers and moving into booming sectors such as consulting and cloud computing. In India he rose to the challenge posed by Infosys, Wipro and other Indian IT service firms by building a huge office in Bangalore and running it as a local operation. He also approved dozens of acquisitions to fill gaps in IBM’s portfolio—another thing Ms Rometty says she intends to continue.

With this strategy, Mr Palmisano managed to turn IBM into a money-making machine, with huge cash reserves and a soaring share price. Lately however, Wall Street analysts have started to question whether it can maintain its break-neck growth. Ms Rometty may find her first challenge as boss to be convincing doubters that everything is on track to meet those 2015 goals.