IBM – How a 100-Year-Old Company Can Still Reinvent Itself Through Growth Hacking
In 1911, three manufacturing businesses in Armonk, N.Y. merged and founded Computing Tabulating Recording Co. – CTR. When Thomas J. Watson assumed the company in 1924, the organization took the name IBM – International Business Machines Corporation. The name has since become a household name and industry standard for computing technology and innovation.
IBM is known for many things, chief among them the invention of the PC, the barcodes system, and the Watson supercomputer. At present, IBM continues to develop, manufacture and sell various digital hardware and software to markets around the world. Such products and services include AI systems, deep learning, and supercomputers. The company’s expertise also extends to information technology infrastructure, data storage, website hosting, and even business consulting.
The company has a workforce comprised of more than 350.000 employees in 170 countries and recorded a revenue of US$79.6 billion in the past year. IBM continues to drive towards fulfilling its mission to offer fast and creative solutions to meet the needs of a dynamic and constantly changing digital and technological environment — one that affects all industries and hundreds of thousands of companies and organizations all over the world.
Adopting a Growth Hacking Approach
Nancy Hensley, who used to serve as IBM’s Chief Digital Officer for IBM Analytics, was one of the primary drivers and proponents of utilizing and adapting a growth hacking approach for IBM.
While it was universally accepted that the company needed to grow, Hensley’s approach took things to another level, due to its proactive nature. She realized that the “old ways of making a product and going to market” were not going to be sufficient to provide enough lift and reach for the company. “Sure, if you are like us [IBM] you have a large and sustaining base of clients but to get real growth in this market we have to think differently. I remember I used to hear people say ‘think like a start-up’ and I would laugh because we simply weren’t ever going to be a start-up. What we should say is ‘think like a growth organization,’ where cross-functional teams come together as a highly effective squad focused on the product experience and growth. Now that makes sense,” she adds.
Why growth hacking?
Because growth practice adds agility, adds value to available data and disrupts the norm. At IBM, the methodology has driven a profound change in mindset that has encouraged people to look at the whole journey, and every element and individual aspect of it through a data-driven lens – then conducting experiments to see what method/s work/s best. Moreover, this approach makes it a good and scalable fit for a dynamic company like IBM. Especially considering that marketers today have so much more access to all sorts of data — thanks to the evolution of digital marketing — there really is no excuse to put off working towards proactive and assertive growth.
For IBM, the goal of adopting a growth approach was not to completely change their approach to dealing with the market, but to develop a digital route alongside its already good products, making them products that people love to use through focusing on enriching the experience for customers and users.
“We can no longer separate out the product from the experience we build around it,” says Hensley. “That’s a big shift for us in a large organization where everything is a separate group- Marketing, Product, Support, etc. Growth only comes from a really great product experience and while we have made some best in class products we weren’t always the best at understanding the experience of using them. It’s truly an outside-in approach.”
Hensley discovered growth hacking due to a launch of a SaaS product she needed to do and realizing that there might not be enough Marketing budget to get her what she needed. “I was in a panic,” she recalls. “The best thing about growth is that it allows you to explore many lower-cost tactics that lead to growth. That was a huge mindset shift for me. I remember thinking about- how the heck did all these small companies grow so huge- Facebook, Uber- the answer was they embraced growth hacking.”
For Jason Barbato, another big proponent of the growth approach in IBM, the company is set to achieve outcomes like a data-driven mindset, a culture of experimentation, as well as a deeper understanding of the end-to-end journey for specific products and their users. This would all lead towards the ultimate reward of accelerating improvement of the company’s key metrics: users, usage, revenue.
“It’s fairly simple: if you don’t test, you can’t learn. And that means learning about your organization and its systems and processes, your users, your products, and the abundance of explosive opportunities that might be right there in front of you if you only took the time to collect and analyze the right data, ideate, hypothesize, and execute — perhaps with a little “constructive disruption” along the way,” he says.
Hurdles and Challenges
The primary challenges with working with IBM was initiating a shift in the kind of mindset and culture the company had, as well as working with more established products.
Barbato recalls the early days when he began building out the growth practice in IBM after being brought on board as the company’s second growth hacker in 2016. “I treated building out the practice as if it were my own internal startup at IBM. There was objection, disruption, but I found enough early adopters (growth-minded product teams),” he says. Not long after, he and his fellows managed to deliver “multi-million dollar experiments that were standardizing and scaling all over the world,” thus proving the efficacy of his methodology. And considering the scale of the improvements — more than $600,000 in revenue in 2017 to more than $12 million in 2018, that efficacy is backed up with some solid numbers.
“There is far less resistance in the current state versus the first 1-2 years. We’ve driven enough outcomes that it has truly shifted from an outbound approach to growing the practice to an inbound one; product teams and other service areas now come to growth hacking with their analyses and ideas in seek of our expertise,” Barbato says.
Hensley, especially, faced difficulty when she began trying to push for a growth approach. “In the early days when we had nothing to hang our hats on it was MUCH harder to convince people this could work,” she recalls, adding that, “people looked at me sideways but I persisted because I truly believed it was the mindset change we needed.”
After countless presentations, podcasts, and meetings, as well as taking every opportunity to educate everyone they could on the concepts like product-market fit and experimentation, senior leadership started to take the movement much more seriously than they did before. Hensley and Barbato also took care to strongly bank on and market the (eventual) successes of the growth approach, which was a major factor in why many ultimately adopted the growth mindset and culture at the company. “Once we got a few wins under our belt we never shut up about them. It made it real for many people. We had proof,” says Hensley.
Another difficulty that the growth team had to sort out was how to work with already established products and to experiment without and major disruptions or mistakes. As opposed to working at startups, where growth hacking is more commonly used, “mature” products have much fewer allowances and growing and changing all the time, and carry a much bigger risk when growth and change are involved. Particularly at IBM, with their products being best in class, enterprise-grade, and generally more expensive, sales cycles were generally much longer. Oftentimes, there was significant anxiety over the possibility of breaking something you are trying to grow or even upset a current client.
Another challenge was to operationalize some of the changes needed for growth. Many times, there was a need to rapidly make changes to marketplace pages to enrich the user experience while also needing to have the ability to scale and localize the content due to the company’s global presence that saw it do business in several countries around the world.
The company’s goal was to lower the entry point so that they could create a B2B business within a B2C. For example, think of a person in accounting using his credit card to make certain necessary business-related purchases but not have to go through the bureaucratic process of getting a purchase order. And while that might not sound like a big deal at first glance, the reality was that many clients want a friction-less experience to get the solutions they want and need without having to jump through hoops from the Purchase Department.
Dipping Into the Digital Toolbox
At IBM, they have a formal growth stack. There’s a standard analytics tool, messaging tool, project management tool, A/B testing tool, etc. Their enablement program moves product teams through understanding growth theory, and into actively using these tools and experimenting.
One of these tools is the Growth Software, which is and continues to be integral to IBM’s growth process. A large part of it is due to its ability to give users the liberty to log ANY idea they arrive on inside the “Ideas” section so it is never lost or forgotten. Growth culture also means that all ideas are fair game and they have a place to capture them.
“First it [Growth Software] will help consolidate all the experimentation in one place and it gives all the cross-functional teams a great way to contribute to the ideas. Now that everyone truly values experimentation all the way up to the Senior Leadership team, we needed to get more organized. I also think this will help to make everyone feel more empowered to participate and collaborate on growth,” Hensley says of the platform’s potential and usefulness.
Growth Software’s versatility has been instrumental for IBM’s growth programs. IBM’s enablement program is sprint-based, with two weeks per sprint comprised of weekly or daily stand-ups depending on the project or engagement and a playback or readout of progress, learnings, and “What’s up next?” at the end of each sprint. That allows participants sufficient time to plan, execute, and reflect.
Most of the time, in their current model, this agile approach supports a larger project or engagement with a formal process and clear scope. This includes including timeline/s, objectives, KPIs, contributors, commitments, and dependencies.
Growth teams then meet weekly to address issues, provide progress reports, share experiences, handle any escalations and blockers, etc. The earlier processes also ensure that these are made as efficient as possible. In addition, IBM also has something called the ‘Metrics Monday’ where the insights from all the work are shared across functional team by the growth leads.
Looking at The Results
The use of Growth Software has helped create good working and collaborative relationships within the company. These cross-functional teams and individuals are also much more closely aligned with the company’s overall strategy and the directions its products need and will take.
For example, visitors to the pricing page within the SPSS Stats product journey were seen to have some intent to buy. But there was a consensus that the design of the page and table of options at the time wasn’t intuitive to guiding users toward purchase, as the actual “Configure and Buy” button was below the fold and outside of the table. So they tested, among other things, stacking both a “Try” and a “Buy” button inside the table, above the fold. The company found overall CTR on the page increased around 6% for two test geographies, including a net new uptick in Try clicks. As a result, the stacked “Try” and “Buy” buttons were standardized for SPSS across 138 geographies with the U.S. In the first 30-days alone, digital, touchless (self-service) revenue saw an 8% uptick.
Another case of success came within their platform experience, where IBM Cloud users typically go to register, download, manage, and eventually upgrade or expand on their SaaS products and services. Their data scientists uncovered patterns indicating thousands of users over a four-month period had attempted to upgrade from trial to paid at the platform level, but their credit card transaction was rejected. The company then tested a series of nurture interventions to capture those rejections as they were happening and route the user to a live support specialist to help troubleshoot and complete the purchase. After some experimentation, they finally arrived on a combination of instant in-app messages followed by email 24 hours later, both driving these users to chat support to resolve any issues. This messaging has now become standard in IBM’s Cloud experience, resulting in the “resurrection” of over 4,000 rejected users which in turn generated millions in new conversion revenue.
Through experimentation, the organization has a much more efficient, intuitive and unified product, marketing and development processing system. This has opened up a world of opportunity for tools and insight that has been transformative for the company. Users, developers, and marketers are getting a much more meaningful view of things because, among other things, they can see which product features are used more than others, or they have the data to understand why someone follows all the way through on a trial.
Moving forward to even further growth
Hensley says that today, there are “pockets of growth popping up and people talking about it all over IBM,” which is an exciting prospect for her and for the company.
The growth movement in the company continues to reach new adopters in new ways. There are still people who, because they’ve been around for a long time, already have a preconceived notion of technology and growth, and not give it a chance. But as growth success stories have shown, while tough, the journey to a new and better mindset has always been a pleasant surprise. Growth at IBM today are stories of a change in people’s perspectives, where they reinvented themselves because they realized that in order to move forward in a highly competitive and dynamic market, they needed to see and do things differently.
New adopters are constantly being brought into the growth fold, attracted by the undeniable successes growth hacking has managed to deliver through the years. The plan is to get better about governing the use of the growth stack so that any hacker, marketer, etc. can run an analysis or propose an idea with ease, confidence, and consistency.
Especially when you consider the company as large and as established as IBM, the potential for growth is essentially endless. Although growth hacking is a startup approach used to test and validate the new product in the market, IBM has managed to make it its own.
The next step in the evolution of growth at IBM is making in-product experimentation as essential, efficient, and strategic as possible.
As Barbato would say, prioritization is key. When someone proposes an idea, it’s always worthwhile to look to its growth potential — assessing metrics like numbers of users, amount of usage, revenue history and trajectory, and general volume to TOFU channels. Then look at the growth stack aspect of things. Any project they take on will require the product team to have proper instrumentation/integration with all of their core tools.
Without growth hacking and, IBM would likely be going at its development initiatives in a much more difficult fashion. But thanks to the perseverance of IBM’s growth gurus, and the open-mindedness of leadership and the rest of the organization to think, look, and do things differently, the company is well on its way to cementing its legacy in the tech space for years to come.
Written by Hale Schneider