The EDS turnaround is meant for an educational purpose and to inspire young HR professionals. It highlights the lesson that the key to a successful turnaround strategy is a leadership that recognizes the importance of culture and strategy alignment.
EDS was launched in Dallas Texas in the 1960s by Ross Perot. The strategy was unique as for the first time a company would handle out-sourced computer operations of other companies. Perot created an aggressive competitive culture and typically recruited predominantly ex military combatants having battle experience.
EDS was taken over by GM (1984) and grew by leaps and bounds operating in more than 40 countries and a $14 billion turnover. When it was spun-off in the late 1990s ithad imbibed GMs complacent and bureaucratic culture. For an IT company this became a definite competitive disadvantage. It lost position of market leader to IBM and others despite the high growth rate of the IT industry. Its profitability declined to the lowest levels.
Dick Brown ex-British Cables & Wireless was hired as CEO in 1999 to lead the turnaround. Brown’s turnaround leadership was a success. The company had to reinvent itself for the digital economy. Brown re-strategized and set up tough financial targets. But alongside he gave the highest importance to a massive change effort. He understood that to make the new strategy work an alignment of the organization culture is an imperative.
His statement as it appeared in an article in Fast Company was – “Most business leaders are afraid to talk about culture, they’re far more comfortable with numbers. While I am very numbers focused, you can’t change a business with numbers. Numbers are the end result. You change a business by changing the behavior of its people.”
The cornerstone of his successful culture change initiative was communication and commitment and a culture of sharing and trust. Thus EDS regained its leadership.
Your comments are welcome! (Also please read comments below for the current status of EDS now a HP company)