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Will IBM's First Woman CEO Have Time to Match a Business Genius?

IBM CEO Sam Palmisano has announced that he's stepping down as of January 1st next year, though he'll remain chairman. His replacement is Virginia Rometty, who is currently head of sales and marketing and who will become the first female chief executive in the company's hundred year history.

Undoubtedly she's capable. IBM has long been a company that understood the need for a solid succession plan, and Rometty has long been the popular bet on who would be the next CEO. But she's got two big barriers to making her mark. One is that Palmisano has had a brilliant career as the head of IBM and left a level of achievement that would be difficult for anyone to equal. The other is that, because of what effectively seems like planned executive obsolescence, Rometty will only have about two-thirds the time in the position as her predecessor.

A strategic equal to Steve Jobs?
Palmisano has been astoundingly good as IBM's CEO over the last 9 years. There was some talk that he might stay as CEO longer, probably because he's been such an asset to the company. Just look at the stock price since he took over in 2002 (chart from Yahoo Finance, click to enlarge):

The stock dropped precipitously not long after Palmisano became CEO, with the pop of the tech bubble a likely major contributor. But nine years later, it more than doubled.

Palmisano succeeded Lou Gerstner, who has been credited with turning IBM around after a long decline. One of Gerstner's major strategies was to realize that IBM was a huge technology integrator that could solve problems for corporate clients. It's why IBM Global Services became the driving force of the company. And it was Palmisano who led that division during those critical years.

People say that Apple (AAPL) co-founder and former CEO, the late Steve Jobs, was a rare figure. But so is Palmisano. Few executives have ever combined high level strategic brilliance with impeccable operational capabilities to the degree he has.

How did Palmisano keep IBM on top for so long and keep growing the company in market niches that couldn't depend on consumer electronics fads to help boost growth? His trick has been to remember that IBM is first and foremost a going corporate concern, not a purveyor of a particular technology. He kept moving in new directions and didn't flinch when market developments might threaten the company's traditional concepts of business.

A tough act to follow
To show her own strength and ability, Rometty clearly has her work cut out for her. She clearly has the pedigree. Not only is she currently in charge of IBM's global sales, but she was previously the senior vice president in charge of IBM Global Business Services when the group undertook the massive PricewaterhouseCoopers Consulting integration.

As Larry Dignan at our sister site ZDNet noted, when Rometty takes control, it will mark two giant tech corporations with women CEOs, the other being Meg Whitman at HP (HPQ). You might say that it's past time, and it is ... but in more ways than one.

Rometty will have two hurdles that Palmisano never faced. One is obvious: prejudice against female executives. But she has a more practical issue, as well. She'll have years less time Palmisano had.

Palmisano became CEO in 2002, a few months before he turned 51. He's been in the position for 9 years and is retiring because he's 60 and that's why IBM CEOs do at that age. Rometty is 54 and won't take over until next year. That gives her a little more than five years before she hits IBM's retirement age. According to the Conference Board, the average tenure of a CEO is about 8 years, down from a decade in 2000. Rometty won't even get the average number of years in charge, unless IBM decides to change its policies.


Image: morgueFile user wax115.