Breakthrough: How Great Companies Set Outrageous Objective

The Breakthrough Phenomenon

By 1992, IBM seemed stymied by circumstance despite its history of massive strategic leaps. IBM had introduced the great mainframe computers and depended upon them for decades, although the firm did not stagnate. IBM invented the personal computer, for example, and moved aggressively into the PC business. Yet others, namely Intel and Microsoft, reaped much richer gains from IBM’s PC innovation.

IBM virtually created Microsoft by choosing DOS as the operating system for the PC, and was an early, though not terribly astute, investor in Intel. IBM owned 20% of Intel at one point, having purchased the shares for between $600 and $700 million. Big Blue sold its stake somewhat prematurely in 1987 for a billion dollars. By 2000, that stake would have been worth more than $60 billion.

In 1992, Intel and Microsoft were companies with a lot of growth potential, but the writing already seemed to be on the wall for IBM, which reported its first loss that year. Clearly, the company needed radical change to survive and return to prosperity. Big Blue required a new leader and breakthrough thinking to restore its glory.

Breakthrough is a change...