IBM Newco: A High-Stakes Spinoff Amid a Battle of the Tech Titans

<p align="justify">Two months after his January 1, 2021, appointment as chief executive officer (CEO) of NewCo, the code name for the soon-to-be spun off managed infrastructure services portion of International Business Machines Corporation (IBM), Martin Schroeter was faced with the daunting prospect of creating a distinct strategy and identity for a huge company in a very short time frame. Announced on October 8, 2020, by IBM’s CEO, Arvind Krishna, NewCo was a high-stakes strategic move to “create value through focus” and “increased agility to focus on evolving customer needs and delivery excellence.” Once spun off, NewCo would immediately become the world’s leading managed infrastructure services provider, with US$19 billion in revenue, 90,000 employees, and 4,600 customers, including more than 75 per cent of the Fortune 100 across 115 countries. With the spinoff expected to be complete by the end of 2021, Schroeter had only a few months to craft a strategy, recruit a leadership team, define a new identity for the company, ensure a “strong strategic relationship” with IBM, and bring thousands of customers and tens of thousands of employees into NewCo. Success required many pieces to come together rapidly and seamlessly. Schroeter was unsure how best to address these challenges. All he knew was that failure was not an option and that time was short.

<p align="justify">This case is suitable for use in several undergraduate- and graduate-level business courses, including global strategy, innovation, disruption, strategic leadership, management information systems strategy, and entrepreneurship.<br><br>This case pertains to leadership, strategy, entrepreneurship, and international management in the highly competitive and rapidly evolving technology industry. This case will help students understand the tensions and trade-offs associated with a high-stakes spinoff, and how corporate culture, strategic purpose, and relationships interact in the disrupted and fast-changing technology industry, where all stakeholders count, not just stockholders. After working through the case and assignment questions, students will be able to<p/><br><br><ul><li>describe the effects of digital transformation on legacy companies;</li><li>understand a CEO’s role in strategy formulation and execution in a high-pressure situation;</li><li>map the components of the spinoff process as worked through in real time by top leadership;</li><li>identify the complexities associated with a high-stakes, global strategic move—from customer relationships and talent management to investor relations; and</li><li>recommend and justify the best course of action to NewCo’s CEO.</li></ul>

• spinoff, IT infrastructure, global