| MARKENLOGIK |

A Service Perspective on IBMs Brand

Today, global conditions challenge traditional views of management, marketing, and economics. The
goods-dominant view, centered on the notion of production and consumption, is being subsumed by
the service-dominant view, centered on the notion that business value is cocreated by interaction of
economic entities. Here, we consider IBM and its brand, showing that it reflects and always has
reflected the service-dominant view of value cocreation.
PAUL P. MAGLIO | STEFAN NUSSER | KEVIN BISHOP

ver the last twenty or thirty years, revenue at the IBM Corporation has shifted from being mostly driven by hardware and systems in the 1980s to being mostly driven by services and software today (IBM 2010). To an outside observer, it may look like
IBM has changed. It may look like the character of its business has
shifted along with the character of the economy at large from
manufacturing to services (OECD 2005). But this perception
would be wrong. There is an alternative way of looking at IBMs
business and IBMs underlying business logic, a way that IBM has
come to call its brand system (Iwata 2009). Simply put, the brand
system is what it means to look like IBM, to sound like IBM, to
think like IBM, to perform like IBM, and to be IBM. It is both carefully orchestrated and entirely emergent, a complex system of interactions among people, technologies, organizations, and information. And its fundamentals have not changed in IBMs 100-year
history, though our ways of talking about it may have.
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The Service-oriented Worldview

But before describing the IBM brand system, lets take a step back
to consider the nature of business and more generally the nature
of value. We take the view that all businesses are service businesses because all value is cocreated between economic entities
(Vargo/Lusch 2004). More specifically, we take the view that an
economic entity is a collection of resources, including people,
technologies, organizations, and information (Spohrer et al.
2007), and that entities interact by granting access rights to one
anothers resources (Spohrer/Maglio 2010b). Interacting entities
form service systems (Maglio et al. 2009), and along with the
service-dominant worldview, the service system is the fundamental abstraction of the study of value cocreation or service science
(IfM/IBM 2008; Maglio/Spohrer 2008; Spohrer/Maglio, 2010a;
Vargo et al. 2010). The basic idea is not new: value emerges when
multiple entities work together to create mutual benefit, the key
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| A Service Perspective on IBMs Brand |

being design and orchestration of these entities for effective value

cocreation (e.g., Normann/Ramirez 1993).
Conceptually, a service system is the basic unit of analysis for
value cocreation. It encapsulates multiple interacting entities in
a simple case, the ways in which just a single firm and a single customer work together to create mutual value (see figure 1). Both
firm and customer bring together resources including capabilities and competences and take joint actions to make one another
better off (Vargo et al. 2008). Consider an example: IBMs Smarter
Planet offerings provide capabilities for instrumenting large-scale
natural and artificial systems, such as waterways and roadways,
connecting instrumented systems, and analyzing resulting data for
effective decision making. In this case, IBM can provide resources
that include expertise and technologies but these Smarter Planet
capabilities do not create any value by themselves. They must be
deployed and used in a customer context. In one case, the City of
Stockholm worked with IBM to instrument, interconnect, and analyze roadway data to create a system to reduce traffic congestion
(IBM 2007). The customer provided just as much expertise as IBM.
Joint activity in this service system created value for both entities,
IBM and the City of Stockholm (Eliasson 2008).
In what follows, we introduce the notion of a brand system and
then use it to describe IBM and its business generally, highlighting
the tight relation between IBMs offerings, execution, and the service-dominant worldview. Throughout, we will show how the notions
of value cocreation and of service systems are critical to IBM.

Brands and Brand Systems

What makes a great brand? There are many ways to manage and
measure a companys brand (see, for example, Aaker 1996). We
think great brands are defined by clear choices made along four
dimensions its brand system (Iwata 2009):

They are built on an enduring idea an explicit and consistent

theme that transcends individual products.
They are clear about differentiation explicit characteristics that
make the brand unique.
They are deliberate about customer experience explicit choices
about how the brand is experienced.
They are built on a choice of who they serve explicit understanding of their main constituents.
For example, Disney is based on the idea of innocence, differentiated by storytelling, experienced through theme parks and movies, and aimed at the child in all of us; and BMW is based on the
idea of exhilaration, differentiated by German engineering, experienced through performance vehicles, and serves the adventuresome driver.
Similarly, IBM is based on the enduring idea of world-changing
progress, is experienced through IBMers worldwide, is differentiated by IBMers living the companys values, and serves forwardthinkers among clients, employees, investors, and communities.
How do IBMs choices in its brand system reflect a service-dominant view of business? And how does the abstraction of the service system serve as the framework for its brand system?

The enduring idea, progress

What does IBM stand for? In the context of value cocreation, we
see that IBM has always been in the service business even when
its primary output was goods, the goods were not the goal. The
goal is to make a difference, a difference for clients and for the
world applying goods and services to accomplish something big.
One hundred years ago, IBM made meat slicing machines not
simply to sell machines, but to enable its customers to make
reliable cuts, creating, for instance, a regular bacon experience
for its customers customers. In the 1930s, IBM invented one of
the first mechanical card punch and tabulating devices, the IBM

Fig. 1 Service-oriented Worldview

Provider

T P
I TI P

Client

T P
I TI P

P People
T Technology
I Information

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| MARKENLOGIK |

077 Collator, designed specifically to meet the requirements of the

Social Security Administration. It enabled the launch of payroll
reporting for 26 million American workers in 1937 (Social Security Administration 2000). In the early 1960s, the company invested
5 billion dollars in the development and launch of System/360, the
first family of compatible, general-purpose mainframe computers.
With this decision, Thomas Watson Jr. bet the future of IBM on
what turned out to be the largest privately financed project ever
undertaken (Boyer 2004). More than any other example, this shows
that progress is truly at the core of IBM. In the 1970s, IBM helped
create the first automated teller machines not simply to sell
machines, but to enable its customers banks to change the way
they did business, and in turn give bank customers everyone
better access to their money.
For IBM, business has always been about creating systems that
make things work better. There is a word for that, progress. In
terms of brand system, IBM focuses on progress that makes a difference on a global scale world-changing progress.

Differentiated by values
What has differentiated IBM over time? Values. According to IBM
CEO Sam Palmisano, Values inject balance into the companys
culture and management system: balance between short-term
transactions and long-term relationships. Balance between the
interests of shareowners, employees, clients and communities. Values help you make those decisions in a way that is consistent with
who you are as a company (Hemp/Stewart 2004). Specifically,
IBMs values are
dedication to every clients success,
innovation that matters, for our company and for the world,
trust and personal responsibility in all relationships.
These values embed the service-dominant worldview into IBMs
corporate culture, directing its value propositions to be centered

on innovation, and reminding all employees that value is fundamentally cocreated between IBM and its customers. Trust and personal responsibility is about shifting the locus for lasting relationships to an individual level. Dedication to client success is about
excellent service: the words client and success are significant,
as client signifies ongoing relationships (versus the transactional
nature of customer relationships) and success signifies a focus
on outcomes (versus fulfilling the terms of a contract). Innovation
that matters is about effecting change on a planetary scale.

Experienced through IBMers

How is IBM experienced by customers? IBMs values and culture
create the basis for how IBM is experienced through its employees. Again the service-dominant perspective is in the foreground.
Service is not simply a common theme across IBMs products the
interaction of IBMs employees with its customers is IBM.
This focus on IBMers as primary ambassadors of the IBM brand
has far-reaching implications. IBM deemphasizes goods and services in favor of the experts and expertise that create them. Enabling
individuals to interact with others effectively within organizations
and between organizations (and within and between firms) is key
to effective value cocreation (Johnson et al. 2005). Simply put, the
IBM brand is built on the relationships that IBMers all IBMers,
not only those in client-facing roles, and including those that represent IBM in IBM Business Partners or remain active as alumni
or retirees have with customers and others.

Serving forward-thinkers
Whom does IBM serve? The IBM brand has broad appeal to different constituents clients, employees, communities, and investors. But within these groups, IBM focuses specifically on forwardthinkers, those who see the power of progress and who are likely
to be good partners in cocreating value. The focus on forward-

Fig. 2 Components of IBMs Brand System in Terms of Our Service System Abstraction

T
I

46

IBMer

T P
I

Progress

T
I

Forward
Thinker

T P
I

IBM Values
Dedication to every clients success
Innovation that matters, for our
company and for the world
Trust and personal responsibility in
all relationships

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| A Service Perspective on IBMs Brand |

thinkers is closely related to the other choices made for the IBM
brand. Value cocreation is a two-way street. Because IBMs core
idea is progress, it follows that IBM must engage with progressive
and like-minded individuals and organizations.

Implications

tions are converging. IBM combined these two separate functions into a single new discipline last year (Iwata 2009). But this
transformation goes significantly beyond a fusion of external
and internal messaging it requires a transformation of the
management system so that it is in perfect alignment with the
brand and affects all parts of the company. For example, IBM
recently redesigned its leadership competencies, the foundational elements of its HR strategy, to be identical with its brand
and workforce strategies. For a large corporation like IBM, this

The components of IBMs brand system are aligned with the service-oriented worldview (see figure 2). Based on the four dimensions
of a brand system, it is clear that two components
reflect distinct choices IBM made for its strategic
direction, specifically the focus on innovation
and progress as the enduring idea and on forward-thinkers as the most critical group of stakeholders. We think the other two choices are
directly linked to the service-oriented perspective described in this paper as well. The notion of
value cocreation implies that the brand is experiAWD, Lichtblick AG, Coop, Hiebers Frische Center,
Nespresso, Henkel, IBM, Mammut Sports Group, Emmi AG, Etap
enced through the companys employees. Because
Hotel, HypoVereinsbank, Miele, Schweiz Tourismus, Unilever
most employees are not trained communication
professionals, there is a need for a clearly defined
14 Fallbeispiele fr Best Practice in Marketing
value system that provides core principles and
Erfolgsfaktoren fr Kundengewinnung, Kundenbindung,
boundaries for these interactions. By applying the
Leistungsinnovation und Leistungspflege
service system abstraction to the IBM brand
Breites Unternehmensspektrum: unterschiedliche Grsse,
model, we can thus identify workforce and valBranchen und geografische Verankerung
ues as being critical to other businesses that view
themselves from a service-dominant perspective.
Practically speaking, we see three major
implications. All are related to these two charFr Dozierende und Studierende der Wirtschaftsacteristics of the IBM brand that are inherent in
wissenschaften, Fhrungskrfte in den Bereichen
the service-dominant worldview employees as
Marketing und Verkauf
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values and so they should be generally appliBest Practice in Marketing
cable to all service-oriented businesses.
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| MARKENLOGIK |

implies a massive transformation it means that the principles

we use to recruit, to develop managers, and to determine career
advancement are essentially identical to our brand and culture.
Eminence of the workforce. The interactions of employees
engaged in value cocreation are becoming increasingly transparent, even amplified, through social media (e.g., Barker 2008; Brzozowski 2009). Though this is sometimes perceived as a threat to
established management systems, we expect that over time, companies will embrace social media as a channel for doing business.
We also see the focus in social media shifting from content to
expertise, with the experts becoming increasingly more important. As we embrace this thinking, open up these boundaries, and
encourage employees to participate in the emerging global com-

The notion of value cocreation

implies that the brand is experienced
through a companys employees.

mons, we will need an infrastructure to nurture and support this

global network of experts, to help our people be recognized and
acknowledged by others for their expertise.
Building a constituency. Just as there needs to be explicit focus
on the workforce, there also needs to be explicit focus on appropriate stakeholders. The service-dominant view goes significantly beyond what is required by the goods-dominant view in
that it entails much more than identifying a target audience; it
entails actively taking steps to establish relationships and to build
a community a constituency that shares the companys core
ideas and values, as cocreation of value is a two-way street,
requiring mutual understanding and trust.
Global economic conditions seem to challenge traditional views of
management, of marketing, and even of economics. The goodsdominant view, centered on production and consumption, is now
giving way to a service-dominant view, centered on value cocreation. We have argued here that IBM has a service-dominant view,
which is reflected clearly in its strategy and its execution.

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The Authors
Paul P. Maglio

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48

IBM Research Almaden, San Jose, California, USA

E-Mail: pmaglio@almaden.ibm.com

Stefan Nusser
IBM Research Almaden, San Jose, California, USA
E-Mail: nusser@us.ibm.com

Kevin Bishop
IBM Marketing and Communications, Armonk, New
York, USA
E-Mail: kevin.bishop@us.ibm.com

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