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Crunch Time At Ibm Europe (Int'l Edition)


International -- Intl' Business: PEOPLE

CRUNCH TIME AT IBM EUROPE (int'l edition)

David C. Winn doesn't seem much like an IBM executive. It's not just his boyish looks. Nor is it that he started his career writing comic books. Rather, it's because the new head of IBM Europe's personal-computer business deplores big-company rules and bureaucracies. "I'm not going to try to fit in," says the 45-year-old Winn.

This IBM antihero aims to do his own thing at Big Blue's European headquarters. His mission is to reverse the slide in IBM's $3 billion PC business even if it means tearing the old IBM Europe apart. Dethroned by Compaq Computer Corp. in 1994 as Europe's leading PC maker, IBM saw its market share plunge again, from 11% to 8.5% in the first quarter of 1995, according to market researcher Dataquest Inc. The culprit: product shortages, including three-month delays on standard desktop PCs, that alienated dealers and customers.

TURF BATTLES. A polyglot, globe-trotting entrepreneur who founded an investment bank and his own management consulting firm, Winn says he has little to risk by taking the radical approach: "I'm willing to die in battle. I don't have a comfortable career to fall back on at IBM, and I'm not afraid of losing my job." Indeed G. Richard Thoman, head of IBM's PC company, expects some fireworks. Thoman, a former head of international operations at American Express Co., hired Winn in 1990 to shake things up at American Express Bank's money-losing French unit. Winn, who has a degree in English literature from Yale and an MBA from Harvard, reversed the tide and churned out steady profits for the last five years.

The job at IBM will be even tougher, concedes Winn, who has been at the company since Jan. 1. So far, he's making progress. On July 18, IBM reported record second-quarter revenue, including a 12% boost in Europe that was helped by a modest uptick in PC sales. Still, the combative Winn has a huge task in front of him. As competitors continue to surge ahead, he first has to work with Thoman to fix IBM's internal operations. PC costs are still too high, and turf battles among European subsidiaries are hampering efforts to streamline the PC organization and forge a global strategy. "We were our own worst enemies," admits Winn.

Winn has launched a frontal attack on the problems at Big Blue's European headquarters. He's shaking up PC management by firing executives who have blocked change. Aiming to boost IBM's gross profit margins above Compaq's envious 25%, Winn has set a 90-day deadline to slash costs.

Belt-tightening alone won't cut it: Winn also wants to boost personal-computer sales by forcing mainframe and midrange salespeople to work closely with the PC sales team. "IBM PCs are still being marketed by people in blue suits with no affinity to the PC company," says Dataquest Inc. PC analyst Stephen Brazier. At the same time, Winn is adding retail distributors who sell to small and medium-size businesses. However, Winn will have to walk a fine line to avoid offending dealers who may abandon IBM if they feel the company is favoring its own sales force.

GERMAN REBELLION. In May, Winn hauled all European country managers to the company's plant in Greenock, Scotland, so they could come face to face with the manufacturing and logistical problems dogging IBM. Winn says manufacturing processes were overcomplicated and customers were given too many choices in customizing their PCS. Winn has simplified production and speeded order flow by offering only 35 configurations. Now, half the orders fall into the preconfigured group.

Winn also aims to tighten discipline among unruly European fiefdoms. During the worldwide introduction last September of IBM's Aptiva computer, Germany broke ranks and delayed the launch by three weeks in a dispute over pricing. Some insiders contend it was an overt act of defiance against U.S. headquarters. "I have low tolerance for people running amok," warns Winn. "Where I come from, it's unheard of."

IBM Europe's problems won't be a quick fix. Winn admits it will take at least six months and closer to a year before the effects of restructuring begin to really take hold. But he's not cutting himself any extra slack, either. "A year is a generation here. If things aren't palpably better in 1996, I may be a dead soldier." With a personality that seems to enjoy a duel to the death, Winn is not likely to be easily slain.By Gail Edmondson in Paris


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