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IBM boss spells out a better future

Normally quiet, CEO Sam Palmisano speaks out about what he says is a need for multinationals to stop being multinational.

Forget the multinational, says IBM chief executive Sam Palmisano. "Global integration" is now the way to go for large organizations.

Normally taciturn, Palmisano this week aligned himself with those who predict a backlash against large multinational companies, such as IBM itself.

In what the Financial Times described as "a rare public intervention," Palmisano expounded on the theme that to prosper, multinationals need to change and indeed stop being multinational companies.

Palmisano's remarks came less than a week after IBM announced a massive $6 billion investment in India.

In his open letter published Monday, Palmisano called for a new kind of organization. "At IBM, we call it 'the globally integrated enterprise,'" Palmisano said, adding he prefers that term to "multinationals," which many "mistakenly project onto 21st century global reality."

"I believe the globally integrated enterprise is a better and more profitable way to organise business activities," said Palmisano, who went on to outline his plans for this new kind of organization, although he was short on specifics.

Shifting to this model presents big challenges for leaders, Palmisano said. He outlined two such challenges. The first is skills, where Palmisano says the biggest problem will be "securing a supply of high-value skills." Second, is a company's standards of governance, transparency, privacy, security and quality. These need to be maintained, even when products and organizations are handled by a dozen different organizations, he said.

The latter challenge is one that IBM has come across before, such as when executives in its subsidiaries in different parts of the world faced corruption charges over government contracts.

"The alternative to global integration is not appealing: Left unaddressed, the issues surrounding globalization will only grow," Palmisano said. "People may ultimately choose to elect governments that impose strict regulations on trade or labor, perhaps of a highly protectionist sort."

IBM's employees may scratch their heads at this latest intervention from Palmisano, who has overseen a downgrading of their pensions during his time in office.

Palmisano has portrayed himself as the quiet man of IBM. He rarely speaks in public and even more rarely speaks to journalists. When he has wanted to give a piece of his mind in the past, he has used the same technique that he used this time: Talking only to one newspaper, and then with no journalists present.

Colin Barker reported for ZDNet UK.