Understanding IBM

Part 25. Legal Beagles

Sniff, sniff, sniff. Sniff-sniff! The beagle and other dogs are excellent hunting companions because of their keen sense of smell. Odors that to us seem faint or even nonexistent are sensed as powerfully by most dogs as a siren or a camera flash is sensed by us. These animals can find a trail in the darkness, through the forest, or in an open field. They can track an elusive criminal suspect or just find where the hunter's prey has fallen.

A different kind of hunting dog is found in the offices of IBM's legal department. These bloodhounds can sense even the slightest hint of potential trouble miles away, and they eagerly pull their master's leash to lead IBM away from it. Saving millions of dollars in legal costs seems like a good idea, but the problem is that billions of dollars in lost opportunities occur as well. What makes IBM's legal beagles so lawsuit-gunshy?

This goes back to years of wrangling and bitter fighting with the U.S. Department of Justice during the 1970s and 1980s in a bitter series of antitrust battles. Literal carloads of documents were required for every major IBM transaction. Everything every IBM'er did or said could be taken to court as evidence of some kind of nefarious plot to control the computer marketplace. Every new product had to be examined with bloodhound eagerness to try to guess what the court would make of it. Top executives that should have been watching the unfolding PC business were instead required to spend long hours in court testimony about minute details of their business conversations and personal notes.

As a result of this burdensome series of events, IBM's top management became petrified. They could no longer move into new markets, they could no longer leverage their biggest successes, they could no longer poke fun at the competition. IBM learned to use legalese and weasel-words to avoid making a firm commitment in any public statement, a trend that they only recently have begun to overcome. Product pre-announcements (a la Microsoft's vaporware) were out of the question.

Like a man on a hunting trip who nearly got shot, IBM became very timid about its business practices and refused to take advantage of many blossoming opportunities, particularly in the PC market. The legal beagles had a major hand in the design of products like the PS/1 home computer, which turned out to be a miserable flop. But IBM is still determined to never get themselves into the position of anyone's legal line of fire again.

Most recent revision: July 21, 1998
Copyright © 1998, Tom Nadeau
All Rights Reserved.