IBM's comms SVP, Jon Iwata, talks with Julia Hood about the role that employee comms and intranet use have played in helping shape the company's cultural transformationHood: What created the need for a new internal communications strategy and platform? Iwata: The context for us is undoubtedly the collapse of the company in the early '90s and the transition and turnaround that played out in the '90s. When we talk about employee communications, we really think of it in terms of corporate culture - how work gets done in our company, how we view things here. If you accept the fact that we have and have had a very distinct, strong culture, it was also partially responsible, perhaps most responsible, for the collapse. So what happened? Failure to change, failure to move fast, to make developments - whether they were technological, competitive, go-to-market changes, all kinds of things. Because we are a company that prides itself on facts and research, we saw all those things coming. And yet the business did not change. We needed to do more with employee communications than change the delivery platforms from newsletters to e-mail - and we've done all that. What's different about what we went through was we needed desperately to change the culture of the company without leaving behind all of the good things from our heritage. Hood: What was the role employee communications played? Iwata: The CEO has to get his or her business to perform, and that is down to the workforce. The realization is that in order to drive any business results, the employees have to be with you and not just understand the strategy and get behind it. Culture is a three-dimensional thing; it's not just the communication of information or even the credibility of the message. It's about how work gets done. We would be having a very different discussion today if the company hadn't gone into this tailspin. [Former IBM CEO Lou] Gerstner could determine strategy - he and other senior executives could change the strategy and make it more competitive. But what he understood and what [current IBM CEO Sam] Palmisano has lived is unless you actually take on the much more difficult challenge of changing behavior and attitude and all that, it's just a handful of senior executives plotting a course, and nothing really changes. The circumstances forced it to be elevated. Gerstner never said "internal communications," and Sam doesn't use those terms. He talks about, "How do we get this business to a different level? How do we address those issues that the employees are so aware of that get in the way?" Hood: What helps in-house communicators become part of that process? Iwata: In many corporations, management looks to the head of communications for what audiences they are responsible for. And you share it with human resources in many cases. It's not like a forced fit - like you have to fight for some connection to dealing with or communicating with or having an impact on the employee population. We [in PR] spend a lot of time talking about how we want to expand or advance or innovate around the market-facing aspects of our role. We get into discussions around brand or reputation or image, saying, "We do more than the media; we think about the market and customers and really driving business." And you hear people in the profession trying to take what management sees as our responsibility, press, and image, and trying to expand it. That same kind of logic and opportunity exists in the internal dimension because so much of what corporations grapple with today is performance-based, so it's around how you effect transformation and change. The role played by marketing in external-facing organizations is played for the most part by human resources internally. But corporate communications is responsible for multiple audiences simultaneously. We are also looking at the marketplace simultaneously. Because you have that perspective, when you talk about changing culture, you're driven to not just communicate what the employee needs in terms of competency and expertise, but also what we are going to do. One of our problems at IBM was we were very inward focused, born of decades of success. One of the things we had to do in changing the culture was [think about] how you bring the marketplace into the business, make it such a stark reality for employees that what began to really get their attention was not what happened on the inside? That was a great partnership for us with HR. If you wait for the CEO and the corporation to suddenly say that what we really need to do is go beyond employee or internal communications, to drive performance, change our culture, transform the way work gets done in our company, and who should be responsible for that - I don't see why it's unnatural for communications executives to say this is a natural progression of what we can do. Hood: How was communications involved in the development of the intranet? Iwata: If you only define the intranet for information delivery, it could belong to communications. But what if the same platform suddenly gets used by employees in the same way the internet went from being just a way to look at information about your account to moving money around, from just looking at catalogues to buying things? What if that same jump occurs with this platform inside of business? So now employees are not just reading, but able to execute transaction - transactions inside of business, including joint design, collaboration, or actual transactions - customer- facing, supply chain-facing, the whole gamut of things you do every minute in business. Suddenly communications doesn't have a natural leadership role - but it could. We could either say, "We need to get somebody else to do that because we don't do that. What we do is write the articles and take pictures and do webcasts." Or we could say, "There's something new happening here. There is no logical owner; there is no pre-existing model of government, management, ownership, or leadership. Rather than abdicate it, why don't we try to learn some new skills?" That's what we did. We made a lot of mistakes along the way, but eventually we figured out that what employees want is one intranet where everything is logically integrated. They don't want to hop around 8,000 sites; they want to stay in one place and have everything come to them. That requires all kinds of collaboration inside the company. That means communications had to go to HR, the sales leaders, the CIO office and start a collaboration. It worked really well. You get into the fights like, "Wait a minute. Why are you calling the meeting?" And, "We're not the experts in fill-in-the-blank." But after a while, they realize it doesn't matter. We provided that integrating role. Hood: How do you measure its effectiveness? Iwata: To start with the quantifiable, hard-dollar figure, since 1996, the intranet and its attendant applications has saved the company $2 billion in direct and enabled savings. The other measurements are the degree to which the employees are finding the intranet to be vital to their work. This statistic is probably the most powerful. We have for decades surveyed employees about how they get information on three dimensions - what do you find most credible, what do you actually use, and what would be your preferred source? The top two have always been the same - number one is the grapevine, the coworker. Second is [the] immediate manager. In 2000, the intranet had replaced the manager, and in 2001, it had replaced the coworker. In 2003, it was far ahead of the manager and the grapevine in all three ways - credibility, use, and preference. To have a channel where employees resoundingly say, "I use it, I trust it, and I prefer it" - as much as I would like to say this is because we produce really great content, that's not the reason why. The reason is they go to the intranet to do their work. It's information, tools, and applications vital to their work.