The Silverlake Project: Transformation at IBM

By the mid-1980s, IBM's leadership in computers was under siege, and in fact one of its most respected sites, IBM Rochester (in Minnesota), was in deep trouble. The birthplace of the IBM System/3 and many other profitable mid-range computers, Rochester had become dazzled by its own technological prowess, producing one sophisticated, elegant machine after another. But then it lost touch with its market. The result was disastrous. Rochester's market share of mid-range computers plummeted. But rather than lay down and die, Rochester initiated the most radical cultural change in IBM's history, switching from a product-driven to a market-driven approach to doing business, and set up the Silverlake Project to create a new mid-range computer, the AS/400. It turned out to be a remarkable success. In two short years, the AS/400 was developed, tested, manufactured and launched--an amazing feat in itself--and then it sold more than 25,000 machines worldwide in the first four months on the market. It was the most successful start of any product in the company's history, and continues to be a worldwide success after three years.
Now, in The Silverlake Project, three of the major figures behind the AS/400--Roy Bauer, Emilio Collar, and Victor Tang--recount the entire history of Silverlake and the AS/400, a key project that would help win the prestigious Malcolm Baldridge National Quality Award for the Rochester Plant. They describe how engineer and programmer Pete Hansen set up the skunk works that would develop the AS/400, how Tom Furey, an outsider from the East Coast, took charge of the development lab and fashioned IBM Rochester into the corporate exemplar of a market-driven enterprise. But most important, the authors outline twelve marketing principles behind this remarkable success. They discuss how to bring customers in at the very beginning, how to select strategic alliances, how to target markets, how to prioritize a strategic decision, how to launch a new product creatively and effectively, and how to keep the momentum going after the launch. The emphasis throughout is on a non-hierarchical, bottom-up idea flow that lets employees and customers influence product development; in light of this, the authors also discuss how others can make their case with corporate headquarters. All twelve principles drawn from the AS/400 experience can be applied to any product in any market. Together, they provide a revolutionary way to approach business, one which will be of value to executives no matter how large or small their corporation may be.
This powerful narrative, as told by Patrick Houston, former Business Week writer, gives the inside story of one of the most successful computers in IBM history. For anyone curious about skunk works, product development, organizational transformation, the computer industry, or IBM, The Silverlake Project will be revealing.