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IBM Offering Advice Free of Charge - What governments and businesses and people learn from this?

IBM is applying the most powerful marketing key word "FREE" globally.
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Article:Offering Advice Free of Charge


In an unusual bid to bolster its business in emerging markets—and give its management training a global bent—International Business Machines Corp. is sending executives to provide free consulting services in Asia, Latin America, Eastern Europe, Africa and the Middle East.

Since February, IBM has sent 36 executives on three-week consulting assignments to four emerging-markets cities, including Rio de Janeiro and Chengdu, China. Next year, IBM plans to send 100 more executives to 11 different cities.

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An aquatic complex in Rio de Janeiro. IBM advised on infrastructure for the city's coming Olympic games.

The idea, in part, is to get to know more decision-makers in those markets, which IBM views as increasingly important to its future. The program also gives executives more familiarity with developing economies and experience working with people from a wider range of backgrounds.

IBM needs to dig deeper in the developing world as growth in more mature markets slows. In the most recent quarter, revenue from emerging markets grew 16%, compared with 3% for the entire company. IBM expects emerging markets, which accounted for 21% of IBM's $24.3 billion in revenue in the most recent quarter, to reach 25% of its sales by 2015.

The program "is intended to expand IBM's presence in growth markets in terms of establishing relationships with the right influencers and government leaders, providing high-quality references, and expanding our opportunities in those markets," says Robin Willner, IBM's vice president of corporate citizenship.

Analysts say IBM has done well at selling computer hardware, software and consulting services in emerging markets to large companies and governments. But as those markets themselves mature, IBM needs to win more contracts from small and medium-sized businesses there, which won't be as easy, says IDC analyst Frank Gens.

"If they want to maximize their opportunity as time goes on they will need to think more about the small market opportunity," says Mr. Gens. "That has not been IBM's strong suit." IBM says it is successfully targeting small businesses, and that it has seen 22% growth this year in revenue from small businesses in emerging markets.

To galvanize its business in emerging markets, IBM two years ago created a "growth markets" unit covering 140 countries and based in Shanghai. The strategy is to open more offices, build large infrastructure projects for governments, and develop technology systems for industries such as telecommunications and finance. IBM now has 103 sales offices in the growth-markets countries after opening 40 offices this year.

The free-consulting assignments are one way IBM hopes to generate goodwill with new contacts in those areas, says Ms. Willner. No new business has come directly from the program so far, however.

In a typical assignment, a handful of executives work with local businesses and government leaders, providing advice on economic development and technology projects. Each engagement costs IBM about $250,000, the company says.

Other companies are experimenting with similar efforts. A group of Dow Corning Corp. employees recently returned from a volunteer assignment in Bangalore, India, where they worked with a nongovernmental organization to help market cheaper, safer cooking stoves. Dow Corning spokesman Jarrod Erpelding says the goal is to help employees learn about new markets and think more creatively.

FedEx Corp. is piloting a similar program for high-potential employees in emerging markets that was modeled on IBM's. And Novartis AG this summer launched an "Entrepreneurial Leadership Program" to expose its employees to health-care challenges in emerging markets.

In an interview, IBM Chief Executive Samuel J. Palmisano says its program is part of a broader push to inject a more global perspective, and a bigger emphasis on collaboration among people from different backgrounds, into its management training.

"In the past when we were running more of a nonintegrated company, you could be great at certain things—software, PC, whatever," he says. "But now you run an integrated play and you have to have a global perspective and be more collaborative with your colleagues and your peers."

Chandu Visweswariah, a 20-year IBM research veteran currently based at its lab in Yorktown Heights, N.Y., spent three weeks in Brazil this summer advising government leaders on which infrastructure projects to build in preparation for the 2014 World Cup and the 2016 Olympics. "We learn how these growth markets operate," says Mr. Visweswariah.

Marcelo Haddad, executive director of the Rio de Janeiro Investment Promotion Agency, who worked with the IBM executives, says he sees the IBM project as a goodwill initiative that could lead to business in the future.

Patrick Boyle, an IBM sales director based in Boston, spent several weeks this summer in Katowice, Poland, a coal-mining center seeking to retain businesses and skilled workers. He helped devise a plan of tax breaks, government grants and internship programs.

IBM already had a small sales and service support office in Katowice, but executives on the project struck up new relationships with government leaders and entrepreneurs, says Mr. Boyle. He says he met more than 200 people, and spent a lot of time with the mayor. When Mr. Boyle returned to the U.S., he says, the mayor friended him on Facebook.

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