Nick Donofrio The IBM Years 1 The IBM Years, The Nicholas Donofrio Story; Celera Search LLC The Nick Donofrio Story Several years ago, I had the privilege of meeting Nick at The Kittle House in Chappaqua, NY one of his favorite restaurants near his home. As a favor to Dr. Pedro Aspe former Minister of Finance, Mexcio and a board member of McGraw-Hill, I had an exploratory meeting with Nick to see if he might consider joining the board of McGraw-Hill. Earlier that summer I met with Dr. Aspe at his office in Mexico City. In 1993-4 I placed Dr. Aspe on the board of McGraw-Hill and he and I were catching up on things. During our discussion he talked about the changing nature of McGraw-Hill’s business. He was concerned about the challenges facing legacy based publishing companies like McGraw-Hill. He sensed the company needed to have a visionary tech- nologist on the board to help them transition into the digital age. Someone who understood the enabling power of technology and could play an important role guiding, directing and help reshape the company so it could thrive in the future. Nick Donofrio, had recently retired from IBM after a 44 year career. He was an EVP who led IBM’s technology and innovation strategies from 1997 until his retirement in October 2008. His most recent responsibilities included IBM Research, Govern- mental Programs, Technical Support & Quality, Corporate Community Relations, as well as Environmental Health & Product Safety. Also reporting to Mr. Donofrio were the senior executives responsible for IBM's enterprise on demand transformation. In 2008 IBM Chairman Sam Palmisano elected Nick IBM Fellow, the company’s highest technical honor. After being hired full time at IBM in 1967, he spent the early part of his career in integrated circuit and chip development as a designer of logic and memory chips. He held numerous technical management positions and, later, executive positions in several of IBM's product divisions. He has led many of IBM's major development and manufacturing teams – from semiconductor and storage technolo- gies, to microprocessors and personal computers, to IBM's entire family of servers which in 1992-93 represented more than half of IBM’s global business revenue. On November 21, 2011 I had my first of numerous interviews with Nick at the IBM Thomas J. Watson Research Center. In the interim, Celera Search has conducted more than 15 hours of interviews with Nick which we are presenting in four parts and featuring on the Celera Search website. Part I, The Formative Years introduces the reader to Nick’s ancestry and upbringing leading up to being hired full time at IBM in 1967. This section, Part II covers his 44 year career at IBM. Part III covers his Post Career Activities serving on boards, as a highly sought after advisor and independent consultant. Part IV examines his insights into topical issues relevant to key decision makers across the private and public sector. Grant P. Lussier Grant P Lussier is the Managing Partner of Celera Search a small boutique executive retained search firm that specializes in recruiting executives and board directors familiar with large scale innovation and transformation initiatives. The firm works with some of the world’s most prominent Global 2000 companies and Mr. Lussier is recognized by industry insiders as an influ- ential senior level executive search consultant. He is also the Chairman and founding member of Celera Partners Transfor- mation Advisory Services, LLC (TAS) a consultancy that assists CEOs, CFOs, CIOs and corporate boards undertaking large, risky IT transformation and modernization initiatives. TAS and its Advisory Board is composed of a distinguished array of preeminent retired and current CIOs, business leaders and consultants. These thought leaders provide valuable insights on innovation and best practices for the business of technology and corporate governance. Via the combination of Celera Search and Celera Partners Transformation Advisory Services, Mr. Lussier has worked extensively with business leaders on large scale change management projects with a focus on reconceptualizing business models, reconfiguring value chains and business pro- cesses. During the past twenty years, Mr. Lussier has established a broad base network of distinguished CEOs, CFOs, CIOs and influencers across most industry segments in the private as well as public sector. Prior to Celera Search, Mr. Lussier was the founding partner of the Mexico Offices for both Heidrick & Struggles and Spencer Stuart. Prior to Hedrick & Struggles, Mr. Lussier worked as a strategy consultant with Arthur D. Little where he focused on strategic and operating issues in the financial services, technology, consumer products industries and the privatization of Mexico’s state owned industries. Mr. Lussier was born and raised in Argentina and received a B.A. degree in International Relations from Brown University. He is fluent in Spanish, Portuguese and English. Upon graduation, Grant was the founder and for 11 years the CEO of 3XM, Inc. a pioneer in the CAD-CAM CNC software industry. 2 The IBM Years, The Nicholas Donofrio Story; Celera Search LLC The IBM Years Part II of Nick’s story focuses on his 44 years at IBM, and the evolution of his career. During his tenure he worked for seven of IBM’s eight CEOs. In 1967 when Nick joined IBM, Thomas Watson Jr. was the CEO of IBM. The following represents one of our numerous discussions with Nick. In Part II we examine Nick’s distinguished career with IBM, the company he loves more than any other. We pick up where we left off in Part I, and now it is the early ’70s. Having moved his family to Burlington, Vermont, Nick finds that the business of technology is changing very quickly. We start by inquiring what it was like at IBM during his early years: Nick worked for 7 of IBM’s 8 CEOs Grant Lussier: Grant Lussier: Nick Donofrio: Oh, no, gosh, How would you characterize the probably a hundred other labs. culture of IBM at the time that IBM grew very wildly through you joined the company? the ’70s. It was very successful; they were doing a lot of hiring 1 and building labs all over the Nick Donofrio: It was definitely world—in Japan, and Taiwan, in a “command-control” type of 1 2 Europe, also Latin America. culture, with lots of directives. They had a big presence in Bra- That aspect of the company zil, Mexico and Argentina. didn’t appeal to me much, but 5 of course, I listened and did what I was told. I understood 4 Grant Lussier: What was the the hierarchy. Before Frank logic to this expansion? Cary, Vincent (Vin) Learson was 3 6 the Chairman and CEO in the early ’70s. He was a tough guy. Nick Donofrio: The thesis was CEOs of their generation would that there are smart people every- say things like “I do not want to where. Moreover, they were tak- see you here ever again,” and ing the British Trading Compa- they meant it literally. ny approach: the thought was that IBM was needed and want- I started in Burlington in ’71, 7 8 ed in many countries, and of and we were there for nine course we could import and ex- years. Toward the end of that 1. Thomas Watson Sr. 5. John Opel port, but the tariffs were huge. time was when I first became an 2. Thomas Watson Jr. 6. John Akers But it’s a different story when executive. I was one of the top 3. Vincent Learson 7. Lou Gerstner you build your product there. It six or seven people reporting to 4. Frank Cary 8. Sam Palmisano was an interesting protective the lab director. So I was manag- strategy. IBM headed for the ing a specific function in the countries that were hot. We were Burlington lab, in which I’d in Brazil, with the thought that it grown up as a technical person. was going to grow quickly, as well as Argentina and Mexico. And then it formed the whole Latin American strategy around those three countries. They were pretty good at Grant Lussier: At this time IBM probably had what, four figuring that kind of program out. I can’t begin to tell you or five labs? how many plants we had in Japan. And eventually we had 3 The IBM Years, The Nicholas Donofrio Story; Celera Search LLC to close them all. After the fast-moving ’60s and ’70s, then we Anyhow, it wasn’t long before I was told that my family and I hit the slower-moving ’80s, and we hit the wall. would be moving to Manassas, Virginia. My kids were still in elementary school, and it was not easy to move them to a new town and school, but we went. The plant in Virginia was a In 1980, I was an executive reporting to the lab director. I test and packaging plant, and I ran the general technology was told that I would be going to White Plains to work for side of the operation. Although I was a lab guy, and not really Jack Kueheler, the president of the General Technology Divi- a manufacturing guy, I thought, “Alright, fine.” I oversaw sion. I would be the division’s planning director. I said, “I about three thousand people. don’t know planning; I have no skills,” and was told “Don’t worry about that; we’ll teach you that.” So it was a training job. IBM was fa- My wife and I loved the area. We found a mous for rotating staff and investing in tiny little house in a cute little develop- people.