An IBM Corp. (NYSE:IBM) spokesman
told Bloomberg Tuesday that the company earlier this month named Elias Mendoza to succeed David Johnson, the company's vice president of corporate development. Johnson left in May to take a similar job at Dell Inc. (NASDAQ:DELL) and is currently
being sued by IBM for violating a noncompete contract.
Mendoza, 43, is a fairly recent hire at IBM. A former managing director at Morgan Stanley's (NYSE:MS) investment banking division in Tokyo, he joined IBM in 2006, according to Bloomberg, and had headed corporate development for Japan and growth markets.
The contrast with Johnson's resume is noteworthy. Johnson was a career IBMer who came up through a series of finance jobs in different IBM units, including the technology group and storage and PC divisions. He joined Big Blue in 1981, grew up with the current generation of leaders and knows his way around a giant organization where there's an awful lot to know. As an IBM strategy executive
told us in 2004: "IBM is matrix upon matrix. It's the only way it can work."
When Johnson got the IBM corp dev job in 2001, the company was ramping up what would become one of the world's top corporate M&A organizations, distinguished by its success in getting all those matrices to work in harmony. He had the word "strategy" in his job description, but ultimately the IBM corp dev organization is more about execution and disciplined capital allocation, reporting up to the CFO and working closely with scores of business development and strategy people embedded in the business units alongside the line managers who have to own and implement deals in order for them to succeed. Perhaps Johnson's experience in building such an organization is part of what made him so attractive to Dell, which has been an M&A laggard.
Like Johnson before him, Mendoza will report to CFO Mark Loughridge, but he'll obviously bring a different set of experiences to the job. A perennial topic at corp dev conferences is the ability (or lack thereof) of i-bankers, with their focus on getting the transaction done, to make the transition to corp dev, where organizational context is nearly everything. It can be tough to win over strong-willed business managers who aren't always happy to hear those famous words "I'm from corporate, and I'm here to help."
Recent history at General Electric Co. (NYSE:GE) may be relevant. In 2001 CEO Jeff Immelt brought in Robert Jeffe, a Credit Suisse First Boston i-banker, as head of corporate business development. In 2005 Jeffe moved back to Wall Street (specifically, to Deutsche Bank Securities Inc.) and was succeeded by Pamela Daley, who joined GE in 1989 and had been the company's lead deal lawyer for the previous 13 years. She's still in the job.
Of course, Mendoza isn't starting from scratch at IBM, and he must already have taken to the IBM culture to have gotten this important job. No doubt he brings a lot to it, with a knowledge of high-growth Asian markets possibly near the top of the list. It could be that, while it took a true insider to build the corp dev operation, it doesn't take a career IBMer to lead it successfully.
One thing's for sure: Mendoza and Big Blue's sizable deal machine will want to be firing on all cylinders, with consolidation in the tech sector likely to accelerate and IBM chairman Sam Palmisano determined to play a big role. -
Kenneth Klee
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