In October 2020, IBM announced that it would be spinning off its managed services division, a $19 billion business unit that focused on IT infrastructure and delivery. In April 2021, it announced the new company would be called Kyndryl. Day 1 of Kyndryl was November 3, 2021.
Three years after the official spinoff, the company's stock has been called a "strong buy" by financial analysts, citing "significant improvements in EBITDA, gross, and operating margins" and "the success of its strategic initiatives," and Kyndryl has been on Newsweek's Global Most Loved Workplaces ranking for two years in a row.
Business leaders within Kyndryl say that an emphasis on culture has been critical to the company's early success. Kyndryl CEO and co-founder Martin Schroeter set the tone for this approach in early conversations with his executive team.
"Martin was always pretty clear that he wanted to change the culture," said Maryjo Charbonnier, CHRO of Kyndryl. "He was looking for someone who could break that down mechanically. How are we going to do that, and what's going to need to change, and what's the sequence of what we're going to need to change?"
Tech companies aren't always bought-in on the idea of leading with culture—most in the startup realm tend to be focused on operational metrics, raising investment cash and developing product-market fit. At Kyndryl, the leadership realized that people were the key to reaching those financial goals.
"As Martin recruited us, we created what we wanted the culture of this company to be, and that's what became, ultimately, The Kyndryl Way," said Michael Bradshaw, who was the CIO of Kyndryl on the day it spun off. He now serves as an SVP in a customer-facing role, as part of the customer-focused culture that they have been looking to promote.
The driving philosophy for this people-first approach was the realization that the company's product was its people, and so Kyndryl's leadership set out to turn its talent into part of its competitive advantage. Schroeter had frequently stated that, before spinning off, Kyndryl was a services organization within a product-centric company.
"We recognize we are a services company, which means that it's about the skills and the way that we bring those skills to our customers. So it means we have to value our employees. We have to understand what makes those employees valuable, to contribute to what we bring to our customers," Bradshaw explained. Kyndryl made an early decision that to be a top technology services provider, it had to be an employer of choice.
This missive is, of course, easier said than done. Though the organization had a lot of advantages compared to a normal startup, like billions of dollars in contracted revenue and 80,000 "new" employees, the situation came with the inertia of a large business unit that was once part of a massive multinational corporation, and a lot of legacy technology systems to address as well.
"We really believe that our Kyndryls [employees] are the heart of progress. That's our slogan," Charbonnier said. "[Schroeter's] belief was we weren't going to change the business unless we change the culture first."
But this wasn't just a cultural transformation, it was occurring alongside a business-model transformation and digital transformation. Amid all that change, the company's culture-driven approach has led to financial success.
"We made a commitment that we were going to get profitable. We achieved that commitment before we thought we would," Charbonnier noted. "We made a commitment to return to top line growth by 2025. We're going to do that. So, we saw the results in the business begin to change, and that bred success as well."
Embracing a Challenge
On the first day of the Kyndryl spinoff, 80,000 IBM employees around the world received an offer letter to work for the new company. Xerxes Cooper, one of the earliest Kyndryl employees, the president of strategic markets, said he was encouraged by the "phenomenally high acceptance rate."
"It was a very, very hot market," Cooper recalled. "There was no change in compensation."
The people accepting this offer letter ostensibly wanted to be a part of something new. They were drawn to the challenge and willing to step away from IBM, one of the most prominent names in the technology industry, for a brand-new company with no name recognition before 2021.
This was certainly the draw for Charbonnier, a former HR leader at Pepsi and CNA Insurance. She had experienced a similar situation when she was the CHRO at Broadridge, which spun off from ADP in 2007. She said the opportunity at Kyndryl sounded like "my kind of crazy."
"I got the call and they told me: It's a transformation. It's a spin. The business was in challenging times as we spun, and a big HR transformation needs to happen," she said. "I was like, 'Sign me up!'"
She added that the job would allow her to demonstrate the value of a strategic HR function.
"I love when business models hit an inflection point, where critical to their inflection point is a complicated set of people-challenges," she said. "HR has a chance to really shine in those moments."
Bradshaw, who knew IBM well as a former employee, spending 22 years with Big Blue until 2010, when he joined Lockheed Martin, was the CIO at NBCUniversal when he got the call from Schroeter, who Bradshaw said he had previously met as a customer of IBM.
"If the intention was to leave it as it was and just keep driving that thing as it had been, that would have been the end of my story with Kyndryl," Bradshaw shared. "It was really pivoting to what the vision of becoming a broader player, leveraging the existing trust that we had, and building even more trust, and really focusing on what value we could bring the customers, and that was what I was hoping to hear."
Very frequently, spinoffs occur to allow this level of focus and innovation that Bradshaw describes. IBM's focus had shifted to artificial intelligence and cloud products, so the overall mindshare of leadership, such as the board and CEO, on making improvements in managed IT services was minimal.
"We started off with this idea of, you know, a startup at scale, a startup in the sense that we were a new company, a new brand," Cooper said, "a chance to innovate and chart our own course."
After 14 years at IBM, Catherine Malkova left in 2020, completing stints at Genpact and NCR Corporation. When a former manager reached out to her about joining the Kyndryl team, she was excited by the possibilities.
"As we are on this hypergrowth trajectory, you can only get there if everyone aligns around the same focus areas," Malkova told Newsweek, expressing excitement for a new vision in technology consulting. She notes that when she joined Kyndryl, Schroeter personally handed her The Leadership Handbook, a printed brochure small enough to fit in one's pocket that outlines The Kyndryl Way.
Establishing a Culture
Saying you want a strong culture is easy, but operationalizing that goal and measuring progress can be harder. This is what Schroeter and Charbonnier set out to do from the start.
"Even back in the days before we were Kyndryl, when we were NewCo, under Martin's leadership, the executive team and Maryjo recognized the importance of culture in those early days," Bradshaw said.
For Charbonnier, it started with a definition of culture, borrowed from Walking the Talk, a consulting firm: "Culture is the spoken and unspoken messages about what is encouraged, discouraged, tolerated, that manifests in behavior, systems and symbols," she shared. "There are a lot of [culture frameworks] out there. Pick one that works for you and your CEO."
The executive leadership team conducted customer research to help determine a direction for the company and also sent out an employee survey, asking what they wanted to keep from their previous work culture and what they wanted to leave behind, Charbonnier shared.
"We had a piece of customer research sitting side by side with employee research, and that allowed us to do the first draft of what we called 'The Kyndryl Way,'" she said.
The Kyndryl Way acrostically spells "red," the color within the company's logo, and then contains three F's: fast, flat and focused. Spelling "red," the R is for restless, the E is for empathetic, and the D is for devoted. Every company leader received the Leadership Handbook that Malkova mentioned, which contains detailed guidance around each of these principles.
"The reason we came to them was based on that research, based on what resonated with our senior leaders, and also, words that, to me, you don't find in everybody's value statement," Charbonnier said. They trained 800 senior leaders on this, with half of the agenda focusing on culture, and then rolled it out to 6,300 managers around the world.
"In a tech-services company, your brand is how you behave," she said, adding that the company's culture was built around excitement for the field they were in and taking pride in being the backbone of many key industries and commercial sectors.
"If you think of all of the biggest brands that are out there, their underlying technology sits on a platform, and most often that platform is one run by Kyndryl. So, if we don't deliver, an entire bank is down," Cooper said.
After setting the cultural agenda and getting the organization's leaders up to speed on them, Charbonnier and the cultural governance team, with the help of technology teams, sought to streamline employee lifecycle experiences such as performance management, promotion and annual reviews.
"These all hold culture," she said. "They amplify it. The good and the bad of it, they amplify it."
After the company's launch and the first wave of training around the culture and values, an engagement survey found that 88 percent of employees agreed that their managers behaved consistently with The Kyndryl Way, a figure that the executive team was quite pleased with. Cooper added that he was enthused by the response rate for the engagement survey itself.
Charbonnier, Schroeter and a host of cross-functional executives met monthly to discuss cultural goal-setting, strategy enhancements and rollouts.
"Culture, to us, had an annual plan," Charbonnier said, "just like the revenue plan."
Bringing a Vision to Life
After an intensely busy period spinning off the company, coming up with a new branding as well as cultural and business transformation strategies, Kyndryl leadership also took the opportunity to reevaluate its technology stack after leaving behind its legacy infrastructure. Bradshaw, who was CIO at the time, shares that 80 percent of the company's applications were removed. Charbonnier added that 48 HR applications were sunset in the first year alone.
Bradshaw credits the team and the culture of empowerment for making this possible.
As an HR leader, Charbonnier embraced the opportunity to make technology upgrades. She said she felt it fit particularly well with the ethos of Kyndryl as well.
"If you're going to be a technology services provider, I like to think you ought to be the best technology services provider in HR, right?...I actually love HR technology changes and projects, because they give you a chance to reinvent the businesses," she said. "It's a great way to make the things you're doing in HR resonate."
After reshaping every HR process and its underlying technology, Charbonnier and the Kyndryl and HR leadership teams revamped many aspects of the employee experience.
"As we did kind of what I call the 'archeological dig' of systems…I think the first thing we realized was that the way we organized work and jobs was really out of date," Charbonnier said.
Kyndryl rolled out new job titles and career paths in 2023, creating a skills-based framework by which employees are staffed onto projects and identified for new opportunities internally. As they gained skills through training libraries or certifications from new technology partners, now that their services are no longer tied to IBM products, new pathways and opportunities arose for Kyndryl employees.
"We revamped all the career paths, what skills are attached to all the jobs, and rolled that up. That was what we called 'powering human progress, release one,'" Charbonnier said. "By March 2023, we were rolling out a brand-new performance management process." That summer, the company launched a new applicant tracking system.
For all of these changes, Charbonnier kept a simple philosophy in the communications: a slide that said "goodbye" to old software and processes, and "hello" to the new ones.
This philosophy around empowerment, leadership and customer focus has also impacted the company's sustainability efforts. Kyndryl has made a 2040 net-zero greenhouse gas emissions commitment with near-term 2030 target goals. It has hired a team of individuals who are excited to make an environmental impact for a major corporation while building a new culture around sustainability from scratch.
"I love a blank canvas," Monoswita Saha, director, social impact, told Newsweek. She joined Kyndryl from IBM and said she's enjoyed being part of building out teams and processes for sustainability, community impact and employee engagement. As a working parent, Saha said she has also appreciated the flexibility around remote working arrangements. Kyndryl's policy has been and remains remote-friendly.
Amelia Miller, a 2020 college graduate working as the senior lead in environmental management at Kyndryl, was not always sure she wanted a job in a corporate setting. As someone passionate about sustainability and research, she was not sure she'd fit in. In her two years at Kyndryl, she said she's had a lot of autonomy and opportunity to pursue her own ideas and projects.
"We're a people company," Cooper said. "We don't sell hardware and software. It is our people and their expertise."
Cooper offered some advice for technology leaders looking to emphasize culture amid pushes for product excellence and operational efficiency.
"I would challenge them to really look at that interaction of the empowerment and the accountability matrix," he explained. "You're never going to get it perfect. It's just the nature of how it is. But if you feel like it's misaligned, it is, and if you feel like you could do a better job, your employees are seeing it too...so take swift actions."
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