perhaps some interesting reading material..
Let There Be Lou
Two tales of IBM's fearsome leader and Big Blue's tumultuous
turnaround
Edited By Jay Palmer
Two new books on the IBM turnaround paint a picture of CEO Lou
Gerstner as a focused, arrogant, monomaniacal and often vindictive manager
you surely wouldn't want as an enemy -- or as a friend, for that matter.
IBM Redux by Doug Garr and Saving Big Blue
by Robert Slater both do a yeoman's job of
looking behind the near-messianic image of the
former travel, food and tobacco executive spun
by the IBM PR machine. The books, by contrast,
present a more balanced picture of the significant
continuing failures that fester just beneath the
glow of the inarguably positive financial results
that followed the company's well-chronicled
near-death experience in 1993.
But both suffer from a lack of detail and needed
insight that would have made them more valuable, with both authors
describing IBM's press-paranoia and pre-Glasnost-Kremlin-style reactions to
their inquiries that ranged from benign non-cooperation to outright
obstruction. Ultimately, this sort of reaction means that IBM has only itself to
blame if it has a question regarding accuracy or context.
Beyond that, however, the two books differ considerably.
Slater's Saving Big Blue is, in large part, a fact-filled, textbook-like re-hash
of news events. The pages are frequently interspersed with annoying
bold-faced paragraphs of Gerstner's direct quotes emphasizing the profoundly
banal and shockingly prosaic. The book purports to offer lessons in the
turnaround, but ends up as a glorification of the obvious: "Set High
Expectations: Don't Settle for Mediocrity," "Stop Wasting Time: Get to the
Point." The book also loses some credibility very quickly when, on page 7,
the author writes: "In 1982 IBM weighed in with its own personal computer."
It was 1981, something easily verified on the IBM Website. On the other
hand, IBM Redux, by a downsized former IBM speechwriter, succeeds not
only in readability but also offers valuable insight into the intractable IBM
culture of bureaucracy and the near Sisyphean challenge that Gerstner has
only partly tamed.
While much of the media have focused on the
parable of Gerstner's laying on of hands to
bring the techno-Lazarus back to life, IBM
Redux points out that the PC business, has
been a continuing disaster wrought by a
metastatically malignant bureaucracy that
continues to lag the market in product
introductions and treats its customers as if they
were ignorant and unwashed.
Garr's details on these unresolved IBM
internal struggles make the company's
recovery seem even more incredible -- its stock price grew at more than three
times the pace of the S&P 500 over the past five years -- and suggests that
Gerstner has even more magic to work if he can stop losing key people and
get a grip on his own anger and arrogance.
While both books dutifully recite the numbers, dates and names that are
familiar to readers of the business press (valuable as a consolidated
reference), Garr offers some insights into the CEO himself.
If Garr is correct (and we have nothing from IBM or Gerstner to suggest
otherwise), Gerstner's big secret was hiring Chrysler CFO Jerome B. York,
who would be described by IBMers as "that profane little Marine who gets
the job done." York, Garr's book makes clear, was the real architect and
engineer -- and maybe the real unsung hero -- of IBM's restructuring.
York was the one who got expenses and other
bloat under control and oversaw the mass
firings of the survivors from the previous
regime. While Gerstner made his way around
the country in IBM's luxurious private jets and
limos to announce belt-tightening and layoffs,
York was the man who created the strategy
and executed it, sparing, of course, all essential
personnel such as Gerstner's private chef who
remained on the payroll at $120,000 per year.
York resigned in April 1995. Garr suggests
that Gerstner's progress since then has been
limited by not having his help.
IBM Redux builds a strong case that Gerstner's self-avowed lack of vision,
his technical naivete and arrogance could produce blunders every bit as big as
the ones IBM committed under previous management. Gerstner's lack of
technical savvy led him into an agreement with Microsoft guaranteeing that the
Redmond software giant would leapfrog OS/2 with its now-ubiquitous
Windows operating system. Garr says that Gerstner's arrogance was behind
the waste of more than $1 billion on OS/2 and that the CEO somehow felt he
could finesse all its shortcomings with a PR blitz in which he tagged the new
version OS/2 as "Warp," under the misconception that people would flock to
a product with a snappy new name.
"Well, it was a disaster," Garr quotes Bruce Claflin, who headed the
development of the ThinkPad, one of IBM's few successful personal
computing products. "We told [Gerstner] it'd be a disaster, but he didn't care.
There was ample information that said, 'Lou, you are about to step into a huge
morass.' And he just wouldn't listen to us. He completely disregarded it in the
most forceful way you can imagine."
Garr cites a number of other ways that Gerstner's lack of technical vision and
arrogance made for lost opportunities: the pitiful performance of the PC
division in general, the market's embrace of standard operating systems,
especially UNIX, and the company-wide assumption that people would pay
more for an IBM product than for a plug-compatible competitor's simply
because the IBM name was on it.
This lack of vision has serious implications. While Gerstner has publicly said
IBM is embracing the Internet, Garr points out that its e-commerce offerings
are really just thinly disguised methods to sell hardware. And while IBM
heavily promotes the "e" word (e-business, e-commerce e-tc.), its presence
lags so far behind Cisco and other giants that it is entirely possible IBM will
not be able to hop aboard the 'Net Express. Indeed, Garr points out that
IBM had a golden opportunity to hammer out a strategic partnership with
Internet infrastructure king Cisco, but failed to do so because no one had a
vision for what was at stake.
Both books show that Gerstner is clearly a dedicated, fanatically hard
worker, but the scenes of his mercurial temper related by Garr (and the way
he allegedly nurses a vendetta) also raise questions about whether his personal
actions have adversely affected the company. In 1997, Garr writes, IBM
made an arrogantly sloppy attempt at getting a piece of J.P. Morgan's $1.5
billion annual technology budget. When the contract went to a competitor,
Gerstner pulled about $10 million worth of business -- mostly pension
management and currency trading -- from Morgan, doing little damage to the
investment banking giant but creating ill will and publicity offering an
unflattering vignette of a temper out of control.
Garr's book recounts page after page of the things that send shivers
throughout IBM's tightly wrapped CEO and his PR department: the foreign
kickbacks and indictments, questions about whether Gerstner is overpaid, the
Aptiva and Network Computer follies and more.
IBM Redux is ultimately a tough, rewarding read. It's full of things that fill in
the cracks between media stories and it offers investors a small part of the
context they need to assess whether IBM will be as good a bet in the next
three years as it was three years ago. In the final analysis, one can only hope
that IBM will start doing as good a job on its technology as its flacks have
done on the boss's image.
-- Reviewed by Lewis Perdue
LEWIS PERDUE, editor and publisher of Wineinvestmentnews.com, does his writing
on a non-IBM PC. |
