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nytimes.com
Two books look at how Lou Gerstner turned I.B.M. around.
By FRED ANDREWS
I.B.M.'s self-importance knows no bounds. In the
early 1990's, when the pre-eminent computer
maker was losing billions and ready to go the way
of the Soviet Union, its board cast about for a savior
C.E.O. from the outside. One director wanted
President Clinton to press Larry Bossidy of Allied
Signal to take the job, as though the I.B.M. post were
a call to patriotic sacrifice. Nothing came of the
overture to Clinton. Bossidy, approached more
conventionally, replied not on your life, and the
headhunters dug deeper. They came up with Louis V.
Gerstner Jr., a chilly but brilliant consumer products
executive who had elevated American Express to a
pinnacle of success before leaving to head RJR
Nabisco, the debt-laden tobacco and foods
conglomerate.
Gerstner was a questionable choice to accept
stewardship for what the Nobel laureate Joshua
Lederberg warned him was one of the world's 'great
technical treasures. . . . You better not blow it.' He
delivered what Doug Garr calls 'inarguably the most
dramatic corporate turnaround of the 1990's.' Today
the famously self-absorbed company is repositioned
for the open architecture ethic of E-business and the
Internet. Its shares fetch about nine times what they
did when the new C.E.O. walked in the door.
Doug Garr and Robert Slater share the recognition
that the rebirth of I.B.M. is a remarkable tale. They
also share the handicap of I.B.M.'s lordly
disinclination to be of much help with the project.
Gerstner couldn't spare five minutes. The big boss's
announced policy of non-cooperation cured any itch
other senior executives might have felt for talking
about the extraordinary recovery. The two books
cover much the same ground with much the same
emphasis. The professionals who monitor Armonk
will find little new. For the rest of us, these popular
accounts are both instructive and accessible.
Garr's 'IBM Redux' is easily the spicier choice, more
thoughtful as well. Garr worked in Armonk as a
speechwriter to the mighty (though not to Gerstner)
from March 1996 through 1997, when he was
downsized out of a job. An appendix describes the
circumstances, together with a rundown on whom and what Garr knew at first hand. But he
vows he left with no I.B.M. materials and based his book on subsequent interviews with 150
former or current I.B.M. employees, competitors, partners and analysts. Garr's familiarity with
I.B.M.'s heavy hitters (Bob Stephenson, for whom he wrote) and rising stars (Sam Palmisano,
now odds-on favorite to succeed Gerstner) brings the tale to life. Though Garr seems free of
animus, his portraits have the whiff of the office skinny. Some ranking executives are skewered
with an anonymous collective judgment.
Slater's 'Saving Big Blue,' thorough and informative, is ultimately an embarrassingly derivative
reconstruction. It is pieced together from scores of articles or interviews in the business press,
duly footnoted, together with lengthy quotations from Gerstner's speeches and I.B.M. house
organs. Given Armonk's aloofness, one might have more sympathy for scissors and paste if
Slater didn't parade his snippings as Gerstner's patented business philosophy. 'Get Inside the
Mind of Lou Gerstner,' the jacket promises. Inside his mind? If the author ever got inside his
building, there's little to show for it.
Faithful to formula (Slater has written books on Jack Welch, Michael Ovitz and George Soros),
the book is locked into the stance that Gerstner, fount of management wisdom, can do no
wrong, or nothing much. Doubly annoying is the device of showcasing Gerstner's canned
comments in clumps of boldface, as though the book were a red-letter edition of the New
Testament. There's only one flavorful epigram in the entire pastiche. ('You don't get points
for predicting rain. You get points for building arks.')
So how did Gerstner work his wonders? First things first: He rewrote the executives' worthless
stock options, tightening the terms to keep top people on board. He brought in Jerry York, a
bare-knuckles chief financial officer who had manhandled Chrysler back from death's door. He
backed York on a $7 billion cost cutting, including the exodus of 35,000 employees, carried out
swiftly and didactically, in contrast to John Akers's agonized water-torture reductions.
Cold to urgings that he split up the enterprise, Gerstner instead championed I.B.M.'s size and
scope as uniquely its strength. He waged war against the empire's reflex to retreat into
near-autonomous dukedoms, beheading prominent recalcitrants who 'made their numbers' but
nevertheless dragged their feet, and against parochialism, paternalism, bureaucracy,
complacence, the absence of urgency. No question, people were scared of the man.
At American Express, Gerstner had depended on I.B.M. mainframes and had the scars to prove
it. At Armonk he made himself the customer's man, convening corporate clients by the
hundreds. Uninterested in lifting the hood, he focused 'maniacally' -- a favorite adverb -- on
what the machines would deliver. He took as an imperative the task of repairing the brand,
which his focus groups told him had become a shorthand for arrogance. He orchestrated a droll,
engaging advertising campaign, Solutions for a Small Planet, that did the trick.
Assessing Gerstner at midstream (in 1997 he signed on for another five years), Garr sees
I.B.M.'s financial results slipping down the stairs from spectacular the first two years to merely
good of late. He fully credits Gerstner for targeting E-business and the Internet, where I.B.M.
can make hay with muscular machines and integrative expertise in a way it never could with
PC's, Gulliver among the Lilliputians. But should Gerstner rank among America's most creative
business leaders, or is he 'just an extremely good manager'? Garr ponders the question:
'Perhaps Lou Gerstner has been so masterful because he is the kind of C.E.O. who demands far
more loyalty from the people who work for him that he would ever give anyone else. . . . It's
nothing personal, it's just the way it is. The I.B.M. that Gerstner walked into was a spoiled child
of a bygone era in American business. It needed the discipline.'
Fred Andrews's column on management will begin next month in Business Day. He is a senior
editor at The Times. |
