Page Two

By Stan Gibson  |  Posted 2002-11-21 Print this article Print

: Having Gotten the Elephants Attention"> Having gotten the elephants attention, he needed a grand cause to create a sense of mission. As Gerstner put it, "I got lucky. I needed a moonshot, and along came the Internet. It just saved me." The Internet, unlike the PC revolution, which IBM had just lost to Microsoft and a host of clonemakers, played to IBMs strengths of servers, software and integration. "It became a galvanizing force," even though the world at large was unconvinced. "Nobody believed us because we were still viewed as a recovering alcoholic," he told Gergen. Keeping the company united and refocusing it around the Internet meant further transformation. "Restoring the company as a leader meant changing it from a manufacturer to an integrator," Gerstner said. That change is still being worked out, as witnessed by the companys acquisition this year of PriceWaterhouseCoopers Consulting.
And even though employees of IBM Global Services, with the addition of PWCC workers, are now more than 50 percent of the corporate population, he said, "I dont think that IBM will ever be a services company. We will continue to invest in hardware and software."
While piloting the company back from the brink, Gerstner took part in a five-year effort to find his successor. He compiled a list of what was needed to run IBM and fed it to the companys succession committee, which measured three or four candidates against the criteria. "We analyzed each of them against different metrics, including passion," before settling on Samuel Palmisano, who was recently named Chairman. Gerstner, a graduate of the Harvard Business School and a former McKinsey & Co. consultant, offered up some nuggets of management wisdom for the crowd. On leadership, he said, "The critical task of a leader is to create a sense of crisis. No organization will change unless people believe there is real pain staying the way we are." And people, even then, cannot be trusted to follow through. "People dont do what you expect. They do what you inspect." Personal commitment is critical. "Leaders must have passion; they must take risks; they must take part in what theyre leading. Who wants to work for a Wizard of Oz that hides behind a curtain?" Corporate culture is indispensable. "Culture is everything. If it isnt right, nothing goes on." And while corporate cultures can be beneficial in times of stability, they can be a liability when market conditions change. "The hardest organizations to change are the ones that are the most successful because they have the strongest culture." Although he deplored the transgressions of certain executives in recent corporate bankruptcy scandals, he warned of regulatory overreaction. "We need to make sure we dont injure the system because of a breakdown in personal ethics." Some in the audience raised questions about disproportionate executive compensation. Gerstner insisted that executives not be rewarded in cases of corporate failure, but asserted that successful execs, including himself, can be justly paid handsome sums because of the beneficial effects of their actions on others. "At the end of the day, 130,000 more people got jobs because of the changes we made," he said. Now that hes leaving, Gerstner can be candid about his encounters with the "old" IBM. The vaunted IBM dress code was an early casualty of the Gerstner era. "The IBM dress code was eminently sensible 60 years ago. You dressed like your customer, and your customer was a banker who wore a blue suit." IBMers still need to dress like their customers, but today IBM customers might wear blue jeans and white socks, he said. Gerstner also confessed to an acute sense of doubt when he started the job. Having turned the job down three times, he finally accepted but could not explain why. "I was scared. Im not really sure why I took the job. An $80 billion company that was hemorrhaging cash was daunting to say the least." When Gerstner reported to work his first day, the door was locked. He had no badge to gain entry, so he began pounding on the door. A cleaning lady let him in, not knowing who he was.

Stan Gibson is Executive Editor of eWEEK. In addition to taking part in Ziff Davis eSeminars and taking charge of special editorial projects, his columns and editorials appear regularly in both the print and online editions of eWEEK. He is chairman of eWEEK's Editorial Board, which received the 1999 Jesse H. Neal Award of the American Business Press. In ten years at eWEEK, Gibson has served eWEEK (formerly PC Week) as Executive Editor/eBiz Strategies, Deputy News Editor, Networking Editor, Assignment Editor and Department Editor. His Webcast program, 'Take Down,' appeared on He has appeared on many radio and television programs including TechTV, CNBC, PBS, WBZ-Boston, WEVD New York and New England Cable News. Gibson has appeared as keynoter at many conferences, including CAMP Expo, Society for Information Management, and the Technology Managers Forum. A 19-year veteran covering information technology, he was previously News Editor at Communications Week and was Software Editor and Systems Editor at Computerworld.

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