Corporate Elephant Trainer Lou Gerstner Takes Center Stage

Outgoing IBM boss Louis Gerstner tells Harvard that breaking up IBM was the best thing he never did.

Taking one last curtain call as his tenure comes to an end, outgoing IBM boss Louis Gerstner is going public with many recollections, observations and judgments as he promotes the memoir of his IBM years, "Who Says Elephants Cant Dance?"

His single most important decision: whether to break up the company, a choice he was faced with 60 days after he took the CEOs reins. At that time, a breakup would have been the easiest and most logical thing to do, he said. The way had been paved by his predecessor, John Akers, who had created a bevy of corporate fiefdoms that were led by executives eager to run their own firms. But as a former customer, his instincts told him that a spinout strategy would be a mistake.

"It was very counter-intuitive at the time. But as a customer, it was an easy decision. As a customer, I wanted someone to put it all [information technology] together."

Gersters remarks came Wednesday evening at the Arco Forum on Leadership in Corporate America, a public gathering at Harvard Universitys John F. Kennedy School of Government, where he fielded questions from presidential advisor and political commentator David Gergen, who is teaching at the school, as well as from the audience.

Gerstners efforts in welding the different pieces of IBM back into a coherent whole brought him face to face with a corporate culture that, once the envy of businesses everywhere, had become ossified and in imminent danger of extinction.

"I had to grab hold of IBM and shake it. It was a deer in the headlights."

Looking at things from a customers point of view was his tool for prodding the lethargic leviathan into action. "IBM had plenty of customer support. They were desperate for IBM to succeed," but the company had priced its flagship mainframe computers out of the market. "Customers said they wanted to buy more mainframes, but they were too expensive. So we cut the price of the mainframe. You dont gouge customers." Describing a mainframe power unit, he said, "Its now one one-hundredth of the cost it was" when he came to IBM.