Louis Gerstner served IBM from April 1993 to March 2002.
In 1956, Watson Jr. introduced System/360, Windows OS of its era for 3 decades.
The expense cuts was the most realistic restructuring program IBM had. It has to come from top. At the same time, it was a challenge to retain the best talents.
Xerox going into financial services; Coca-cola into movies; kodak into pharmaceuticals. Marketing myopia: They think they are into railways only, not the transportation business. He argues companies focus on too narrow a segment. He believes that in most cases a company has a set of competitive advantages in its base business. It may be hard- very hard to redirect or reenergize an existing enterprise. But it’s a lot easier than throwing that enterprise over the fence into a totally new enviornment and succeeding. STICK TO YOUR KNITTING. Managers must be asked to report on their performance and explain their successes and failures.
Small companies are fast, enterpreneurial, responsive.
<ul><li>The Challenge : To bring IBM back from the brink of insolvency to lead the computer business once again. </li></ul><ul><li>In 1956, Watson Jr. introduced System/360, Windows OS of its era for 3 decades. Declining sales of System/360 Mainframes. </li></ul><ul><li>R&D unit of IBM was very efficient, but the new technologies would have cannibalized Mainframes, or it required to be sold to other competitors. </li></ul><ul><li>Competitors : Microsoft, Intel. </li></ul><ul><li>Lumbering size of IBM. </li></ul><ul><li>Insular corporate culture and Complacency. </li></ul>
<ul><li>The biggest challenge was to change the culture- the mindset and instinct of hundreds of thousands of people who had grown up in an undeniably successful company, but one that had for decades been immune to normal competitive and economic forces. </li></ul><ul><li>It was like taking a lion raised for all of its life in captivity and suddenly teaching it to survive in the jungle. </li></ul>
Communication <ul><li>DURING CRISIS : The author believes in the public acknowledgement of the crisis. If employees do not believe a crisis exists, they will not make the sacrifices that are necessary to change. </li></ul><ul><li>WAKING UP THE LEADERSHIP TEAM: He showed photos of some of their top competitors to the employees. Quoted one of the competitor Larry Ellison “IBM ? We don’t even think about those guys anymore. They’re not dead, but they’re irrelavant.” </li></ul>
<ul><li>From the lessons learned : </li></ul><ul><li>Focus. </li></ul><ul><li>When the going gets tough in the base business, companies try their luck in new business. </li></ul><ul><li>Superb execution . </li></ul><ul><li>Building measurable targets and holding people accountable for them. Accountability must be demanded, and when it is not met, changes must be made quickly. </li></ul><ul><li>Leadership is personal </li></ul><ul><li>It is about visibility – with customers, suppliers, and business partners. They don’t leave to others the delivery of bad news. They treat every employee as someone who deserves to understand what’s going in the enterprise. </li></ul>
ELEPHANTS CAN DANCE <ul><li>Big matters. Size can be leveraged. Breadth and depth allow for greater investment, greater risk taking, and longer patience for future payoff. </li></ul><ul><li>“ It is not a question of whether elephants can prevail over ants. It’s a question of whether a particular elephant can dance. If it can, the ants must leave the dance floor”. </li></ul>