Louis Vincent Gerstner Jr. served as the Chairman and CEO of IBM from1993 to 2002. Through his leadership he led to an effective business turnaround for the technology giant which had been trailing far behind its competitors and was burdened financially to the point of near collapse. Formerly, he had held positions at RJR Nabisco where he served as CEO, American Express and McKinsey and Company. He is credited for his books; “Who Says Elephants Can’t Dance, and IBM Turnaround Strategies among others.
The book “Who Says Elephants Can't Dance?” is a vivid account told by Louis Gerstner of IBM's historic turnaround during his tenure. Lou Gerstner reveals how he led IBM from the brink of total bankruptcy and shame of obscurity back into the glamour of the technology industry to become a market leader. The books starts of by introducing the career journey of Loius Gerstner his pre-IBM background is briefly covered before indulging in length into his successful career within IBM the technology giant. The book contains five main topics outlined as one, "Grabbing Hold," two "Strategy," three "Culture," four "Lessons Learned," and five "Observations." (Gerstner 3)
"Grabbing Hold," which is the first part covers the story of how the former CEO Louis Gerstner joined IBM following a phase of indecisiveness where he was presented with a dilemma on whether to join or not. However he joined after a rigorous interview process. The highlights of Louis Gerstner as CEO in IBM first year describe how he was able to turn the company’s fortunes around at a time when the company was experiencing severe financial crisis especially in the early 1990’s. Louis Gerstner saved the company by increasing its assets against its liability such that the company remained solvent at a time that the company was grappling with a heavy financial burden as he reveals coming from its creditors and investments abroad.
The second part on “Strategy” becomes even more interesting where Louis Gerstner gives a brief history of the company and its earlier decisions that had made the company recognized. This second part indulges the reader into the success that the CEO Louis Gerstner had in repositioning the turnaround strategy that made the operations, processes and stakeholders cohesive, productive and performing. Through a various set of course actions he was in a position to influence a major comeback that gave IBM a head start into the marketplace again. At this time it was thought that the best move to return IBM to its profitable situation was by breaking it apart into different companies but through Louis Gerstner view by doing this they would kill the core strengths that IBM presented and offered to its customers. His first strategic decision involved preserving the company as one single unit and facilitate it by “teaching the elephant to dance” (Gerstner 10). To this day Louis Gerstner believes that is the best decision he made in the history of IBM.
What followed next was the enthusiasm to craft or formulate new strategies that would drive the company to prosperity. By “fixing the company” it meant that the company was to be actively involved in execution of strategies in the new plans made to keep the company sustainable and above all create a market competence. To Louis Gerstner realization, IBM had a unique strength that had not be equaled by any competitor in the market. The company had the capability to develop and use complex technologies to solve business challenges. Banking on this value proposition Gerstner, applied this as the foundation to rebuild IBM on. However, success wouldn’t be automatic and a lot of things had to be done. First, the company needed a thorough facelift as the company still had the traditional 1950’s look. Moreover, process and operations reengineering was necessary to enable the company to maximize their output as well produce products that had maximum value to their customers. The implementation of these needed change ultimately led to the new look of IBM. Humorously, it gave popularity to a wise statement from a senior executive at the company which states that "reengineering is like starting a fire on your head and putting it out with a hammer."
According to Gerstner, fixing IBM involved basically execution. In addition, this execution had a great sense of urgency and the lifeline of the company was fully dependent on it. Louis Gerstner approach involved driving the company in accordance to the customer’s view while turning IBM from an internally focused and process driven entity to a market driven enterprise (Gerstner 77). Surprisingly, against all odds this approach worked! Before Louis Gerstner had joined IBM the company had followed some false statistics which were basically not reflective of the markets’ true response, therefore, Gerstner generated new parameters of measure depending on the strategy execution and this were truly reliable in reflecting the far that the company was and where it was headed in the future. In crafting the IBM strategy, Louis Gerstner decisions were probably influenced by his great experience with the Five Field Measures as well as reference to Rational’s mission statement. He took deep focus into the customer’s view on success which enabled him to drive the company to a unidirectional focus on market needs. This market driven decision approach led to a comprehensive outlook of ideas and relationship within IBM resulting to the birth of a new IBM organizational culture.
During his tenure as CEO at IBM, Louis Gerstner believed that organizational culture amounted to everything for the company. This led to third part of his book. He explains why he pleased with the corporate culture at Rational while working there. He explained that he and other technology representatives enjoyed working at Rational since the culture was enabling and gave individuals the platform to make a difference in the world. This made Louis Gerstner implement change on the culture of IBM. Previously, IBM had not invested greatly into the corporate culture therefore focus on success, vision, mission, strategy, operations, processes, resources and management were all not embroidered into an enabling working system. Therefore, the company was in dire need of a comprehensive culture that was flexible and accommodative that in great ways would lead to its success by creating a collective capacity that created value. As CEO Louis Gerstner writes that he was proud of this accomplishment as the institutionalization of this new culture inspired employees and other stakeholders to focus their strengths and efforts into creating a customer considerate system.
The last part of the book “Lessons learnt and Observations” brings in rich nuggets of experience and wisdom on the occurrences and events that turned around the fate of IBM (Gerstner 289). First, Louis Gerstner identified that an integrator basically acting in a service based role within any industry controls the whole industry. In this light, he built IBM Global Services. Secondly, Louis Gerstner believed that an influential market industry is fundamentally built around open standards. It was upon this realization that Louis Gerstner led IBM Software to implement the open standards in a network focused environment. To this effect, Louis Gerstner offers a compelling argument against proprietary development and use of software standards. He believes that successful companies were OEM suppliers who rely on the value technologies create. This led to IBM licensing their technology.
Though IBM received great negative criticism for appointing Louis Gerstner to the position of CEO due to his non-technical experience, his successes and results are true testimony of his capabilities and abilities. Though many doubted Louis Gerstner got “The elephant to dance” and his impactful reinvention at IBM stands out as one of the most notable corporate turnarounds of the twentieth century. The E-Business vision envisioned by Louis Gerstner shows what desirable future plans that he set and kept the ball rolling in achieving products such as automatic and grid computing initiatives and IBM IT On Demand. The financial overview in the appendix section of the book reveals admirable figures with a positive upward trajectory which crowns Louis Gerstner not on as a great leader but also an effective result oriented influencer.
It is only through understanding the organizational resource that a leader can actively engage the human resources productively. Employees on the other hand do not commit further than the leaders do and always seek motivation from the belief of the leaders in achieving the goals and aims of the company in pursuance of the Company’s vision. Louis Gerstner knew that to tap into the richness of the resources at IBM he had to restructure the organization culture that would create a constructive climate (Northouse, 200). It is upon this platform that relationships within the company grew strengthening the workforce and offering a stable working environment that had unified vision and mission at IBM leading to success in the execution of the IBM turnaround strategy. Moreover, understanding the philosophy of the company, one understands not only its vision but also its mission which is the purpose to its existence. When, Louis Gerstner joined IBM the company had great focus on internal processes only. This was basically what was ailing the company pushing it into a cash trapped pit. However, he took time to understand the products and services IBM offered. It was after this that he structured and implemented strategies that were meant to create efficiencies in products that were customer focused.
All companies have different work environments within which exists certain organizational politics due to the virtue that there is great dynamism in the workforce. Though the organizational culture offers a level playing ground for all employees, it is inevitable that conflict in an organization will always occur. At times these conflicts can unnecessary go out of control affecting the productivity of the company, which bring out the question, “what is the role of leadership in conflict management?” Leaders are tasked with the responsibility of steering the company to success, conflict resolution is part of their problem solving abilities (Northouse 255). There are various approaches of resolving conflicts within an organization they include; avoidance, competition, accommodation, compromise and collaboration. Ensuring that all internal and external customers relate to each other in a cordial and positive manner will enable the leader to mitigate against negative conflicts while encouraging positive conflicts. The element of change can be a source of conflict within the organization since most stakeholders feel unprepared for the changes or feel threatened. Enshrining change mechanisms within a progressive and enabling organizational culture contributes greatly to the avoidance and control of conflict.
In conclusion, obstacles occur frequently on the path of any organization. They prove to be hindrances or problems that occur to human resources or organizational processes or operations and greatly undermine the progress of the company. These obstacles may occur in terms of resistance to change, lack of management support, low motivation, unclear direction or goals, complexity of tasks at hand, lack of authority corresponding to the responsibilities accorded and inadequate allocation of resource among others. Overcoming these obstacles is a management responsibility and how best a leader acts on this proves his worth. In the occurrence of obstacles, the leader has to assist his follows to overcome or avoid them by providing directive leadership (Northouse 356). In the case study of Louis Gerstner at IBM we find that he enabled the staff to avoid or face obstacles headlong in order to achieve expected results.
References.
Gerstner, Louis. Who Says Elephants Can’t Dance? Leading a Great Enterprise through Dramatic Change. New York: Harper Collins Publishers. 2003. Print.
Northouse, Peter. Introduction to Leadership: Concepts and Practice. Western Michigan: Sage Publications. 2015. 3ed. Print.
