I go for lots of long walks and rather than just listen to music on my iPod, I’ve been catching up on some of the more interesting business books in the market. I recently finished up Jim Collins’ Good to Great, which I thought was very good, thought provoking, and also a bit of a business book cliché with its cutesy new metaphor each chapter. Still, very worth reading / listening.
Now, since I’ve been working with some of the senior execs at IBM on a new project and getting a glimpse of the internal business infrastructure, I’m listening to
Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround, former IBM CEO Lou Gerstner’s story of his 1990’s corporate turnaround of IBM.
I’m mostly through the book now, but so far what most strikes me is the extravagant lifestyle of large, publicly traded corporate CEOs. Gerstner started out at high powered consulting firm McKinsey & Co. (business guru Tom Peters is another famous McKinsey alum), headed the American Express credit card and travel divisions, then was at RJR Nabisco through the infamous leveraged buyout by KKR and subsequent implosion of the corporation. Next stop? The top job at IBM. He even shares that then President Bill Clinton was ready to ask Gerstner take the job. High profile? Oh yeah.
But then Gerstner comes across as remarkably arrogant and elitist as he shares the “tedious obligation” of having to go to formal fundraising events for major charities, the experience of having a fancy multi-story apartment in a chic area of New York City and a second house on the beach in Florida. Yet when he joins IBM, Gerstner complains about the stodginess of the executive team but has no compunction flying around on the IBM corporate jet or having his “driver” show up in the morning to chauffeur him to the office.
I realize that when you’re the boss of a multi-billion-dollar corporation, there are certain perquisites that not only go with the job, but are expected, but it seems awful disingenuous to talk about cutting costs, rethinking executive reporting structures, and maximizing the cash reserve of a company when you can’t hop on a commercial flight or drive yourself to work…
On the plus side, the book is compelling, interesting listening so far, and Gerstner shows that he had a keen eye for corporate dysfunction and that IBM really was a company on the rocks, stifled and drowning in a frozen bureaucracy rife with “lifers”. His description of how senior management meetings were nothing so much as the IBM version of multinational diplomatic negotiations is quite fascinating, for example.
What’s most interesting is that IBM is presented as a culture of smug insularity, where Gerstner characterizes the corporate view in 1993 as one that blames the media and public relations for their problems. “If only we got better press,” they said, “all our problems would go away.” Yet, the core problems with IBM were the same as with many companies who become disconnected from their market and customer base: instead of being customer-centric, instead of starting with the customer needs, IBM was product-centric, assuming that it could charge whatever it wanted for its hardware and software and that people would be forced to buy it.
But two events were conspiring to derail them: the growing irrelevance of mainframes and their lack of any ongoing competitive analysis. Pricing was set based on a required target profit margin, without even considering what alternatives customers could choose. It’s no wonder their sales were plummeting during the early 1990s! But how many companies do you know that get painted into this corner after a few years of success in the market?
Okay, not here’s the truth in advertising part: I was about 80% through the audio book when I took a two week holiday, and try as I might, I can’t get engaged again, so I’m listening to “Hitchhiker’s Guide to the Galaxy” instead, as a neural holiday. Nonetheless, “Who Says Elephants Can’t Dance” is still on my recommended list both for its analysis of the IBM transitional period and because of the casual arrogance of Gerstner and his ilke. Why not just listen for yourself, though? Spring the few bucks for the audible.com download — it’s quick, painless and iPod ready.
I recently finished WSECD – I won’t spoil the ending for you =) I found it a good read, not so much for what Gerstner did, but that a turnaround at a company the size of IBM could actually be done. And how quickly some of the baby (ok, not so baby in most cases) steps to get there could be accomplished. That’s a huge motivation for companies that are struggling in this day and age of globalization, rising commodities, and experience-demanding consumers.
I recently found audible.com as well, and already expect it to change my life. Sorry Amazon.com and Barnes and Noble =)
Well, James, given that I’m working with IBM on a strategy project right now, I kinda have a clue how it turns out anyway. 🙂
In terms of Audible, by the way, don’t forget to check out some of their free downloads. The quality is mixed, but there are some pretty interesting lectures there for the listening.
Does anyone have any idea why IBM’s stock is continuing to plummet so drastically. I noticed that a responder, James Reagan, is working with IBM on a strategy project. Any clue? IBM’s health means a lot to my retirement portfolio.
ANYONE can turn a profit on a billion dollar company by firing its employees and selling off its assets and that is all Gerstner really did while at the same being arrogant about it and as mentioned lived large while doing it.
That is not leadership nor vision, it is simply being an arrogant asshole. Gerstner literally wrecked hundreds of thousands of middle class lives and does not even care, in fact he writes a self-congratulatory book about it. Gerstner enjoys the guaranteed retirement with full health benefits for himself and his wife that he denied to those who made IBM money. He still flies IBM corporate jet while IBM employees fly coach.
IBM is the big company that moving in computer bussiness. i have an interesting with IBM History. can anyone posting to may adress.