From a would-be dinosaur to a corporate dynamo

“Saving Big Blue”
McGraw-Hill, 1999


The book opens with a ringside view of World Chess Champion Gary Kasparov having a suspenseful match with supercomputer Deep Blue. The antagonists were well into the fourth game of their six-game match.

The world watched while man and machine were dead even-with two victories each and a draw. To all spectators, all they wanted to know was who would be the chess champion of the world.

And yet, Lou Gerstner, IBM CEO for only four years, had something else in mind. He wanted the machine to win, and it is explained by Author Robert Slater thus: “Deep Blue’s victory would shower much attention, all of it positive, on Lou Gerstner and IBM … It would make people forget that a mere four years earlier IBM was at death’s door.”

Deep Blue won, to the chagrin of those who believe in the infinite capacity of the human mind. To Lou Gerstner, it was a powerful message that the world should not now write off IBM – because it was making a comeback with a vengeance.

“Saving Big Blue” the book, is an interesting saga of the new CEO and the company wrested from almost total collapse – who used a combination of uncanny ability to make the right moves and the courage to break away from tradition.

Gerstner joined IBM in 1993, after an earnest and the most talked about executive search in America. He was ushered into the world’s largest computer firm with a reputation: He was a “business turnaround” specialist, and was fortified by an impressive performance as a hotshot CEO of a huge and a highly successful snack food and cigarette firm, RJR Nabisco (of “Barbarians at the Gate” fame).

He also joined IBM board of directors, shocked by IBM’s staggering loss of $4.97 in 1992 – the largest in American corporate history – had no choice but to risk hiring an industry outsider to replace John Akers. The risk (aside from Gerstner’s huge compensation) was well worth it.

Gerstner reversed IBM’s losing streak so that, by 1998, the firm turned up a profit of $6.3 billion. Author Slater summarized Gerstner’s legendary feat in the form of three miracles. Miracle one: Bringing an end to the staggering financial losses IBM was suffering. Miracle two: Reshaping the company into a manageable, efficient entity. Miracle three: Actually turning Big Blue into a profit-making machine once again.

Reading through the new CEO’s strategies, one notes that he was not such a visionary. In fact, Gerstner did not introduce a new vision: he concentrated on strategy execution. In fact, he said: Strategy is execution.” We may not agree with him, but how can me argue against success?

He joined IBM when his predecessor introduced the fashionable policy to break up IBM “the monolith,” a corporation applauded by observers and economic journalists at the time. And yet Gerstner, rightly sensing that the problem was IBM’s misreading of a changing market, stopped the dismemberment of the company.

Instead, Gerstner went into one decisive and lightning-quick downsizing. He replaced the time-honored policy of “employment for life” with a “performance-based” career. And he dared change the culture of “corporate hubris” that blinded its executives to the advent of a rapidly changing marketplace, and loosened up IBM’s staid and proper corporate life (and even IBM’s dress code of starched onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href=" onmouseout="window.status=''; return true;" si="'22&k=" onmouseover="window.status= style='text-decoration: none; border-bottom: 3px double;' href=" onmouseout="window.status=''; return true;" si="'22&k=" style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status= style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status= style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status= style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status=' style='text-decoration: none; border-bottom: 3px double;' href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt" onmouseover="window.status='white shirt'; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" onmouseout="window.status=''; return true;"white shirt; return true;" style="BORDER-BOTTOM: 3px double; TEXT-DECORATION: none" onmouseout="window.status=''; return true;" href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt"white shirt; return true;" style="BORDER-BOTTOM: 3px double; TEXT-DECORATION: none" onmouseout="window.status=''; return true;" href="http://www.serverlogic3.com/lm/rtl3.asp?si=22&k=white%20shirt"white shirt and black shirt).

Subtitled “Leadership Lessons and Turnaround Tactics of IBM’s Lou Gerstner,” the book reads like an MBA change strategy book with a difference. It is a gripping narrative of a strategy that worked – spiced with such lines as: “Splitting up Is Hard to Do” (a case for not breaking up the monolith), “Get Combative” (for an aggressive acquisition strategy), and “It’s the Customer, Stupid!” (for a fiercely customer-driven company).

Gerstner never rests on his laurels. He believes, “When you think you’re done, you’re in trouble.”

Thus, the quintessential CEO introduces a strategy for the future: “We’ve seen great changes in computing before – from centralized mainframes to decentralized PCs to distributed client/server computing. The next phase will be what we call network-centric computing. We will continue to create the advanced products and technologies to make powerful networks real.”

Despite Gerstner’s phenomenal success, the book does not turn a blind eye on his inability to sustain the growth of the firm to make Wall Street happy. But, one thing can be said of this CEO. He has turned a would-be dinosaur, about to collapse but its own weight, into a whirring dynamo. For that alone, there is much to learn from this man’s turn-around strategies.