Who Says Elephants Can't Dance?

from The Rational Edge: Elenburg reviews this account of IBM's historic turnaround by Louis V. Gerstner, Jr., the former chairman and CEO who led the firm from the brink of bankruptcy and mainframe obscurity back into the forefront of the technology business.

by Louis V. Gerstner, Jr. Harper Business, 2002 ISBN: 0-06-052379-4 Cover price: US$27.95 372 pages

(252 K)

Who Says Elephants Can't Dance? is an account of IBM's historic turnaround as told by Louis V. Gerstner, Jr., the chairman and CEO of IBM from April 1993 until March 2002. Lou Gerstner led IBM from the brink of bankruptcy and mainframe obscurity back into the forefront of the technology business. After a brief foreword and introduction in which Gerstner provides his pre-IBM background, he jumps right into the story of his IBM experience. The book is divided into five parts: "Grabbing Hold," "Strategy," "Culture," "Lessons Learned," and "Observations."

Part I, "Grabbing Hold," is the story of how Gerstner wrestled with the idea of taking the IBM job (he turned it down at first), followed by highlights from his first year on the job. It provides an interesting insider's view of the CEO recruiting process for a Fortune 50 company and describes how Gerstner addressed IBM's severe financial crisis in the early '90s and managed to keep the company solvent. It also reveals just how precarious IBM's financial position was during that time, which many readers (including myself) might not have known. Still, although Part I is quite interesting, the real meat of the book is in the subsequent parts.

After stepping back to provide a brief history of IBM, Part II ("Strategy") dives more deeply into how Gerstner repositioned IBM's corporate strategy to keep the company together and pull off a successful turnaround. When Gerstner came on board, the conventional wisdom, from both industry pundits as well as many IBM insiders, was that the only way to save IBM from eventual disaster was to break it apart. But Gerstner looked beyond this advice and opted to preserve the real strength he believed IBM brought to customers. His decision to keep the company together and "teach the elephant to dance" was "the first strategic decision, and, I believe, the most important decision I ever made -- not just at IBM, but in my entire business career," Gerstner writes.

Fixing IBM: "All about execution"

What Gerstner realized is that IBM had a unique and unequaled capability to "apply complex technologies to solve business challenges." It was this unique value proposition that would enable him to bring IBM back from near extinction. But to accomplish this, IBM needed not only a corporate makeover, but also a complete facelift and some liposuction as well! Gerstner likens his arrival at IBM to stepping through a time warp and arriving back in the '50s. A massive, difficult, and painful reengineering feat was required to get the insular IBM to focus on bringing value to the customer in the marketplace. Ultimately, though, this led to the "new" IBM. It also gave rise to a hilarious statement that the book credits to a senior IBM executive: "Reengineering is like starting a fire on your head and putting it out with a hammer."

In Gerstner's own words, "fixing IBM was all about execution" and required "an enormous sense of urgency." His whole approach was to drive the company from the customer's view and "turn IBM into a market-driven rather than an internally focused, process-driven enterprise." And it worked. It was all about execution -- and honest ways to measure its effectiveness. Before Gerstner arrived, IBM had a tendency to fool itself with bogus indices and data (e.g., customer satisfaction numbers generated from hand-picked samples; subjective product milestones, etc.), but he changed all that. "People do what you inspect, not what you expect," he explains.

I couldn't help thinking that perhaps Gerstner took a peek at Rational's mission statement and Five Field Measures to craft his IBM strategy, but then I know these things work because they are based on sound general business principles. As a new IBM employee, I was very encouraged by Gerstner's maniacal attention to customers' notions of success and his single-minded focus on responding to marketplace needs. If his market-driven approach to doing business really does pervade the "new" IBM culture, then it will be no surprise if IBM ends up dominating the technology landscape in this century, just as it did in most of the last one.