Cover image for IBM redux : Lou Gerstner and the business turnaround of the decade
IBM redux : Lou Gerstner and the business turnaround of the decade
Garr, Doug.
Personal Author:
First edition.
Publication Information:
New York : HarperBusiness, [1999]

Physical Description:
375 pages ; 25 cm
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HD9696.2.U64 I254 1999 Adult Non-Fiction Central Closed Stacks

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Can one man change the course of business history?

When Lou Gerstner, a high-tech neophyte, took the helm at IBM in 1993, the company was in a death spiral. Big Blue lost $8 billion that year, capping a three-year loss of nearly $16 billion. One of the nation's premiere industrial giants seemed destined to wither away and die in bankruptcy. The world of high technology changed and IBM failed to adapt, drowning in its own bureaucracy and its insular view of the business world.

Six years later, after a miraculous recovery, IBM is vital and thriving once again. The stock has reached its all-time high, the balance sheet is cashrich, and its market capitalization has increased more than fourfold to $169 billion. It is a success story beyond compare.

IBM Redux is the inside story of the greatest turnaround in business history, and the man who made it happen

Here is the first in-depth look at IBM's recovery and the man who is leading it, Louis V. Gerstner, Jr. It is a skillfully told story, as author Doug Garr chronicles Gerstner's rise, his arrival as the first steward from outside the company's ranks, and his implementation of new business and marketing strategies. Drawn from more than 150 interviews and hundreds of pages of documents, Garr paints an enthralling portrait of the improbable transformation of this dying mainframe company into an increasingly nimble information services giant. With unprecedented access to current and former IBM employees, the author provides rare insight into how it happened and what still needs to happen for the company to thrive in the twenty-first century.

From the complete overhaul of IBM's culture and image to the takeover of Lotus and the development of network technology, Garr vividly illustrates Gerstner's operating methods, management philosophy, and, yes, vision. And along the way he reveals who this extraordinary, sometimes difficult, man is, what drives him, and where, in the eyes of his critics, he has missed the mark.

Fast-paced and fascinating, IBM Redux is the first unauthorized, behind-the-scenes look at a remarkable company and its remarkable manager who, after previous careers dispensing cookies and credit cards, is rapidly changing the face of the entire high-tech industry.

Author Notes

Doug Garr, a former IBM speechwriter, is a business and technology journalist whose magazine credits include New York, Business Week, Popular Science, Harper's Bazaar, and GQ. He is the author of Woz: The Prodigal Son of Silicon Valley. He lives in New York City.

Reviews 3

Booklist Review

Garr tells the story of Gerstner's turnaround of IBM beginning in 1993 after $6 billion in equity evaporated in a three-year period as IBM stock dropped 30 percent. Faced with a faltering giant, Gerstner stopped the hemorrhaging and ushered in a painful era of change, which included altering the culture, replacing entrenched officers and board members, and cutting 35,000 employees in addition to the 40,000 to 50,000 already released. In less than 27 months under Gerstner, IBM gained considerable momentum, with the stock selling two and one-half times the levels posted before his arrival. This is an unauthorized book, and the author implies that preparing it may have contributed to his own downsizing from the company in 1997. He conducted more than 150 interviews of former and current IBMers, competitors, business partners, technology and financial analysts, and others who knew him, and, of course, he received mixed reviews. Nevertheless, most will agree that IBM is the most dramatic corporate turnaround of the 1990s. --Mary Whaley

Publisher's Weekly Review

The joy of this book doesn't come from ground-breaking reporting. Rather, its appeal comes in the details: how Gerstner decided to forgo splashy graphics at a major computer show, as a way to stand out from all the hype; how desperately the advertising agency Ogilvy & Mather Worldwide needed to win the IBM account, once Gerstner and his new team were in place; and what it was like negotiating the purchase of Lotus. This is no small feat in writing about IBM, a company that is renowned for limiting access to reporters, and Garr's accomplishment is even more remarkable since Gerstner himself is known to keep an even closer eye on his public image than the IBM spin doctors do. Even so, Garr managed to talk to numerous present and former IBM employees, who give first-hand recollections and impressions of Gerstner in actionÄmany of which are riveting. Garr is a former IBM speechwriterÄa fact that cuts both ways, as he convincingly explainsÄbut his reporting is evenhanded, and his eye for detail extraordinary. (Sept.) (c) Copyright PWxyz, LLC. All rights reserved

Library Journal Review

This story about IBM under the leadership of Lou Gerstner is a portrait of one of America's most respected and most private superstar managers. Gerstner and his methods took IBM from an $8 billion loss in 1993 to an astounding $6 billion profit in 1997. Garr, a business journalist and former IBM speechwriter, chronicles Gerstner's methods and classic management philosophy: cut costs, restructure the bureaucracy, and overhaul the culture and image of the company. Gerstner's ideas and methods changed IBM from a dying mainframe company in the age of personal computers to an information services giant. Garr covers the development and early success of the Aptiva, the planning and failure at the Atlanta Olympics, and more. Using Gerstner and IBM as vehicles, he explains how to control media spin. An outstanding case study for academic, special, and public library business collections. [See also Robert Slater's Saving Big Blue: Leadership Lessons and Turnaround Tactics of IBM's Lou Gerstner, coming from McGraw-Hill in September.ÄEd.]ÄSusan C. Awe, Univ. of New Mexico Lib., Alburquerque (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.



Chapter One A Brand Guy in the Information Age Las Vegas- November 1995 The cab drivers are busy but unhappy because Las Vegas Boulevard is jammed and morning traffic is crawling. The best craps dealers are calling in sick because the tips are lousy. Casino pit bosses are griping that the gambling tables are slow, the way they are every year at this time. When the computer crowd shows up just before Thanksgiving, a lot of the natives would rather just take the week off. What flows into town is net worth, not cash. The digerati, you see, even the wealthy ones, just don't gamble very much, at least in casinos. Bill Gates plays $25 blackjack. These conventioneers aren't typical tourists; they're geeks and suits who know the odds to the hundredth when they roll the dice. They like action, but they're not stupid. They know they can't beat the house. The people who live in Las Vegas have not yet figured out that the people who earn their living in the world of high technology are high rollers at heart; they shoot craps when they wake up every morning. The city's biggest convention means fat receipts for the hotels. They are booked solid a year in advance, and the food and the inflated room rentals will make more money than the gambling tables will, an aberration that continues to baffle local economists. This is the annual worldwide confab of the makers and purveyors of microchips and related wares, hard, soft, middle, and otherwise. COMDEX, the Computer Dealers Exposition, where a couple of hundred thousand digital savants converge at the Convention Center. Hundreds of high-tech companies, from one-horse outfits to multinationals, clamor for attention. In hotel conference rooms and trailers in the parking lots outside the exhibit hall, the industry's power brokers meet and cut deals, carve up territories, make alliances, plot against Sun or Oracle or Dell or Compaq-or even IBM, the company everyone loved to hate until a couple of years ago. Before Microsoft was on the verge of becoming like IBM. On the Strip at the Aladdin Hotel Theater, up onstage is Lou Gerstner, the fifty-three-year-old chairman and CEO of IBM. He's about to give the keynote address that traditionally opens the show, the biggest single draw of the four-day event. The video feed will be piped into the ballrooms of several other hotels. Unless you're hopelessly hungover or closing the deal of a lifetime, you're tuned into this speech. The "Voice of God," convention lingo for the words from an anonymous technician at the mixing console, introduces the speaker. Gerstner is not a casual guy. He doesn't go onstage in khakis and a sweater. He is wearing a perfectly pressed dark suit, white shirt, beige print tie. His suit coat is buttoned, and it will remain that way until he sits on a stool. His style differs from most other industry luminaries, who try to outdo one another at COMDEX with elaborately staged theatrics. The stage is sparse. There is a simple background of vertical brown and white and gray panels, with downlights illuminating them. No pyrotechnics, no multimedia for this CEO. No giant company logo either. Gerstner is larger than life only on the projection screens on either side of the stage. Just the stool and a glass of water off to the side on a modern, stylized group of rectangular pedestals. This simple approach is deliberate. After considerable discussion and debate, it was suggested that one way to distinguish Gerstner from the technology clutter was to send him out there without any fanfare, without the usual gizmos or props. This is Gerstner's most visible public appearance since he took the reins of the failing computer company two and a half years earlier. He has meticulously avoided high-profile events like these, mainly because he feels uncomfortable in front of a crowd of technology devotees. His most visible industry peers and rivals, Andy Grove of Intel, Bill Gates of Microsoft, Scott McNealy of Sun Microsystems, and Larry Ellison of Oracle, are guys who like working under the hood, getting their clothes full of the grease of computing. Gates and Grove are technology lifers, pure wonks within their own firms, at ease among the eccentrics, the engineers and scientists and programmers. McNealy, who would stimulate a good deal of the Internet's growth with the Java programming language, is outspoken on any topic, especially when prodded about his dislike for Microsoft's monopolistic tendencies and strong-arm marketing tactics. Ellison, the often flamboyant purveyor of large system database software, is a Silicon Valley original and something of a loose cannon-his highly controversial personal life rivals Ted Turner in his worst bad-boy moments. All four of those CEOs have an intimacy with technology, and a certain healthy disdain-but not disregard-for IBM, a company that is squarely in recovery but which they still think of as well past its innovative prime. They respect Big Blue but they do not fear it. They haven't been afraid of it in years, ever since the monolith began to melt. Even Gerstner, a man with a considerable appetite for achievement, admits that IBM will never be an omnipotent presence again. He is hoping for something less: consistent growth and profitability and a leadership role in the burgeoning networked world. No, Lou Gerstner never looks under the hood. He doesn't speak the language of the digerati, and he's never going to learn it. Therefore, he is something of an outsider. He isn't a CEO who hangs out with the design guys and listens to their rhapsodies on processor speeds, memory capacity, bandwidth, and applets. He hates that stuff, and he makes no secret about it. And you couldn't measure his contempt for any twenty-eight-year-old T-shirt-clad Silicon Valley multimillionaire whose motto is "Failure is cool." (Continues...) Excerpted from IBM Redux by Doug Garr Copyright © 2003 by Doug Garr Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

Table of Contents

1 A Brand Guy in the Information Agep. 1
2 Would Anyone Want This Job?p. 19
3 A New Man in Armonkp. 33
4 First Months, First Movesp. 55
5 A Vertical Vision of Realityp. 77
6 The Making of a CEOp. 95
7 Seismic Shakes in Big Blue's Culturep. 117
8 Two Camels in Front of a Pizza Hutp. 139
9 That Strange, Elusive PC Companyp. 161
10 At War with the Evil Empirep. 187
11 Gerstner Grabs for Groupwarep. 207
12 A Shifting Wind in Armonkp. 233
13 New Images in the House That Lou Builtp. 253
14 Leadership--At Home and Abroadp. 277
15 Network Computers and Big Blue's Serversp. 291
16 A Loss Leader Even Lou Can Live Withp. 305
17 There's No Place to Hidep. 321
Full Disclosurep. 345
Notesp. 353
Bibliographyp. 365
Indexp. 369