Big Blue: Turnabout is Good Play. - Brief Article - Review - book reviews

Chief Executive, The, Dec, 1999

Saving Big Blue--Leadership Lessons & Turnaround Tactics of IBM's Lou Gerstner. By Robert Slater. McGraw-Hill. 288 pp.

IBM Redux--Lou Gerstner & the Business Turnaround of the Decade. By Doug Garr. Harper Business. 357 pp.

For years, IBM was the most interesting company in the world to watch. It was impeccable from, oh, so many standpoints--its consistent growth, its global reach, its avant garde development of computers, its renowned policies of gentlemanly leaders, lasting jobs, quiet dress, and good manners. IBMers were a cult unto themselves. To be the CEO of IBM, well, that was the closest access to God that a mortal businessman could ask for.

Then came the same old story. IBM got fat, sloppy, and bureaucratic. Brash new competitors began eating its lunch. The company lost market share, money, and its cool. The last IBM CEO, John Akers, lost his job. By 1993, the once revered company was in disarray and a desperate board was looking for a new chairman and CEO who could turn the company around and save its assets and its soul.

Two new books take a crack at telling why Lou Gerstner was picked for the job, how he approached his monstrous task, effectively stabilized the business, and prepared it for future growth. These are both "interim" books, for the story is not yet over. Indeed, much of the story is not yet told, for Gerstner, in his quirky way, refused to be interviewed.

Of the two, Robert Slater's Saving Big Blue digs deeper into the facts and the background. But Slater, a Fortune writer, was not able to reproduce the excitement and readability of his previous effort, which recounted Jack Welch's crusade at GE. Forced to do without first person commentaries from Gerstner, Slater relies on endless lift-outs from old Gerstner speeches, annual reports, and an extensive dissection of a 1985 Harvard Business School case based on Gertstner's American Express experience.

Slater digs up a lot of stuff about IBM and Gerstner and the computer industry, but his treatise does not have the snap and crackle that it could have had with Gerstner's personal cooperation. However, Gerstner and Fortune had a nasty spat over a 1997 article and the wounds had not yet healed, so Slater had to make do.

By the same token of cooperation, our second author, Doug Garr, fares even worse. Even though Garr had been a speechwriter for IBM, and personally knew a lot of the key players in the Gerstner/IBM drama, he was denied access to most of the people and files of IBM. His explanatory epilogue is one of the most interesting facets of his book. As a result, Garr tends to be more candid in his assessments of Gerstner as an individual performer, the quality of his appointments, and in his quotations from former IBMers. Though not as well written, and not as thorough in its coverage as Slater's book, Garr's story is more sprightly and entertaining.

The two books are pretty much in agreement on two basic points:

One, a masterful turnaround job has been done at IBM and Lou Gerstner deserves full credit for getting the job done. In truth, although Gerstner was blasted by the press and by his critics for his famous statement that "the last thing that IBM needs now is a vision," Gerstner went through an almost classic approach to turnaround management. He dedicated himself totally to the task, spent thousands of hours with the troops, traveled incessantly, listened to customers, and sold his story. He cut out the fat by downsizing quickly. He brought in new, tough people. He sold off the non-fit pieces and bought some new bright companies. He dumped some silly old things, such as the dress code and ad infinitum meetings, and initiated new and different business styles, including a new headquarters building. He turned losses into profits. He rejuvenated businesses. He brought stock options and monetary rewards to the people. He got the job done.

Two, Lou Gerstner, who signed on with a whopping new stock option based on future results, has yet to convince most of the IBM watchers that he can lead the firm into extended new, lasting growth. Both Slater and Garr voice a certain skepticism here. Does Gerstner have enough technical savvy to gain a top position for IBM in the Internet, in both hardware and software, in the service business?

What did I conclude after reading these two books? That Gerstner is a superior and tough manager and a fine internal communicator. Like most tough CEOs, he is hard to love and is rather difficult to work for. He is not a uniquely creative, dynamic leader like Jack Welch, but he did as good a job of saving IBM's skin as any CEO I can imagine could have done. I read every word in these two books and found it time well spent. And I am keeping these books in my library to reread five years from now when Lou Gerstner's IBM building effort should be more clearly assessable.

Formerly the CEO of F.&M. Schaefer (1972-1977), Robert W. Lear is chairman of CE's advisory board.. He taught at Columbia Business School, where he was executive-in-residence until June, 1999. He has been a director of many companies and is on the advisory boards of five small firms. He is a partner of Lear. Yavitz & Associates corporate governance consultants.