Louis V Gerstner - The Man Who Turned IBM Around
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Case Details:
Case Code : LDEN007
Case Length : 14 Pages
Period : 1992-2001
Pub Date : 2002
Teaching Note : Not Available
Organization : IBM
Industry : Information Technology Countries : USA
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"Louis is an incredibly focused executive, he makes
it very clear to everyone what his expectations are."
- John W. Thompson, former general manager of IBM's North
American Sales Group.1
"He's thinking like a businessman and IBM hasn't had
someone at the top thinking like a businessman for many years. IBM's chairmen
have for years treated the company like an institution that couldn't be changed.
But Gerstner is going through a methodical, unsentimental resuscitation of IBM."
- Edwin Black, publisher of OS/2 Professionals,
an IT magazine in the US.2
Introduction
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In 1993, IBM, a global leader in the IT industry was in deep
financial trouble. The company had reported a record net loss of $8.1 billion.
Many analysts wrote off IBM as dead. However, eight years down the line in 2001,
the company reported a net income of $7.7 billion (Refer Exhibit I). During the
period 1993-2001, the share price of IBM shot up by nearly 800%. This was the
period in which Louis V. Gerstner Jr. (Gerstner) headed IBM.
Under the leadership of Gerstner, IBM made a remarkable comeback and proved its
critics wrong. In doing so, IBM seemed to have made significant changes which
had an impact on the entire information technology (IT) industry.
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It strategically positioned its server family to suit the needs of the emerging
Enterprise Resource Planning (ERP) and e-commerce applications.
IBM also changed its emphasis from being product centric to being
customer-centric in order to provide complete solutions to its clients.
Gerstner played a major role in reviving the fortunes of IBM. Under
Gerstner, the image of IBM was transformed from a company which primarily
manufactured mainframes to a company which offered complete solutions in
hardware, software, and other technologies.
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Gerstner brought about a radical change in the work culture of IBM. The
turnaround was achieved by a series of well calculated and
unconventional moves, which appeared unreasonable to many employees of
IBM as well as industry analysts.
According to analysts, Gerstner's style of
functioning was quite different from that of his predecessors. He was a
man of conviction and always followed his own instincts. He was seldom
disturbed by what his critics said. He believed that his deeds spoke for
himself. He wanted results and expected his employees to give the
results at any cost. He did not mince words when it came to expressing
his views on their performance... |
Louis V Gerstner-The Man Who Turned IBM Around
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