Louis Gerstner Jr. ? The Man Who Turned IBM Around
The turnaround of IBM under Louis V. Gerstner's leadership is considered to be one of the most remarkable turnarounds in corporate history. The strategic measures taken by Gerstner to transform IBM from a loss making company to a profit generating company; and to transform a hardware vendor to a complete IT solutions provider were remarkable. The case also reveals how he continuously reinvented the business model of IBM amidst rising competition and changes in the business environment. Under Gerstner, IBM's new strategy was to use processes and culture to regain advantage.
The change of culture he introduced gave IBM the speed and effectiveness that was missing before. The network-enabled process and the Internet were certainly stimulating forces in his achievements. The Major measures Gerstner undertook to bring IBM to success were customer orientation, reducing work force, changing employee compensation structure, decentralizing decision making, developing e-business strategies, focusing on problems at hand, minimizing restrictions over employees, and regular monitoring of different units around the world. Though some of the strategies adopted were at the cost of the employees, Gerstner's main aim was create a profit making corporation as well as maintain a promising overall performance by bringing radical changes to IBM that would support such adjustments.
Three Management Traits
One of the three management traits that standout is the carefully calculated and unconventional strategies that Gerstner utilizes to achieve his goals. The sudden appearance of rivals that constantly change and shape the global market calls for the need to have a flexible as well as unique business approach to adjust to such an unconventional business environment. Moreover, his ability to turnaround the performance of a business is extraordinary as noted not only in IBM, but also in his previous career with RJR Nabisco. Such courage and confidence in ones ability to bring about a drastic change is essential; however, not many mangers posses them. Finally, his ability to focus on immediate problems and evolve strategies; while at the same time, keep track of other related issues affecting the company is significant. This helps to effectively solve the problems at hand without neglecting the influential surround environment.
A Good Manager, but a Poor Entrepreneur
This is an inaccurate statement as most of the entrepreneurial characteristics can be seen in Gerstner, such as spirit of adventure, self confidence and self reliance; trust of other people; goal orientation; innovativeness, creativity and versatility; persistence; hard working and energetic; a positive attitude; willingness to take initiative; leadership; an understanding of different cultures etc. According to the definition of ?entrepreneur,' the only part that is missing is ?taking ownership of a new business' and to claim such a statement, "A Good Manager, but a Poor Entrepreneur," both ends should have been met. Since, from the case study, it is evident that Gerstner was a good manager, but there is no evidence of being an entrepreneur (namely taking ownership of new business) whether good or poor, this statement is flaw.
Key Take Away
Even with several years of huge losses, an organization can shift 1900 to the opposite direction in a relatively very short period of time. This can be achieved with strong perseverance as well as belief; profound business strategy and principles; quick decision making; and a strong knowledge base. In most cases, there will be a way out if the above mentioned aspects are applied effectively.
Hitt, M. A., Ireland, R.D. & Hoskisson, R. E. (2007). Strategic Management: Competitiveness and Globalization (Concepts and Cases) (7th ed.). Prashanth, K. & Gupta, V. (n.d.). Louis Gerstner Jr. ? The man who turned IBM around (pp. 133?140). Ohio: Thomson South-Western.