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Literary Review
Corporate folklore
FOREWORDS generally give a good idea of the basic intent of an author, his attitude and perhaps even his state of mind while writing a book. In his foreword, Louis Gerstner, Lou to his friends, clearly says that there was no book inside him; it was extracted out of him by friends and admirers! While he is a most reluctant author, there is a definite air of supreme self-confidence in his beliefs, actions and overall approach.
Gerstner is not given to unnecessary, mushy sentimentality. A clear indication of this is revealed by the fact that this book — about IBM's turnaround during his stewardship — is dedicated to IBMers; spouse, kids, pals et al find no mention at all. And if the dedication did not dispel this notion, the very first line in his Introduction does the job. He clearly states, "This is not my autobiography. I can't think of anyone other than my children who might want to read that book (and I am not 100 per cent sure they would, either)."
Clearly this is about a situation reported, analysed and acted upon, by a professional who went about doing his job, doing what he was meant to do. This is not about someone who saw himself as a Corporate Icon of Capitalist America, here to save the day. There is no chest thumping, no self-aggrandisement, and no "dazzling flashes of brilliant insight".
The very appointment of Gerstner as the CEO of IBM in 1993 raises issues of the relative importance and relevance of domain/ functional knowledge, educational qualifications and where you got it from, length and type of experience, the network of contacts that a senior professional has developed, as also the kind of hard and soft skills essential for a CEO of such a huge, ostensibly monolithic corporation.
Gerstner, who, immediately following his graduation in engineering sciences from Dartmouth College, went to Harvard Business School to do his MBA, started off his career with McKinsey & Co. in 1965. Over the next nine years, while he rose to the position of senior partner, he became "increasingly frustrated playing the role of an advisor to decision makers... I want to be the one... who makes the decisions and carries out the actions." However, he waited for two years more till he accepted an offer from American Express Bank to join as the head of its Travel Related Services Group. The next 11 years saw him learn the "lifelong process of trying to build organizations that allow for hierarchy but at the same time bring together people for problem solving, regardless of where they are positioned within the organization." Amex also showed him the strategic value of information technology, as it was "a gigantic e-business."
In 1989, he left to join RJR Nabisco as the CEO. Over the next four years, he struggled "managing an extraordinarily complex and overburdened balance sheet", and was left with a singular lesson — "free cash flow" as the single most important measure of corporate soundness and performance! Shades of the old "Parta" system of accounting, and its inherent wisdom?
Indeed, the key lessons learnt that Gerstner puts down, in a meticulous, almost bullet point manner (not at all surprising given that his moorings are in management consultancy) show the intrinsic discipline of both the man and the inner workings of truly successful, large corporations.
Some major take-outs are:
* Gerstner's strong conviction that CEOs need to have an ownership stake in the company to make sure his interests are clearly aligned with the company's.
* "Fixing IBM was all about execution... with... an enormous sense of urgency."
* The vital importance of communication in a turnaround situation — the need to stress that there is a crisis and articulate the broad strategy in order to get commitment and active participation across levels.
* A strong board of directors, and a top notch, committed team are a sine qua non for a successful company.
* The ability to say that "The Emperor has no clothes"; question the fundamental assumptions on which an industry and/ or company operates.
* How incredibly challenging it is to manage a complex and huge enterprise like IBM — USD 83 billion in revenues with over 300,000 professionals worldwide. Not just that, the presence of multiple product divisions and individual companies in several countries meant that there were several fiefdoms or power bases to contend with; employees tended to be loyal to their division or geographical command first than to the integrated IBM corporation, their real employer.
* The necessity of change and the difficulty in making it happen.
* The importance of the brand; the need to understand what is the core brand in a business like IT, and how to go about making an organisation customer-centric.
Apart from these major points, there are a number of small nuggets which are quite fascinating by themselves — these have mostly to do with American corporate life in general, IBM's workings in particular or Gerstner's individual traits.
For instance, how Gerstner was chosen or opted for being CEO of IBM. The headhunting process for a new CEO of a truly global company, perhaps even one which can be considered an institution (in 1993, with USD 62.7 bn revenues, IBM was about 27 per cent of India's GDP) makes for fascinating reading. Likewise, Gerstner's first impressions of IBM were that it gave no indication at all of being an IT company — there was no computer in the CEO's room! Or, how all executives dressed like clones — for Gerstner's first official meeting, he found he was the only one not wearing a white shirt. Similarly, the directness, even bluntness of employee comments to the CEO, perhaps unthinkable still in the Indian corporate context, surprised even Gerstner.
Gerstner too reflects a distinguishing characteristic between the average Western executive and the typical Indian professional — even a CEO like him takes detailed notes and has documented whatever he did in IBM to enable him write this book. It is little wonder, then, that we don't have really well researched and finely written corporate tomes in India.
One thing that seems to clearly distinguish Gerstner from many a corporate CEO who has written books is that he never really liked being in the public eye. As he says, "I am by nature a private person, and to be frank, I don't enjoy dealing with the press." Just as this book is more a way of fulfilling an obligation, so he deals with the press more out of necessity owing to his position (after all in 1993, IBM was virtually written off as a mega corporation and its every move scrutinised, analysed and commented upon with nearly as much vigour as an ex-President's peccadilloes) than out of personal choice. Gerstner would much rather walk the beach in solitude to clear his mind.
The turnaround of IBM, whose demise as one integrated corporate entity was predicted by many an analyst in 1993, is part of contemporary business folklore. And this book, written by the man at the epicentre and an outsider at IBM when he started, gives us a clear overview of what and how it all happened. And the numbers too speak — in 2001, the company reported revenue of $85.9 billion and net income of $7.7 billion. In 1993, the company's revenue came to $62.7 billion, but it reported a net loss of $8.1 billion.
Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround, Louis V. Gerstner Jr., HarperCollins, p.372, £20.
CHANDU NAIR
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