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IBM Redux: Lou Gerstner and the Business Turnaround of the Decade


Here is the first in-depth look at IBM's recovery and the man who is leading it, Louis V. Gerstner, Jr. 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 a portrait of the improbable transformation of this dying mainframe company into an increasingly nimble information services giant. With access to ...
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Here is the first in-depth look at IBM's recovery and the man who is leading it, Louis V. Gerstner, Jr. 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 a portrait of the improbable transformation of this dying mainframe company into an increasingly nimble information services giant. With 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.
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Editorial Reviews

Business 2.0
...Garr does a thorough and careful job of analyzing the personalities and events that shaped the giant corporation in the past decade. He tells a compelling story....[T]he overall feel of the book reveals admiration for Gerstner and the job he accepted.
Publishers Weekly - Publisher's Weekly
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 action--many of which are riveting. Garr is a former IBM speechwriter--a fact that cuts both ways, as he convincingly explains--but his reporting is evenhanded, and his eye for detail extraordinary. (Sept.) Copyright 1999 Cahners Business Information.
Library Journal
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.--Ed.]--Susan C. Awe, Univ. of New Mexico Lib., Alburquerque Copyright 1999 Cahners Business Information.
From The Critics
Lou Gerstner is an egomaniac. That's the bad news. The good news is that he's a hardworking egomaniac with a knack for cutting through the bullshit. Which just so happened to be what IBM needed in 1993, when Gerstner took the helm of one of the greatest companies in American business history.

That's the word from Doug Garr, a former IBM speechwriter, in his new book, IBM Redux. To hear Garr tell it, IBM was a mess in the early '90s, when Gerstner was brought in to turn the company's fortunes around. In 1991, the company lost $2.9 billion. During the next two years, IBM lost $5 billion and $8.1 billion, respectively. IBM had lost ground in just about every market in which it had products.

Gerstner was fresh from stints at American Express and RJR Nabisco, and relatively new to technology, but the latter didn't matter to IBM. The company needed someone from outside Big Blue to change its culture. (Gerstner, in fact, was the first IBM chief executive from outside the company.)

It's a familiar story. IBM, after years of success, was fat and happy. While its revenues remained consistently high, its losses grew. The cost of doing business was too high and internal fiefdoms in its divisions had made it difficult to rein in costs. Garr quotes Gerstner when he first took over: "We're making $64 billion a year. By far, the most money in the information-technology business is being spent with us. The problem is that it's costing us $69 billion to do it. So, how do we deal with this?"

The story of the need to change IBM's culture is an important one. Garr writes that IBM at the time was filled with middle managers and executives long on how computers work, but short on what technology could do for the consumer. Gerstner, as a consumer himself – at American Express he authorized purchases of IBM equipment – understood the difference, and set about reshaping the company.

Garr has nothing but praise for the way Gerstner turned around IBM's business. But he doesn't go soft on him, either. For instance, he details what happened when Fortune ran an infamous article on Gerstner titled "The Holy Terror Who's Saving IBM." Gerstner was so enraged by his characterization as gruff, rude and more than a little arrogant that he actually pulled all of IBM's advertising from the magazine and ordered IBM employees not to return phone calls from Fortune staffers.

As recently as 1998, the feud was still going on. Garr writes that Gerstner was scheduled to give the keynote address at PC Expo but backed out a month before the conference because of a "scheduling conflict." The truth, according to Garr, was that when Gerstner learned that Fortune was sponsoring his address, he demanded that the magazine's banner be removed from the meeting hall. Fortune refused and Gerstner opted out.

Business 2.0
...Garr does a thorough and careful job of analyzing the personalities and events that shaped the giant corporation in the past decade. He tells a compelling story....[T]he overall feel of the book reveals admiration for Gerstner and the job he accepted.
Kirkus Reviews
The detailed story of a strong-minded business leader and his battle to reverse the failing fortunes of a major international corporation. This story would probably have been intriguing even if it were a puff piece, generated as an IBM public-relations ploy. But the author, a former IBM-speechwriter-turned-journalist, crafted this work without the support or approval of the giant computer company. From this independent perspective, it succeeds in capturing both the former culture of IBM, established and set in its ways after decades of affluence, and the unsettling conditions created by the new boss, Lou Gerstner. The profile of Gerstner reveals a complex, not always likable character, yet someone uniquely capable of identifying problems and finding appropriate people to work with him. Although focused on Gerstner, the book also covers the carefully chosen executives he selects to turn his directives into action and those who fail to make the grade. Since 1993, when Gerstner was wooed away from RJR Nabisco to manage the blundering IBM, he has not always made the right decisions or backed the right products. But from a management perspective, he produced a textbook example of instrumenting change between old and new business models. Although the main narrative is how the new leader forged his turnaround, readers not already aware of how and why IBM fell from power will be fascinated, if not disgusted, by the details included here. And Gerstner's background will also prove informative and insightful, an example of achievement founded in a working-class environment. Although Gerstner was ambitious and hungry for control, his tale stresses the value of going to the right schools (for him itwas Dartmouth and Harvard Business School), working harder than those around you, and having superior intelligence to begin with. A dramatic and well-told adventure story, with the high seas and pirates replaced by carpeted office corridors and MBAs.
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Product Details

  • ISBN-13: 9781402844706
  • Publisher: HarperCollins Publishers
  • Publication date: 9/1/1999
  • Pages: 375

Meet the Author

Doug Garr is the author of IBM Redux: Lou Gerstner and the Business Turnaround of the Decade. His work has appeared in BusinessWeek, Fortune's Technology Review, GQ, Popular Science, Worth, New York, and MIT's Technology Review. Garr lives in New York.

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Read an Excerpt

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."

IBM Redux. Copyright © by Doug Garr. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.
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