Louis Gerstner: Scaling Blue Myth
?【Big Blue fell to fast, who was to hold up as if paralyzed the elephant? No one is
willing to giant corpses, to save face difficulties described by the media
&quot;have one foot forward in the grave&quot; of the IBM ... ...】
IBM is known as the world&#39;s best business, management, one of the most
successful companies. It has 400,000 middle-level cadres, 520 billion in assets, annual
sales of more than 500 billion dollars, profits of 70 billion. Once its sales in the
computer industry, first in the world.
Good flowers seldom open the 20th century, the late 80s, IBM&#39;s managers
are obsessed with beauty Yesterday the face of the rise of personal computers
indifferent. The IBM PC compatible manufacturers instead of cultivating them to
become their competitors, Microsoft and Intel are in IBM&#39;s imminent
demise in the growing. The early 90s recession in Europe and America, IBM
management more scientific and more show as difficult, shares keep falling for
several years, a time, &quot;IBM has been difficult to escape the sword of
destiny&quot; pessimism rampant.
In 1993, a do not understand computer technology, do not understand this industry
outsider ─ ─ Gerstner took over IBM. He led the IBM PC industry to launch a
new assault to revive the old Xiong Wei. The end of 1994, IBM won the first time
since the 90&#39;s profitable ─ ─ 30 billion.
Big Blue did not fall, is life and life Gerstner with a strong personality to support it
back up, sharp edge to his writing a magical blue myth, it is relying on what Gerstner
Cliff on the IBM
80 years of IBM is the world&#39;s most profitable company, highly respected.
However, from the late 80s to 90s in it suffered a serious crisis, the hero of the lonely,
In 1984, IBM personal computer in the beginning of the suffering of the competition.
Intel launched the beginning of large scale integrated circuit chips and IBM launched
the company began to design alternative to IBM PC IBM PC / AT their territories, it
will be used by the operating system MS-DOS. Bill Gates suggested that IBM PC /
AT design should be based on Intel&#39;s next-generation products are
developed based on the 80386-based chip, this chip represents a new 32-bit
microprocessor chip technology. Bill is to update the product through the back edge of
innovation, and not always stay on in the improvement of old products. But IBM is
naive to think they control the standard personal computer, there is no rival dare to
launch before the IBM PC Intel 80386 chip-based products. If anyone dares to early
action, IBM will be allowed to pay a heavy price. Unexpectedly, the first to use the
Intel 80386 chip Compaq usurp the initiative, but the sword so that IBM almost a
September 1986, Compaq introduced the Intel 80386 chip-based machines, popular in
the market, other companies see the success of Compaq, to follow suit. They divide
up their fat, IBM would like to enter in, nor did it open for the 80386 chip.
House seemingly endless rain. Apple now being PC, after playing confusing, but also
introduced it has a good graphical user interface of the Macintosh treatment, its good
market effect, IBM once again blow.
IBM this elephant was a hit and collapse, develop OS / 2 operating system software is
also a total failure. Lack of matching applications, but also extra 20 million U.S.
dollars in hardware upgrade costs, the end of 1989 to get OS / 2 in market share is less
than 1% market share of 65% of the share is still DOS. With Windows can handle a
lot of memory, it is increasingly popular with its users, IBM-compatible computer
applications software market dominated by the Bill Gates.
The hands of IBM&#39;s mainframe is a trump card, which is 25 years
worldwide hosting market has been dominated by the IBM. Even 80 years, customer
demand for mainframe processing capacity increased steadily each year as much as
35%, although the technological advances that IBM&#39;s competitors in the
annual price reduction of about 20%, IBM can increase sales revenue by 15%. In the
early &#39;80s, customers will be the core of the network settings in the
mainframe, simply because IBM&#39;s sales personnel that this is the right way.
But now, the initiative has been transferred to the customer hands. Customers have
sufficient knowledge of computer technology to understand what they need computer
equipment, they won from the hands of computer manufacturers control.
With the use of computers in business, a large contingent of technical personnel has
grown up. For them, the mainframe is not complicated. These have considerable
expertise with new customers choose, they will not blindly buy the IBM mainframe,
the eyes of customers is not only IBM, and they are IBM and Hitachi and Amdahl
Corporation in the choice made compatible . 80&#39;s, and Amdahl, Hitachi has
established a reputation for excellent quality, they prove their quality to customers and
IBM can rival. As the product replacement behind, IBM compatible mainframe
market share from less than 90% to 80%; for every 10 percentage points of market
share is approximately equal to 4 billion U.S. dollars in sales. Into the 90&#39;s,
the mainframe sales situation worse. In 1992, the mainframe&#39;s total sales
grew by only 2%, so that IBM sales decreased 10% to 15%, while major competitors
Amdahl and Hitachi&#39;s revenue grew by 48% and 10%.
Situation is becoming clearer. New competitors not only the absolute leader in
functionality, but also in the price of great advantage. IBM is really old yet? Even
trump card at risk. And the retreat of IBM in the printer market is not satisfactory.
Hewlett-Packard and Canon&#39;s &quot;designated river&quot;,
allowing only air from the Lamentation IBM.
Policy mistakes, backward technology, outdated ideology, lax management, together
with Europe and the United States of depression, early 90s, IBM had a long-term huge
losses occurred in 1993, a record 8.101 billion U.S. dollars has yet to be broken.
Company shares have fallen sharply, from the original more than the German stock
exchange value of all shares of listed companies fell to just the sum of the 10 largest
U.S. companies, losses amounted to 75 billion U.S. dollars, equivalent to one year,
Sweden&#39;s GDP (GDP). IBM&#39;s assets declined by 200 billion
dollars, equivalent to the gross national product of Ecuador 2 times. During this
period, 14 million jobs lost, the number of people affected by up to 40 people
Big Blue will soon fall, and who was to hold up as if paralyzed the elephant? No one
is willing to giant corpses, to save face difficulties described by the media
&quot;have one foot forward in the grave&quot; of IBM.
Fierce competition for the old giants can not, but IBM unwilling this fall, blue myth
will continue, because they have a new Iron Chancellor ─ ─ Gerstner.
April 1, 1993, Fool&#39;s Day. In people&#39;s curiosity, fear, doubt
complex eyes, calmly Gerstner took over the former right hand of Aix handle, as IBM
chairman and chief executive.
Though he has an engineering degree from Dartmouth College and an MBA from
Harvard Business School, although his famous McKinsey management consulting
firm is hot on the 1st person, though he had succeeded in RJR Nabisco, the
company&#39;s president and Chairman, American Express president. But he is
still not convincing: He is a computer outsider, do not understand technology, but the
key is that he does not understand the industry. Business in circulating such a sentence:
do not understand the market is equal to half of the deaths.
Let an outsider to the world&#39;s largest computer company in charge, this also
happened in the most bureaucratic and conservative, IBM is incredible. It was keen on
pleasing waiting, waiting for IBM&#39;s grave, the other foot. But what popping
is the &quot;lay&quot; IBM only two years taken off their losses hat.
Perhaps, as Gerstner said, &quot;like me do not belong to one charge of industry
and certain products, my responsibility is to the local integration of all the IBM team
up to provide integrated solutions to provide integration of IBM&#39;s outside
Gerstner took over IBM, the IBM does not replace most senior executives, but by
tough action to reverse the IBM &quot;Yilaoyishao&quot; the style and
way of thinking. He hired an entrepreneur from Silicon Valley to replace the IBM disk
drive department head. Subsequently, he was still IBM&#39;s external Chief
Financial Officer of people do and personnel director. But he did not kick the vast
majority of senior executives. He said: &quot;I am very serious, like the
challenge. I am very focused, straightforward, and very tough.&quot;
&quot;I do not care you will be the future of the business celebrity, or are
preparing to find another way out, I want is you now have for my dedication best
Business rule is cruel, and enterprises are to survive and thrive, only fight, go all out
to strive and work hard. Gerstner excels at this time is fully demonstrated. He decided
soon after taking office: determined not to break up IBM. He said: &quot;When
all the competitors to concentrate in one area inside, you and others do not like and
others do not do the same thing, IBM&#39;s advantage is that big.&quot;
&quot;We want to maintain a large company, in this companies which have
different products, different services, there are hardware have software that can
provide the direction of integration. &quot;
Take advantage of IBM, Gerstner was the first step, is also a key step. Undoubtedly,
this step he is gone successfully.
Gerstner stressed the importance of the IBM Corporation as a global company, and
only operate globally, IBM have a chance to compete. He put the customer into
different industries, each industry has a global manager, is responsible for the industry
in global sales and customer service. &quot;Advantages of the past regional
operations with global, making our forces more powerful.&quot;
Know thyself, know yourself. Many famous business motto these words as gospel,
but can not really understand the essence of many, often great importance to know the
enemy, ignore the confidant. At this point, Gerstner has done very well.
He saw the IBM of the problem. Bureaucratic model, the slow development cycles,
high costs of business operations, pursuing the issue has been so tied IBM. Gerstner
that the company must self-assessment, this will help to understand the core issue:
where to focus resources, increase or decrease in investment, where to put the power
to obtain market leadership. At the same time companies must address key issues ─
─ cost structure and competitiveness of their products.
Gerstner understood that to get IBM back to life, the most critical is the corporate
restructuring: &quot;not a simple body corporate restructuring and asset
restructuring. Making any serious, meaningful corporate restructuring, to have done to
you everything, and you manage a fundamental business process evaluation. IBM to
do the job. &quot;He succeeded in convincing the board of directors, with five
years to transform IBM.
IBM in the restructuring process, Gerstner&#39;s ideas are very clear emphasis
on a market-driven corporate culture. For the computer industry, not just limited to the
invention, while IBM has always been such a problem exists before it is now difficult.
Is the adjustment: the customer&#39;s needs? The changes in the market? Our
competitive strengths? What is unique?
Gerstner has said that &quot;an important aspect of restructuring is to identify
the focus, focus.&quot; Able to do this, he thinks the world each and every one
of the characteristics of successful enterprises. The so-called concentrate, is that: first,
based on facts, very clear position, I believe that they can take advantage and market
leadership. Second, it is clear where to focus its resources on where to invest and
where to exit. Of course, this requires a reasonable division of the market overall
capacity. In order to have this capability, you need to improve information systems,
such as information gathering, information analysis.
Proceeding from reality can be summarized his remark is the essence of it? Success in
the under Gerstner, steeped in the most simple sense, but can really play a down effect,
but also several people?
Gerstner is a great personality is also very &quot;control freak&quot; who,
at the Kempinski Hotel Beijing Super 100&#39;s press release, he let others to
control the reporter&#39;s question, but to personal control. Gerstner wanted to
call the reporter&#39;s question, which would cut off his fingers with the hand
of a powerful cross-refer to the past; which have excited journalists held their hands,
fidget and move too quickly, he asked which one. Not tall, but bristled with Gerstner
long standing tall and walking around the podium like a very powerful conductor ─
─ he had about you, you are difficult to control him.
For this control to Gerstner to IBM, the cost of major surgery on the right, he thinks a
company&#39;s cost structure, if not the best, will not be a successful global
Gerstner was the quality of operation of the cycle and speed comparison. He says:
&quot;operation of the cycle for us is success. In fact, business-to-speed pursuit
of the past 30 years than at any time urgency.&quot; &quot;When our
business reporting quarter and the operating results of the month, We also asked them
to report on progress in the operation of the cycle. This reorganization endless, and
the requirement to restructure the company&#39;s core operations. &quot;
In addition IBM has also conducted extensive restructuring, but unlike other
companies, most companies will also conduct one or two large business
reorganization plan. And IBM at any time, all the company&#39;s projects will
have more than 60 while in the implementation and the restructuring of branch or
department level, there were hundreds.
This is a thoroughly reorganized company&#39;s information infrastructure is
key. Gerstner has since prepared a unified global coverage information base,
marketing systems, financial systems, contract enforcement systems, manufacturing
systems and customer service systems, centralized data center, thereby preventing
excessive and redundant costs.
Drastic reorganization of total savings of 80 billion U.S. dollars, reducing internal IT
costs by 47%. It also achieved the following results: from 4 years of hardware
development time down to an average of 16 months, some products only for 6 months;
on time delivery from 70% to 95%; inventory cost reduction of 2.2 million write-off
of goods The decrease of 800 million U.S. dollars; material costs reduced by nearly
300 million U.S. dollars; shipping costs reduced by 2.7 billion; customer satisfaction
Degree in business administration at Harvard Business School, the learning culture of
the Gerstner good to conclude the problem, quickly absorb a large amount of
information. Career success to the sea, and insight to his thinking are quite sharp, he
knows IBM is facing unusually large market. According to U.S. statistics, a research
firm, the global technology services in 2000 (including maintenance, consultancy,
outsourcing services, etc.) market size, up to 666 billion U.S. dollars. All the
information industry is a large investment in building services team. But Gerstner
want more than that. Because the service is not merely the greatest potential of
revenue, but customers can take part in the next 3 to 5 year program.
To the IBM PC, the production by a big transition to service and technology has
become the mainstay of the enterprise more competitive, Gerstner began his series of
blood and iron.
First of all, Gerstner put in service a lot of manpower, district-based attempt to
&quot;service&quot; the feasibility of small-scale deployment for the
customer information system, the cumulative service. Until 1997, only to break the
region restrictions, the establishment of Global Services Business Unit, to establish
unified and systematic processes. In the past few years, over 20% annual growth rate.
Service sales approaching 19 billion U.S. dollars a year.
And the development of middleware. Gerstner understood that when the hardware has
been developed to a certain extent, is difficult to highlight the differences, while the
demand for enterprise development, whether it is data access, messaging, security
management and control are inextricably linked with the software. Therefore,
beginning in 1995, IBM to develop new software products, during which rival Oracle
in addition to availability and DB2 database software, the also bought the group in
1995 and 1996 and storage management software giant software company Lotus Ti
IBM hopes that more people side of software development and application, will be
back to business with IBM&#39;s middleware platform. To continue to develop
the software side, but the selective development, such as not going on with the
Windows desktop operating system in competition, escape Microsoft&#39;s
edge, and in the database, system management, collaborative operation, and so to get
ahead. Now IBM software sector is a source of profit growth.
Secondly, let IBM&#39;s patent start &quot;value&quot; of money.
Gerstner said: &quot;Before I come to IBM, IBM received very little from the
outside to the patent fee, I came, IBM received an annual one billion U.S. dollars
from all royalties.&quot; On the Lotus and other companies and Ti Weili
acquisition of software company has also had considerable economic benefits.
In September 1999, Gerstner in turn have no competitive advantage to switch off the
network equipment sector, while retaining some technology, so that he can cooperate
with the network giant Cisco. After Cisco bought IBM technology in the switches and
routers, IP 200 patents. So, get rid of a big burden Gerstner, IBM&#39;s wings
so that more light.
Once again, to embrace the Internet. Gerstner began several years ago about the
online world will change. He firmly believed that: &quot;the future of
e-commerce market means that the potential market, and IBM all the structure must
apply the economic development of the network.&quot; To the IBM office,
Gerstner has a firm belief: information technology is an epoch-making techniques;
This technology will occur about 100 years, but its arrival will change all of human
society. We have to admire the vision of Lou Gerstner.
The prevailing situation is: in the hardware market, Compaq, Dell has long relied on
low-cost approach to IBM driven back; software market, growing up from the IBM
support Microsoft&#39;s momentum Masamori. Concentrate on R &amp;
D despite the good, but to feed hundreds of thousands of big companies really
difficult. Gerstner made by the former chief executive of IBM Aix, once proposed the
separation, according to different business to IBM dismantled into 13 smaller
companies, such as IBM make run faster, Wall Street analysts have also generally
think this is a feasible method. Gerstner against all the odds, rejected the plan. The
judge is wise, if the split was a, IBM would not have its present size and strength. The
industry also will leave an everlasting regret.
Gerstner this bold decision, is by no means groundless. He has long been noted that
young enthusiastic group on the Internet, he was pleasantly surprised to find that this
thing can be hardware, software, all strung together, while other competitors do not
have the resources of IBM and more. In 1996, Gerstner officially announced:
IBM&#39;s goal is to help customers use the Internet to do management,
e-commerce transactions. That the future of IBM, to charge more on the network. At
the time, Gerstner was the first seriously to the United States the Internet as a business
tool to discuss the information industry executive, faster than the cover times. The
logic is that Gerstner, IBM has done is not the development of
&quot;new&quot; business, but to redefine the &quot;old&quot;
business, and brought it into the new model.
Finally, the creation of industrial eco-system networks. Provide professional services
must not only know their own products, only to just stand for the customer, to provide
data and information they need to win customers trust and respect.
In order to confirm the cause of each head of IBM&#39;s strategy is clear,
Gerstner asked IBM&#39;s top executives have each signed a
&quot;Declaration of a business partner&quot; of the document. Document
requirements, IBM will be based on customer needs, to find the best hardware,
consulting, and software solutions, even if customers want is competitors.
With the declaration of the specifications, IBM&#39;s services team to be a go.
IBM now has 72 software business partners, including the German ERP giant like Sap,
Silicon Valley proficient in customer relationship management Siebel,
IBM&#39;s goal is to achieve the scale of 200 business partners.
In today&#39;s environment, not only the hardware, software, and business
strength, must be to create a large-scale ecosystem.
Gerstner&#39;s &quot;partnership strategy&quot; really contributed to
IBM&#39;s revenue, third quarter 2001 financial report, produced by the
partners, IBM&#39;s revenue was 22.5 million, compared to 750 million in 2000
revenue figures, an increase of two-fold. IBM Express service strategy through
business partners to accelerate progress, but also criticized IBM for a good
opportunity for competitors. IBM competitors that the development of business
partnership is but a necessary strategy for development of information services, but
the quality control capacity will cause a big problem IBM services. However, IBM
has recognized the &quot;open&quot; is the present-day survival,
determined not to turn back.
Under the management of the Gerstner, IBM demonstrated both organizational
transformation, strategic restructuring and technical transformation; also cleverly
accumulated in the history of science and technology strengths, successfully
demonstrated the transition to the service.
In 1992, before Gerstner took office, IBM loss of 50 million; in 1993, the first year
after taking office Gerstner, IBM losses of up to 8.1 billion U.S. dollars; in 1994,
Gerstner took the second year, IBM taste the taste of making money, profit of 30
billion; after successive bumper harvests, IBM 1998, operating income reached record
levels, reaching 81.7 billion U.S. dollars, compared to 78.5 billion U.S. dollars in
1997 increased by 4%. Net income reached 6.3 billion, net income over the same
period in 1997 was 61 million. In l998 IBM in global technology development results
more prominent, patented in the United States to 2658, for 6 years among the top
global companies. IBM&#39;s sales in 2001 up to 86 billion U.S. dollars, total
profits, up to 7.7 billion U.S. dollars, second only to Microsoft in the technology
industry. IBM therefore deservedly named the &quot;Fortune 500&quot;
It can be said Gerstner in IBM10-year term for all the efforts made in the final of an
immortal, now, IBM has once again rise from the ashes, Big Blue has stood up. While
many people avoid like the plague IBM cases, Gerstner it arose, this first paralyzed
save elephants. But on what basis exactly Gerstner saved IBM? He does not very
attractive personality? Wild huh? Or changing jobs more frequently, or to fight for
their own interests, often have a big opening?
Figure difficult to nail into the
Gerstner is known to very tough. Youth, he was mowing the yard, in order to rule out
the mower&#39;s fault, careless broke his right thumb and index finger, but to
fight back pain forced her grass Gewan the.
IBM, Gerstner, a senior director commented that his personality than the nail is also
hard, difficult time in IBM, is in need of exceptional talent like him who have.
&quot;I do not understand technology, but understand the customer&quot;
is the catch-phrase often Gerstner. He just took office, the first time to attend the
meeting, senior director of IBM customers, introduce themselves at the beginning of
the meeting, said: &quot;I told the president, IBM has a different other places
that I used to be IBM&#39;s customers, so I fully understand the customers and
their needs; is because I do not understand technology, so you can spend more time,
customers from the customer point of view of things. &quot;So, yes Gerstner on
the customer information management skills in a major.
Gerstner and IBM customers value is the former a very big difference, he made the
right decision is an important source. Gerstner is the kind of people who love to
communicate, his primary audience is the customer, in addition to their often to visit
clients, he also forced the senior vice president to visit.
He should be every two weeks, senior vice president and all will open a. He spent the
most time asking you: you visited over the past two weeks, what customers, clients
tell you what. Thus he could hear the new market needs, customer demand, IBM has
done is very sound to hear.
He ordered the world&#39;s 350 senior executives of the world&#39;s 500
largest customers, you must be at least one customer&#39;s partner, not because
of your work, but because you are IBM. Long-term relationship with customers and
clients regularly to visit the most competent, and some guidance to the sales force, to
help them. Hear the sound from the client and then prescribe the right medicine.
Gerstner reason in 1996 and raised the banner of e-commerce, mainly from customers
who get inspiration.
Gerstner spent more time to communicate with the second object of the staff, he
always try to put the company&#39;s direction so that every employee knows,
this is usually a large company the most difficult. He changed the past practice of
hierarchical, direct e-mail and staff communications. If the United States, today
announced the company&#39;s global headquarters in performance, then the
next morning, more than 20 million employees worldwide e-mailbox president will
have a detailed report. Every place he went to a special arrangement to be an hour
meeting with all staff, to talk about the company&#39;s direction, and then leave
45 minutes, the staff raised their hands free to ask him questions. So he always had a
way to hear the voice of customers, staff hear the voice, to see changes in the market.
His e-mail and staff communications, from the problem do not pay someone else to
help him down, when he learned who is responsible for any program, call the person
directly, even if that person than his low-56.
Gerstner also reform the payment system, he said, &quot;to those outstanding
individuals and groups tilt. To employee compensation and company performance
Facing criticism from internal and external criticism Gerstner insistence shock therapy,
significantly cut costs, and successfully persuaded the board to restructuring ─ ─
&quot;If there is no commitment to produce high-level business at least 5 years
to reform , then the institutional restructuring not be successful, but is not difficult to
start, but will change endure, until an end. &quot; He also actively abolish the
old rigid system, such as the staff dress requirements and unnecessary meetings and
conferences; He also used the stock options and financial incentives to encourage
ways of combining their subordinates.
Gerstner is a pragmatic man, he never beat about the bush and people talking,
categorically. He requested all competent jurisdiction for their achievements, and the
performance of executives is valued. Gerstner each called to be senior director of
global U.S. headquarters, opened a two-day meeting to set a clear direction for the
coming year, talk to the lower back, senior director in charge of communication, let
everyone know the direction of the company, that company is doing anything.
Looking back over the past ten years, Gerstner has made two important decisions:
First, to expand IBM&#39;s reach to the world, more diversified business, so
IBM avoid the decline of the high-tech industry; the second is to change the mode of
operation, from hardware to service. IBM&#39;s Global Services has become
the fastest growing this company, a division of benefits, and has accounted for 43% of
total sales. In Gerstner&#39;s leadership, IBM today has become a computer
company does not manufacture computers. The number of U.S. computer
manufacturers, even today realize such a strategy had to make adjustments.
Gerstner has not only saved IBM but also Yuehuo Yue good. Gerstner is down to earth
style, spirit of innovation, foresight capacity, to concede defeat easily, but also
arrogant foul problems, so the blue myths continue.