Power Point: 5 tips from IBM’s turnaround champ

I think that all the big blue ceos have made a great job eve including his former CEO Sam Plamisano who know how to lead this big corporation takeing the right choise at the right time.

I joined IBM shortly after the Gerstner era, and had several occasions to interact with Lou directly. In my experience, he was the sharpest — and most sharply focused — executive I’ve ever encountered.

When he joined IBM, it was being slowly strangled to death by its own overgrown bureaucracy, and the malaise within its ranks. Many employees basked in a culture of entitlement, and few felt anything resembling a sense of urgency to return IBM to profitability.

While the measures he took were tough, they were necessary to preserve what Gerstner seemed to think IBM was: a national treasure, that — once righted — could accomplish things that no other company could.

Yes, he pushed people hard… but never harder than he pushed himself. He deserves whatever awards come his way.

I really hope that the US can get up and running again with their economy, there are so many intelligent and innovative people over there. It seems that Lou Gerstner is trying to make an effort and by reading point 4 he understands team work. If the next President focuses on Teamwork a bit more I think the US will see positive results in the distant future.

It’s amazing how much credit we give to currency exchange and tax evasion. If it hadn’t been for evading the taxes in Europe through royalty payments and today’s currency exchange advantage of a falling dollar, IBM might not have survived the early 90’s and looked good in the last few years.

IBM is a foreign company charted in the US. Credit has to be given to the fact that they have decided to abandon all their ethics, morality in pursuit of profits abroad. Just like what they did to Endicott and thousands of employees, they have abandoned the US and moved elsewhere like a good itinerant oil salesman now called a “global company”.

The day of judgement will come when the dollar strengthens. Instead of adding to the 6% measly real growth it’ll start subtracting. The next step will then have to be to move their charter out of the US to a “tax ignorant” jurisdiction and set up tent there.

IBM, the brand that has decided it has only one ethic and morality. The brand that places itself on the altar of profit, ignoring everything else. One day this decision will destroy your brand despite your excellent communications team and economists.

I am an IBM retiree, Lou began his work just as I retired. As a retiree, I’m glad he did what he did, or I might not be receiving a pension. The individual who said in their father’s view that Lou was the worst IBM CEO, is one of those people that we have in so many companies who just don’t get it. And they are usually the first to get laid off, and they should be. Lou did far more than cut the workforce and lower the benefits. An examination of the real facts will show he in fact did implement a turn around strategy, and one that worked. He deserves the recognition for what he has accomplished through all aspects of his career. We need more such executives in American business, and then America will regain its edge, as IBM did, contrary to the writer from Rochester’s comments. The comments about IBM are just as uninformed as the comments on Yale/Bush. Guess someone spends too much time listening to their Yorkie while wondering why everything is going to the dogs.

For the ignorant fool from Rochester, MN:
Yale did not “give” George W. Bush a Masters degree; he received his undergraduate degree from Yale. He was a C student at Yale, as was his classmate John F. Kerry. However, George W. Bush later “earned” a Masters degree (MBA) from Harvard. Nobody ever suggests you can get a highly respected Harvard MBA without earning it. And, unlike Ted Kennedy, George W. Bush was never expelled from Harvard for cheating. Al Gore failed twice at getting his Masters degree, first at Vanderbilt Divinity school and then at Vanderbilt Law school. Get your facts straight before shooting your mouth off about your political bias.

These comments surprise me – perhaps they reflect the bitterness of those who are negatively impacted by the changes needed to turn IBM around. Without those changes (including globalization) IBM would likely be relegated to the dustbin of corporate history.

Instead, today it is the second largest software company in the world, the largest IT consultancy, and remains one of the largest hardware manufacturers. The shift towards software and consulting makes sense, and the results show in this quarter’s extremely strong numbers in a down economy.

Culture? I find it to be an interesting place to work. Yes it can be stultifying as part of a behemoth, and one could easily feel lost in the machine – it takes sustained personal effort to stay on top of your game in a place with so many moving parts and cross-functional teams.

But – few other companies can achieve the stupendous engineering feats of which only IBM is capable – it is inspiring to work at a place which continually makes the world’s fastest supercomputer, or helps to solve the mysteries of man’s history as told in your DNA, or crunches massive volumes of data daily on Wall Street.

It’s a place worthy of the investment of my efforts. It you don’t feel the same way, then please do yourself, me, and IBM shareholders a favor and find some other employment.

Lou Gerstner being honored by Yale – that makes sense. They’re the same institution which gave George W. Bush a Masters degree. My father was an IBM engineer for 32 years. He thought Lou was the worst CEO ever. In 1994 he sold all his IBM stock, retired, and purchased Harley Davidson for $5 a share. I work with a lot of people who weren’t go lucky. How tough is it to cut the workforce and lower retiree benefits? My Yorkie could do that. Is that a turn around strategy? Wow. No wonder America has lost its edge.

What a joke to say, “It’s all about culture. You have to transform the culture, not just the strategy. Culture is what people do when no one is watching.” Even with the ‘great’ 2nd quarter #s, employees still don’t get raises or bonuses. Everyone here is looking out for themselves, that’s what the culture is.

For some one who mentioned that Lou was looking for himself and IBM ofshoring work , think if IBM or any other company was not competing with the world market then IBM and its 160 thousand + US jobs would have vanished by now.!!
Its the global market every one has to compete now , if not that company will not exist and what ever jobs it provides will be gone. Companies of INDIA , CHINA are buying up US and European firms! So now can u say to US govt to stop this happening . come one WAKE DUDE ! WAKE up the competitive capitalistic world.
If you want a TV for $200 then obivouly its made some where in the world where the labor is cheap , its pure business!!
If u are ready to pay $500 for the same TV which is made in US then the business will adopt that!..

Obviously, the investors are just looking at the finacial “power point”, and quickly will adversely sell, when the EPS “growth” slows.
Perhaps one should have a look at the following at IBM:
- further divisionalism does not support the “single” vision – quite opposite, IBM has invidualized goals for sales and services
- IBM is offshoring jobs from the USA in masses, of course this helps for short EPS increases – long term however ?
- weak $ gives good earnings abroad, in ermeging markets too
- share buy back helps the share price, how long will Sam held this up at the cost of employees’ wages and morale
- these at just a few things to look at; the majority of the people WORKING at IBM thinks, – especially in the USA- it’s time to leave the business

It truly takes a visionary to transform a behemoth like IBM. Lou changed the culture of IBM, now Stringer is changing the culture of Sony with Lou’s advice. I wonder when will our President have the vision to transform America into a nation that strive for excellence again.

Two other companies that “Sweet Lou” Gerstner was probably thinking about:
Sun Microsystems, and
Honeywell.

Nice note, good points made – as an investor I look at a firm’s culture first – I’m a fan of Eaton Corp (ETN) for that reason.

How about:
1) GM
2) Ford
3) Delphi
4) Dana Corp
5) Northworst Airlines
6) K-Mart/Sears

to answer your question…IBM is one of them…

Are HP and Motorola the remaining two?

Lou came in and was looking out for no one but himself. If you disect the numbers, you will see that things really stayed flat and many many assests, including employees, were put on the chopping block. Lou screwed IBM and its culture and is still collecting a consulting fee from IBM. Meanwhile USA employees see their jobs being offshored and wages slashed. Current management is just as cut-throat and IBM is becoming a “run of the mill” company whose flame is going out quickly.