When Blekko was acquired by IBM in 2015 we had an "Integration Executive" assigned to us who was responsible for all the 'detail work' of the integration (if you can imagine a project manager for an integration that would describe their job). He had joined IBM in the '80s. I found his perspective on the Gerstner years pretty fascinating.
I had interned at IBM in the late 70's (as a high school kid of all things) and decided it was more of a real estate company than a computer company :-). Up until Gerstner, IBM had a policy of acquiring and holding real estate as a hedge. Often reported on the books under "cash equivalents" because real estate had the property that it could usually be liquidated when required into cash. When we were acquired in 2015 that had changed, nearly all of the places I had worked in the 70's were no longer owned (or operated) by IBM.
Our exec said that those property holdings were the only thing that kept IBM alive between 1990 and 2000. They had to ruthlessly re-tool the entire business and that required a lot of up front cash without a product revenue stream to fund it. That was Gerstner's legacy for him, he used that asset to re-invent the company around consulting services, business automation, enterprise data processing, and business insights driven by processing billions of metrics.
And it turned out that a lot of companies needed to understand their business better, and automate it, to adapt to this new fangled thing called the Internet.
We both agreed that they would be unlikely to do that again as they had used up their 'secret weapon' already.
In his memoir, Gerstner described the turnaround as difficult and often wrenching for an IBM culture that had become insular and balkanized. After he arrived, over 100,000 employees were laid off from a company that had maintained a lifetime employment practice from its inception. Long allowed by their managers to believe that employment security had little reference to performance, thousands of IBM employees had grown lax, while the top-performing employees complained bitterly in attitude surveys. In the goal to create one common brand message for all IBM products and services around the world, under Gerstner's leadership the company consolidated its many advertising agencies down to just Ogilvy & Mather. Layoffs and other tough management measures continued in the first two years of his tenure, but the company was saved, and business success has continued to grow steadily since then.
Seemed like a pivotal time in IBM's history. IBM in 1993 was looking face to face with irrelevance during his tenure after mainframes being evergreen declared relics, and losing the bus wars in the PC industry. IBM in 2002 was still an interesting R&D and products company. Unfortunately the talent bleed off has been continuous from that time and neither the R&D nor the products are as astonishing versus the competition as they used to be. At least no follow on CEO has been daft enough to undercut the mainframe business so far, but they did miss the timing and limp execution on plenty of things.. POWER8 was almost perfectly positioned to be the AI interconnect and glue of choice.
Zero intention to speak badly of the deceased… Just an anecdote - I started at IBM in the early 2000s right out of college. At the time his immediate legacy was the divestiture of a big chunk of IBMs real estate. As a new IBMer that meant hot-desking if I went to the office and a very liberal work from home policy 20 years before its time. I love work from home but experienced first hand how hard it can be on young people. In my first professional job I maybe saw my bosses (yes plural because of org changes and the IBM matrix) twice a year.
I was in my 2nd year on college when I remember Gerstner was named to run IBM. At the time, IBM was the big tech monster that was stagnet and needed a fresh way to move forward. He came in and radically changed how it worked. I remember services became a big part of its core business. He really made a big difference on how the company functioned.
What I admire is that one man changed IBM from the 50s and 60s stoggy IBM to a more modern functional company that was able to move forward. I supect that without him IBM would have died long time ago.
I arrived at IBM just a little before Gerstner got there. He was an absolutely amazing individual in terms of how he spoke incredibly bluntly to everyone. At IBM, it was all about legacy internal political structures, where you would have enormous presentations held by various executives trying to explain why their business was going to be best and why you needed to invest in it. The ritual of presenting at IBM’s headquarters in Armonk was a symbol of the culture.
While I don't remember every single speech word for word, I remember one of his earliest all-hands meetings. He said, "If I have one more exec come to me with a bunch of slides that can't simply describe what's happening in their business with the key strategic attributes, I'm going to start firing people." He continued, "If you're running a massive section of the business, I should be able to come to you and we should just be able to have a good, solid conversation about the levers. You need to demonstrate to me that you know exactly what's going on, and you can't have your staffer answer my questions."
He also stated that he was completely appalled because, at every other company he had been at, they woke up every day paranoid about the competition. He told everyone we had completely lost our way. if you weren't waking up every single day thinking about the scorecard, you probably weren't right for the new environment.
If you were internal and under any scrutiny at all during these years, you would understand that Lou, without Jerry York, was only half of the story. Jerry was an amazing financial mind who could sniff through spreadsheets and smell bullshit. People would come out of executive reviews hanging on for dear life. Some of these executives, after they had been exposed to York and actually performed well, would leave IBM and succeed elsewhere. However, to be clear, he was an A-hole.
They achieved an enormous amount of cultural change, which was excellent. The problem was that while they had a great cultural leader and a great financial leader, IBM which was built to the brim with some of the most incredibly technical people you had ever seen, was completely lacking a clear technical lead. Inasmuch as these two guys created an amazing turnaround story, they never stopped for a moment to ask how to find the technical leadership to truly transform the place. While they did a great job, you cannot support a stool with only two legs. If IBM had found that third leg, we would still be counting it among the Mag 8 of today.
I spent 9 months at IBM in 1999. At that time, Lou’s legacy had already been solidified. He saved IBM. While not everyone agreed with his decisions, there was a culture of both honesty to customers and innovation that permeated the company. In contrast, look what happened to HP without such great leadership. Once a shining light in Silicon Valley, it turned into a shell of its former self.
It paved the way for a lot more than that. At a time open source in general, and Linux in particular, did not have much corporate buy-in, IBM signaled "we back this" and "we're investing in this" in substantial ways that corporate IT executives could hear and act upon. That was a pre-cloud, pre-hyperscaler era when "enterprise IT" was the generally understood "high end" of the market, and IBM ruled that arena. IBM backing Linux and open source paved the way for a large swath of the industry—customers, software vendors, channel/distribution partners, yadda yadda—to do likewise.
OS/2 never had a chance. I was working at Radio Shack at the time that IBM was trying to sell Aptivas with OS/2. No one wanted it.
It was just weird to people. Microsoft did a big consumer push for Windows 95 and there were lines to buy it and Bill Gates promoted it on the Jay Leno show.
It was never really suited to retail sales channels like Radio Shack. It was more of a corporate thing although it obviously failed there as well.
I only came across it at one site, a big UK bank (Midland Bank). They were using a heavily modified version, it didn’t look anything like the original product.
When Blekko was acquired by IBM in 2015 we had an "Integration Executive" assigned to us who was responsible for all the 'detail work' of the integration (if you can imagine a project manager for an integration that would describe their job). He had joined IBM in the '80s. I found his perspective on the Gerstner years pretty fascinating.
I had interned at IBM in the late 70's (as a high school kid of all things) and decided it was more of a real estate company than a computer company :-). Up until Gerstner, IBM had a policy of acquiring and holding real estate as a hedge. Often reported on the books under "cash equivalents" because real estate had the property that it could usually be liquidated when required into cash. When we were acquired in 2015 that had changed, nearly all of the places I had worked in the 70's were no longer owned (or operated) by IBM.
Our exec said that those property holdings were the only thing that kept IBM alive between 1990 and 2000. They had to ruthlessly re-tool the entire business and that required a lot of up front cash without a product revenue stream to fund it. That was Gerstner's legacy for him, he used that asset to re-invent the company around consulting services, business automation, enterprise data processing, and business insights driven by processing billions of metrics.
And it turned out that a lot of companies needed to understand their business better, and automate it, to adapt to this new fangled thing called the Internet.
We both agreed that they would be unlikely to do that again as they had used up their 'secret weapon' already.
It’s interesting that Apple is buying real estate like there is no tomorrow.
In his memoir, Gerstner described the turnaround as difficult and often wrenching for an IBM culture that had become insular and balkanized. After he arrived, over 100,000 employees were laid off from a company that had maintained a lifetime employment practice from its inception. Long allowed by their managers to believe that employment security had little reference to performance, thousands of IBM employees had grown lax, while the top-performing employees complained bitterly in attitude surveys. In the goal to create one common brand message for all IBM products and services around the world, under Gerstner's leadership the company consolidated its many advertising agencies down to just Ogilvy & Mather. Layoffs and other tough management measures continued in the first two years of his tenure, but the company was saved, and business success has continued to grow steadily since then.
Seemed like a pivotal time in IBM's history. IBM in 1993 was looking face to face with irrelevance during his tenure after mainframes being evergreen declared relics, and losing the bus wars in the PC industry. IBM in 2002 was still an interesting R&D and products company. Unfortunately the talent bleed off has been continuous from that time and neither the R&D nor the products are as astonishing versus the competition as they used to be. At least no follow on CEO has been daft enough to undercut the mainframe business so far, but they did miss the timing and limp execution on plenty of things.. POWER8 was almost perfectly positioned to be the AI interconnect and glue of choice.
https://en.wikipedia.org/wiki/Lou_Gerstner
https://web.archive.org/web/20251228211136/https://gerstner....
https://openlibrary.org/works/OL274413W/Who_says_elephants_c...
https://archive.org/details/WhoSaysElephantsCantDance
Zero intention to speak badly of the deceased… Just an anecdote - I started at IBM in the early 2000s right out of college. At the time his immediate legacy was the divestiture of a big chunk of IBMs real estate. As a new IBMer that meant hot-desking if I went to the office and a very liberal work from home policy 20 years before its time. I love work from home but experienced first hand how hard it can be on young people. In my first professional job I maybe saw my bosses (yes plural because of org changes and the IBM matrix) twice a year.
> In my first professional job I maybe saw my bosses (yes plural because of org changes and the IBM matrix) twice a year.
Did this work at all? How did you feel throughout it? What about your colleagues?
I was in my 2nd year on college when I remember Gerstner was named to run IBM. At the time, IBM was the big tech monster that was stagnet and needed a fresh way to move forward. He came in and radically changed how it worked. I remember services became a big part of its core business. He really made a big difference on how the company functioned.
What I admire is that one man changed IBM from the 50s and 60s stoggy IBM to a more modern functional company that was able to move forward. I supect that without him IBM would have died long time ago.
At Kaleida Labs (a joint venture of Apple and IBM), I gave Lou Gerstner a ScriptX demo involving an animated disembodied spinning bouncing eyeball.
He commented "That's a bit too right-brained for me."
I replied "Oh no, I should have used the other eyeball!"
I arrived at IBM just a little before Gerstner got there. He was an absolutely amazing individual in terms of how he spoke incredibly bluntly to everyone. At IBM, it was all about legacy internal political structures, where you would have enormous presentations held by various executives trying to explain why their business was going to be best and why you needed to invest in it. The ritual of presenting at IBM’s headquarters in Armonk was a symbol of the culture.
While I don't remember every single speech word for word, I remember one of his earliest all-hands meetings. He said, "If I have one more exec come to me with a bunch of slides that can't simply describe what's happening in their business with the key strategic attributes, I'm going to start firing people." He continued, "If you're running a massive section of the business, I should be able to come to you and we should just be able to have a good, solid conversation about the levers. You need to demonstrate to me that you know exactly what's going on, and you can't have your staffer answer my questions."
He also stated that he was completely appalled because, at every other company he had been at, they woke up every day paranoid about the competition. He told everyone we had completely lost our way. if you weren't waking up every single day thinking about the scorecard, you probably weren't right for the new environment.
If you were internal and under any scrutiny at all during these years, you would understand that Lou, without Jerry York, was only half of the story. Jerry was an amazing financial mind who could sniff through spreadsheets and smell bullshit. People would come out of executive reviews hanging on for dear life. Some of these executives, after they had been exposed to York and actually performed well, would leave IBM and succeed elsewhere. However, to be clear, he was an A-hole.
They achieved an enormous amount of cultural change, which was excellent. The problem was that while they had a great cultural leader and a great financial leader, IBM which was built to the brim with some of the most incredibly technical people you had ever seen, was completely lacking a clear technical lead. Inasmuch as these two guys created an amazing turnaround story, they never stopped for a moment to ask how to find the technical leadership to truly transform the place. While they did a great job, you cannot support a stool with only two legs. If IBM had found that third leg, we would still be counting it among the Mag 8 of today.
I spent 9 months at IBM in 1999. At that time, Lou’s legacy had already been solidified. He saved IBM. While not everyone agreed with his decisions, there was a culture of both honesty to customers and innovation that permeated the company. In contrast, look what happened to HP without such great leadership. Once a shining light in Silicon Valley, it turned into a shell of its former self.
Maybe not a great contrast there. HP and IBM entered the "shell of their former selves" stage of development at roughly the same time.
It can be argued that the real HP became Agilent and Keysight.
And IIRC, he had IBM invest in Linux around 1999. That paved the way for eventual acquisition of Red Hat (for good or bad) :)
It paved the way for a lot more than that. At a time open source in general, and Linux in particular, did not have much corporate buy-in, IBM signaled "we back this" and "we're investing in this" in substantial ways that corporate IT executives could hear and act upon. That was a pre-cloud, pre-hyperscaler era when "enterprise IT" was the generally understood "high end" of the market, and IBM ruled that arena. IBM backing Linux and open source paved the way for a large swath of the industry—customers, software vendors, channel/distribution partners, yadda yadda—to do likewise.
agree - and the big industry consortium building `gcc` was already proving itself
I got complicated feelings about that. He did help pave the way for Linux, but he also killed OS/2.
OS/2 never had a chance. I was working at Radio Shack at the time that IBM was trying to sell Aptivas with OS/2. No one wanted it.
It was just weird to people. Microsoft did a big consumer push for Windows 95 and there were lines to buy it and Bill Gates promoted it on the Jay Leno show.
Windows 95 almost killed Apple.
It was never really suited to retail sales channels like Radio Shack. It was more of a corporate thing although it obviously failed there as well.
I only came across it at one site, a big UK bank (Midland Bank). They were using a heavily modified version, it didn’t look anything like the original product.
"Where's the buy button?"