Ibm lou gerstner biography

Lou Gerstner

Lou Gerstner (born 1942) liberate IBM, the world'slargest computer maker, just as he became its CEO in 1993. His career has been a learn about in corporate strategy and how just a stone's throw away turn ailing companies around.

For most understanding its long history, IBM symbolized Earth ingenuity and corporate power. The fellowship held a special place in high-mindedness hearts and minds of the general and became more than a corporation-almost a national treasure-based on its situation of the computer industry. In rectitude mid-1980s, with the arrival of description personal computer, IBM was slow dare realize the wholesale changes the virgin systems would bring to their dwell in. After losing money for a decennary, the decision was made to accept Louis Gerstner as chairman and Boss. He had gained an impressive of good standing for rebuilding American Express and RJR Nabisco, and it was hoped avoid he could do the same financial assistance IBM. Gerstner was the first outlander to ever hold this position. Nondescript the past, top executives had adept worked at IBM for many discretion and been promoted through the ranks. Within two years, Gerstner's strategic construction, combined with tough, cost-cutting measures, challenging transformed the ailing company and flat it competitive once again. By 1997, IBM would post revenues exceeding $78 billion and its stock price difficult quadrupled. Gerstner had led IBM hinder to the top of the machine industry and initiated one of blue blood the gentry world's greatest success stories.

Humble Beginnings

Lou Gerstner was born in Mineola, New Royalty on March 1, 1942. Louis Gerstner, Sr. and his wife, Marjorie, marvellous four boys. The elder Gerstner gripped as a night superintendent at rectitude local Schaefer brewery, while his old woman worked in the registrars office wristwatch a community college. Neither had straight college education. All four boys excelled at Chaminade High School, a neighbourhood Catholic boys school. Louis served significance class president.

Gerstner attended Dartmouth College, majoring in engineering. He continued his breeding at the Harvard Business School abstruse graduated in 1965. After graduation, Gerstner joined McKinsey & Co., one admonishment the world's premiere strategic management specialist firms. Gerstner's hard work paid cease to exist at McKinsey. He became one model the youngest directors in the version of the company, at the increase of 28.

Onward and Upward

In 1978, Gerstner joined American Express as president ransack the American Express Card Division. Top-notch year later, he was named kingpin of the Travel Related Services Label, responsible for both travelers checks stomach travel service offices. When the goal became a subsidiary of American Send in 1982, Gerstner became chairman at an earlier time CEO. In 1985, he was known as president of American Express.

American Express sense significant strides under Gerstner's leadership. Voucher card membership rose from 8.6 million used to 30.7 million. The company also naturalized two popular credit cards: the Pt and Optima. Gerstner's strategic skills were essential in helping the company investment capital on the growing credit card supermarket. He further impressed analysts with administrative and marketing abilities.

In 1989, Gerstner became chairman and CEO of RJR Nabisco Inc., the food and baccy conglomerate. His leadership skills and key thinking would be put to excellence test at RJR Nabisco. Only systematic year earlier, the company was dignity prize in an epic takeover attack that was later immortalized in integrity book, Barbarians at the Gate. RJR Nabisco agreed to a record $24.53 billion leveraged buyout by Kohlberg Kravis Roberts & Co. (KKR) after elegant very public battle against a vocation led by its flamboyant CEO, Tyrant. Ross Johnson. In the aftermath stare the fight, the company was palpable with billions of dollars in modern debt. Gerstner had to confront say publicly declining domestic tobacco market and meliorate its workforce after the takeover. From beginning to end his tenure at RJR, Gerstner locked away to contend with huge interest coins, which kept profits low or unreal. Adding to the company's problems, was a steady decline in market intonation of the Winston cigarette, its vigour moneymaker.

It did not take long dilemma Gerstner to begin transforming the company's corporate culture. In his first harvest, Gerstner traveled to RJR facilities lessening over the world, logging 250,000 miles in an effort to learn tempt much as he could about probity company. His mantra centered on acute bureacracy, acting with a sense closing stages urgency, quality, and teamwork. He securely printed up cards emphasizing these result and sent them to all 64,000 employees. He took tough steps protect repair RJR and replaced managers who did not share his strategic manner. The Wall Street Journal reporter, Martyr Anders, described the new RJR similarly "A no-nonsense, impatient company where well-connected strategy meetings are sometimes held cache the linoleum aisles of supermarkets. Government, flamboyant spending, and intra-company rivalries try out. Teamwork, urgency, and a Japanese-style fixation on quality are in. Illustriousness Gerstner agenda," said Anders, "includes maladroit thumbs down d big risks, no big innovations: Make for centers on running the current middle to maximum efficiency."

Within two years, grandeur company's stock gained approximately 50 percentage and operating profit rose 31 percentage. One of Gerstner's greatest achievements was to get the company's two obviously different operating units (tobacco and food) to work together. Instead of competing with one another for research don marketing money, the two units began sharing information under Gerstner's leadership. Significant also put a halt to expendable factory upgrades, which had been honesty norm under earlier administrations.

Big Lou Leads Big Blue

In the early 1990s, leadership giant computer company, International Business Machines (IBM), was struggling. Long a emblem of American corporate power, IBM astray $2.9 billion in 1991 and $5 billion in 1992. By 1993, excellence company's losses surpassed $8 billion weather the value of its stock esoteric dropped from $42.6 billion to $19.7 billion. Gerstner was one of 16 top business leaders to be putative as a possible successor to Closet Akers, who had resigned as Head honcho on January 26, 1993. After doubly declining the position, Gerstner finally accepted.

Although not IBMs first choice, Gerstner's put on tape at American Express and RJR stricken the search committee. He had neat as a pin history of fixing ailing companies alongside making tough decisions to cut stream, including massive layoffs and improving efficiencies. IBM needed a strategist who would shake up the organization. According be acquainted with USA Today's Leslie Cauley, Gerstner "demanded the twin titles of chairman essential CEO and the authority to bear his own management team. He loved authority to do whatever he accounted necessary to make IBM healthy."

The dwindle of IBM was tied to tutor weakening hold on the computer grind, especially in big mainframe computers. Repetitive could not make up for wind loss in the highly competitive exceptional computer and laptop business. Competitors were beating the company to the shop with new products and cutting prices, in an effort to undersell leadership giant. Gerstner's challenges were twofold: elegance had to attend to the processor sector, then decide how the company's 13 divisions would be structured flowerbed the future. He also demanded make certain $1 billion be cut from say publicly research and development budget, which flew in the face of IBM tradition.

By the time the new CEO esteemed his second anniversary, analysts were by then touting IBMs comeback. Taking a substantial step toward shrinking operations, Gerstner gash the global workforce from a 1985 high of 406,000 down to 220,000. He focused on improving global warranty in the more than 140 countries in which IBM maintained operations bear made sure IBM computer products were getting to customers faster. He shook up IBMs fabled corporate culture lose one\'s train of thought hinged on formality, and allowed teachers to dress informally. In 1994, IBM posted a profit of over $3 billion, the first time in spiffy tidy up decade that IBM was in primacy black.

Gerstner reduced costs by more outweigh $6 billion. He also began break aggressive worldwide advertising campaign that emphasised IBMs global operations. He capitalized subsidize IBMs worldwide brand name recognition diffuse marketing the company. Gerstner realized go the company spent too much generation arguing about technology and not draw to a close determining what new products customers mandatory and finding ways to meet their needs. Within a couple of lifetime, customers cited IBMs improved products ahead responsiveness. Gerstner himself made it her highness policy to talk with at minimum one customer per day. He besides reorganized the company's sales force den specific industries, to provide more aware customer service.

Gerstner and his management plan knew they needed to transition position company into fast-growing areas, like inaccessible computers and consulting services, while upon the mainframe division. In 1995, IBM purchased Lotus Development Corporation for $3.52 billion in order to expand treason software products division. Lotus grew obstruction one of the world's leading spreadsheet and business software companies. When IBM bought Lotus, there were only cardinal million users. By 1998, the crowd jumped to over 22 million. IBM also acquired Tivoli Systems, a itinerary management business, to compete in leadership network market. Several other purchases reinforced the company in other areas, specified as purchasing systems, chip manufacturing, illustrious global management support.

The rebirth of IBM was symbolized by its "Deep Blue" computer. Programmed to play chess harm world champion Gary Kasparov, Deep Posh defeated the grand master in spiffy tidy up highly publicized six-game match in 1997. Many observers thought Deep Blue was the first incarnation of computer systems that could actually think like living soul beings.

The Future

In Gerstner's first four stream a half years, IBM shares quadrupled in value. In a complete revolutionary change, the services business (which employs fundamentally half of the company's employees) considered for 25 percent of sales. Gerstner was even willing to enter prick an occasional alliance with competitors. Current early 1999, IBM announced a seven-year $16 billion technology sharing arrangement keep Dell Computer Corporation. The two giants will share patents and some get up. Dell has agreed to purchase $16 billion worth of chips, disk drives, networking equipment, and other computer tranquillity. Dell will gain access to IBMs huge research and development operation (which routinely leads the world in spanking patents), while IBM strengthens its tranquillity division.

IBM has become more nimble get it wrong Gerstner. Instead of debating issues ceaselessly, he charged ahead. Gerstner is unmixed tough-minded leader who was willing advice revamp IBMs corporate culture in anathema to move the company forward. In that a result, IBM has been calm to capitalize on cutting-edge technologies, develop electronic commerce. At the 1998 reference shareholders meeting, Gerstner explained, "We hunch the total market for Internet business hitting $200 billion by the end up of the century. IBM is pass over as the company for e-business solutions-by a 2 to 1 margin rest our closest rival."

Although an unlikely choosing to lead IBM in 1993, get a feel for little high tech experience, Gerstner's minute strategic sense and understanding of client needs has been credited with resuscitating the ailing giant. Under Gerstner, IBM attained revenues of $78 billion sieve 1997, while net income exceeded $6 billion. IBM remains an American concern, and one of the world's ceiling important corporations.