Throughout the summer of 1993, that's exactly what Gerstner did, meeting with each operating unit and going detail by detail through each department's business plan. "He's a tenacious person," recalls York. "It was clear in those meetings from the depth to which he probed."
The result was a plan to reduce $7 billion in expenses. Tens of thousands of IBMers left or lost their jobs, and Gerstner quickly built a reputation for tough-handed authority and insistence on managerial performance. Those who know Gerstner describe him as brusque, arrogant and egotistical, yet thin-skinned - pretty much the perfect leader to firm up a huge corporation that had gone soft in the middle.
With the new stability as a foundation, Gerstner began to build. His biggest decision was to kill a plan to break the company into pieces. IBM's critical asset, he argued, was its ability to be an integrated supplier - a supermarket of high-tech goods. While the company's rebound was led by the revival of its mainframe line, Gerstner recognized early that selling services would be key. Customers, he noticed, were starting to leave the selection of hardware to the judgment of their consultants.
Another move was to approve the hiring of a separate sales force to revive the lagging software division. Gerstner put more than $1 billion behind the marketing and development of the high-potential DB2 database, Websphere application server and Tivoli systems-management software, products that have become leaders in their respective markets.
He also latched onto an e-business sales mantra well before industry visionaries such as Bill Gates, doing away with the old-school white-shirt, blue-suit dress code and helping to reestablish the company's reputation as a leader in new technologies.
"He's been kind of a godfather to the growth business," says John Kelly III, senior VP. "Lou made some big bets. They clearly are paying off."
The result of gerstner's and his team's efforts is that, after years of trailing the high-tech pack, Big Blue is again a technology leader. Its products qualify as state-of-the-art - or at least close to it. New mainframes came to market in the fourth quarter of 2000 and sparked the best quarterly performance by the mainframe division since 1998. Advanced copper and silicon germanium chips are attracting eager customers in the computer and communications industries. Its middleware products - communications layers that sit between operating systems and applications software such as accounting ledgers - are challenging the leadership of BEA Systems and Oracle.
