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Lou Gerstner Speaks at HBS

Six weeks before his retirement as IBM’s CEO, Lou Gerstner returned to the campus where he started his career by earning his MBA degree 37 years ago. And he did so with the satisfaction of someone who has made things happen in the corporate world, and wants to share what he learned with future generations. Addressing a packed Burden Auditorium, Gerstner talked about the RC’s case of the day – IBM’s turnaround – about vision, strategy, leadership and the new life that awaits him in six long weeks.

Gerstner achieved what is considered to be one of the greatest turnaround stories of the 90s. In the past nine years, he turned Big Blue into a global computer and services giant, able to compete with smaller and arguably more agile companies in one of the fastest-changing and most innovative industries in the world. So how did he make this “elephant” dance? The key, according to him, lies in implementation and in having an extraordinary team of people.

It was reassuring to hear a leader like Gerstner admit that, at times, he thought they were not going to make it. Coming from a successful career of eleven years at American Express and four at RJR Nabisco, at first he was utterly lost among a group of technical people from an industry completely different to those he had worked in. Ironically, Gerstner does not believe in outsiders coming in to run a company, but recognized that in IBM’s case a fresh and different perspective was needed. Furthermore, implementing the changes needed at IBM required a degree of emotional detachment that he doubts could have been achieved by someone from within. Nevertheless, he does not view himself as a turnaround leader, because he generally does not make the distinction between leadership during crisis and thriving times. For Gerstner, a good leader will do what is best for the company at any given time.

While claiming to be lost at a whole day strategy meeting, Gerstner realized that the word “client” was not mentioned once, which signaled to him a key issue that was central to IBM’s woes. He was unambiguous about the fact that a company must listen to and be in contact with its clients. That was probably the starting point to his new strategy, which eventually led to a change in culture.

In spite of his famous quote “The last thing IBM needs is a vision,” Gerstner does believe in the need to set a general direction, and understands the importance this has in motivating people during times of change. “The words ‘right now’ were somehow cut off the sentence”, he explained in order to reconcile both views.

Gerstner’s advice for those who are about to go out into the corporate world shows his passion for working in industry as opposed to his early days in consulting. He urged us to “get out and make things happen”. He views the current economic situation as resulting from normal cycles and expressed his confidence in the leaders of corporate America.

He was thrilled about his plans for the future, which include learning Chinese history and archaeology and enjoying his recently born grandson. He will also continue to be involved in philanthropic activities to improve the level of high school education. Private equity company The Carlyle Group announced last week his appointment as chairman, providing strategic advice among other activities. A heavy agenda for “retirement” plans.

The occasional loud hiccups from the sound system did not overshadow an overall excellent event. Gerstner speaks with the security of someone who is conscious of his great strategic thinking but is still thrilled to share his career-long learnings with others, in an entertaining way to keep his audience’s attention. This proud old member of section E was puzzled over the interest that he had sparked among current section I…perhaps having one of his classmates as NI’s TOM professor could explain this?

December 2, 2002
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