Lessons from who says Elephant's can't dance.

I read this epic IBM turnaround story for the first time when I joined IBM in 2004 as it is available in every IBM library. It is written by the IBM CEO Louis Gerstner who had turned around the troubled IBM which had a near death experience in the early 1990's to back as the market leader by later part of that decade.As Louis Gerstner himself puts it IBM turnaround was a unique story which may not be applicable to other companies. But recently while re-reading this book during this weekend, I found many universal key takeaway points worth sharing. These are the following lessons which is universal to any business and in particular to knowledge industry

Doing your daily job at its best is a way of patriotism that show your commitment to Nation and Society.

During late 1980's and early 1990's Information Technology industry was on a cusp of change triggered by the advent of Personal Computing and Distributed computing. But the real threat to IBM's mainframe model started with with the rise of UNIX, an “open” operating environment championed by companies like Sun and HP. UNIX offered customers the first viable, economically attractive alternative to IBM’s mainframe products and pricing. In the open, plug-and-play world of UNIX, many companies could make parts of an overall solution—shattering IBM’s hold on architectural control. Almost overnight IBM was under attack by an army of the so-called “pure play” companies like Sun, HP, SGI, Digital, and all the makers of associated software and peripheral products. All these created a sobering state at the IBM in early 1990's. IBM’s sales and profits were declining at an alarming rate. More important, its cash position was getting scary.Mainframe revenues had dropped to an alarming 46% decline.And IBM had to lay off around 125000 of its work force.It was a make or break situation for IBM. So a CEO search committee was formed to find a person who could save or graciously dissolve it into different units. Jim Burke of Johnson & Johnson, was heading the CEO search committee. This committee then embarked on a rather public sweep of the top CEOs in America. Names like Jack Welch of General Electric,Larry Bossidy of Allied Signal, George Fisher of Motorola, and even Bill Gates of Microsoft surfaced in the list.

When Jim Burke approached Louis Gerstner, he was very reluctant to take up the position believing that as a non technical person, he was unqualified. Jim Burke cajoled him up to the point that it was his responsibility and national duty to take up the job since Louis Gerstner owe it America to take up the job was his argument.Jim Bruke said that IBM was such a national treasure that it was Louis obligation to fix it.This is one of the most extraordinary and most striking thing that come to my mind when I think about this book.This emphasize the point of constructive patriotism which can be manifested in doing our daily job at it best thereby participating in the economic production and thus contributing to the GDP of the nation.An innovative technology product or solution can make a difference in the life of millions of people. For example, IBM pioneered the way we process data, AI systems that can do better diagnosis. IBM developed the first ever computer machine the revolutionary IBM System/360.Some of the other IBM inventions that made a difference in human life includes ATM, floppy disk, hard disk drive, electronic keypunch, magnetic stripe card, virtual machine, scanning tunneling microscope, relational database, airline reservation system, dynamic random access memory (DRAM). We often miss this aspect of patriotism and often focus on the destructive jingoism.

Attitude, Common Sense and Passion is all that is required to do a job exceptionally well.

Louis Gerstner didn’t had any prior knowledge of technology business. He started his career as a consultant with McKinsey & Company. Then he moved to American Express in its cards business and travelers cheque. RJR Nabisco, which was his immediately preceding parent company was into food processing and tobacco business. But with mere attitude, commonsense and experience he was able to do a seemingly impossible job which many other titans of the IT industry refused to take up.

From the beginning of his IBM career itself with the advantage of the vantage point of the CEO,Louis Gerstner could grab hold of the big blue by setting his management philosophy and practice. Which in his own words are the following

• I manage by principle, not procedure.
• The marketplace dictates everything we should do.
• I’m a big believer in quality, strong competitive strategies and plans, teamwork, payoff for performance, and ethical responsibility.
• I look for people who work to solve problems and help colleagues.I sack politicians.
• I am heavily involved in strategy; the rest is yours to implement.Just keep me informed in an informal way. Don’t hide bad information— I hate surprises. Don’t try to blow things by me.
• Solve problems laterally; don’t keep bringing them up the line.
• Move fast. If we make mistakes, let them be because we are too fast rather than too slow.
• Hierarchy means very little to me. Let’s put together in meetings the people who can help solve a problem, regardless of position.
• Reduce committees and meetings to a minimum. No committee decision making. Let’s have lots of candid, straightforward communications.
• I don’t completely understand the technology. I’ll need to learn it, but don’t expect me to master it. The unit leaders must be the translators into business terms for me.

Study the problem before solving it.

Gerstner took the first few weeks or so simply learning about what IBM did. I have seen in many places where people insist on solutions even before problem is not studied well, which is like placing the cart before horse. IBM stock stood at $13 when Gerster took office.The backbone of IBM business the sales of mainframes system/360 was sinking like a stone.IBM was loosing market share to Amdahl and Hitachi.Customer satisfaction index was falling apart. IBM was facing the market with inside out strategy instead of market driven.Rigor mortis had set in among the IBMers. Once he gauged these problems Gerstner laid out his expectations

• Redefine IBM and its priorties starting with the customer.
• Give laboratories free rein and deliver open, distributed,user-based solutions.
• Recommit to quality, be easier to work with, and reestablish a leadership position (but not the old dominance) in the industry.
• Everything at IBM would begin with listening to our customers and delivering the performance they expected.

Gerstner announced operation “Bear Hug” as the execution strategy.Bear Hug became a first step in IBM’s cultural change. It was an important way for him to emphasize that IBM were going to build a company from the outside in and that the customer was going to drive everything IBM did in the company. It created quite a stir, but when people realized that he really did read every one of the reports of the client meetings he had asked to conduct by his managers, there was quick improvement in action and responsiveness.

Some of the decisions Gerstner made early on after understanding the Big Blue's problems are

• To Keep the company together.
• Change IBM's fundamental economic model.
• Re engineer how IBM did business.
• Sell under productive assets in order to raise cash.

Culture is everything.

Gerstner had devoted one section with three chapters to write about the importance of a company's culture in winning the game.Gerstner have spent more than twenty-five years as a senior executive of three different corporations—and he peeked into many more as a consultant in the years before that. Until he came to IBM, he felt that culture was just one among several important elements in any organization’s makeup and success—along with vision, strategy, marketing, financials, and the like.But once he joined IBM, Gerstner realized that culture is just not one of the elements of a company, but culture is one of the most integral part of the game. In the end, an organization is nothing more than the collective capacity of its people to create value. Vision, strategy, marketing, financial management—any management system, in fact—can set you on the right path and can carry you for a while. But no enterprise—whether in business, government, education,health care, or any area of human endeavor—will succeed over the long haul if those elements aren’t part of its DNA I have seen some companies working in great business domains, say blue ocean products or services, yet become stagnant after few years because of the terrible company culture. An ideal company culture should nurture and retain talent, encourage innovation and adapt change as fast as possible

Its is the culture of the company that translates how people actually go about their work, how they interact with one another, what motivates them.Successful institutions almost always develop strong cultures that reinforce those elements that make the institution great.Of course, enlightened companies and leaders know that an institution must outlive any one person or any one group of leaders.Thus they nurture a culture that foster principles like reward for high performance, team play , superior customer service and respect for individual.

Gerstner set a stage for a culture that inspires people to focus on customers and the marketplace, not on internal status. A company fighting for survival doesn’t need a published caste system

Personal Leadership – be a change agent with agility driven by passion

Personal leadership is the most important element of organizational transormation.At the end of the day great institutions are the length and shadow of individuals. Great institutions are not managed; they are led.They are not administered; they are driven to ever-increasing levels of accomplishment by individuals who are passionate about winning.The best leaders create high-performance cultures. They set demanding goals, measure results, and hold people accountable. They are change agents, constantly driving their institutions to adapt and advance faster than their competitors do.

Personal leadership is about communication, openness, and a willingness to speak often and honestly, and with respect for the intelligence of the reader or listener. Leaders don’t hide behind corporate double-speak. They don’t leave to others the delivery of bad news. They treat every employee as someone who deserves to understand what’s going on in the enterprise.

Most of all, personal leadership is about passion. The great CEOs we know in successful American corporations —among them Sam Walton of Wal-Mart, Jack Welch of General Electric, Juergen Schrempp of DaimlerChrysler, and Andy Grove of Intel—have the common thread among them is that they were or are all passionate about winning. They want to win every day, every hour. They urge their colleagues to win. They loathe losing. And they demand corrections when they don’t win. It’s not a cold, distant, intellectual exercise. It’s personal. They care a lot about what they do, what they represent,and how they compete

Reading this book is really stimulating , even though this book is more useful as a strategy guide for those who are in top leadership roles. I recomend this as a must read for everyone who are in Information Technology industry. It gives us the glimples of IBM history, culture and first hand experience of a gigantic turn around story.