Who Says Elephants Can't Dance? by Louis V. Gerstner Jr

Author:Louis V. Gerstner Jr. [Gerstner, Louis V. Jr.]
Language: eng
Format: epub
Published: 0101-01-01T00:00:00+00:00

A Future After the War

With yesterday’s war behind us, it was easier to start planning for what lay ahead. As I took inventory of what we had available to us inside IBM, it was a mixed picture: a software business that was big but fragmented and unmanaged; a software portfolio that was closed in a world destined to be open; software built for mainframes, rather than for smaller and more widely dispersed systems; and a business that, aside from operating systems tied to the hardware, was losing huge sums of money.

We needed far more focus. Toward the end of 1994, I decided to pull together all of IBM’s software assets under a single executive and ask him to build a distinct, stand-alone software business. John Thompson had attracted my attention very early as one of the most thoughtful and capable managers at IBM. He demonstrated a deep understanding of the technology, had a bright and thoughtful intellect, and, perhaps most important for me, he was able to translate arcane technology into business terms.

At the time, John was running our Server Group—the heart of the company. We were managing a critical technology transition, and he’d been in his position for only about fourteen months, so he was shocked when I asked him to take up the task of creating a new business from scratch. But as he did many other times during my tenure at IBM, he accepted the challenge and brought his many talents to bear quickly and effectively.

It is really difficult to exaggerate the enormity of the problem that John faced as 1995 began. IBM had 4,000 software products, all of which were branded with separate names (most of which were unmemorable and un-“rememberable”). They were made in more than thirty different laboratories around the world. There was no management system, no model for how a software company should run, and no skills in selling software as a separate product.

Over the next two years John and his colleagues recruited and trained 5,000 software sales specialists; they became the backbone of a new sales function in IBM that eventually reached 10,000 by the year 2000.

John reduced the thirty labs to eight and consolidated sixty brands to six. He built a management team, developed strategies, and created marketing programs. His team redirected hundreds of millions of dollars of research expenditures and, in particular, shifted substantial sums of money into the new marketing and sales functions. IBM salespeople loved to sell hardware, and why not? That was how they made their quotas and their money. They had little appetite or skill to go up against Oracle or Computer Associates salespeople who were trained exclusively to sell software.

What remained was to find a sense of direction, a focus, a leadership position that would send a message that IBM was serious about software. John thought he had the answer.

To set up the software bet we were about to make, think about software doing its work on three levels:

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