LEADERSHIP AND PROFESSIONAL DEVELOPMENT

Assignment

Leader’s traits

Submitted to

Prof. Amjad Ali

Submitted By

Ali MurtazaL1F12BBAM0445

Section

E

Person:

Louis Vincent Gerstner Jr. (born March 1, 1942 in Mineola, New York) is an American businessman, best known for his tenure as chairman of the board and chief executive officer of IBM from April 1993 until 2002 when he retired as CEO in March and chairman in December. He is largely credited with turning around IBM's fortunes.

He was formerly CEO of RJR Nabisco, and also held senior positions at American Express and McKinsey & Company. He is a graduate of Chaminade High School (1959), Dartmouth College (1963) and holds an MBA from the Harvard Business School. He is a former member of the Steering Committee of the Bilderberg Group.

Introduction and life history:

He took over as CEO in 1993, a year the company posted an $8 billion loss, and IBM shares that had sold for $43 in 1987 could be had for $12. IBM’s “prospects for survival are very bleak,” wrote the authors of the book Computer Wars. The Economist doubted whether “a company of IBM’s size, however organized, can ever react quickly enough to compete.” And Larry Ellison of Oracle commented: “IBM? We don’t even think about those guys anymore. They’re not dead, but they’re irrelevant.” He declined the job when it was first offered, he says, because he felt he didn’t have the technical know-how to handle it. But it turned out that his most important decisions weren’t based on technology but on his past experiences as an IBM customer.   For Gerstner, the first order of business was making the company solvent. Under his guidance, IBM cut billions in expenses (partly through massive layoffs) and raised cash by selling assets. Gerstner says that few people even understood how perilously close the firm was to running out of cash. In 1993, more than 90% of IBM’s profit came from its mainframe sales, which were sinking fast. Conventional wisdom had it that the main frame was simply losing out to personal computers. But Gerstner’s 11 years as head of American Express’s travel-related services division told him otherwise. 

You can’t run a world-wide credit card business on a PC. You can’t run an airline on a PC. Main frames were still needed. IBM’s problem, he learned, was not product but price. He asked why the company hadn’t lowered its prices to meet the competition. “Because we’ll lose substantial revenues and profits when we need them badly,” he was told. Not exactly long-term thinking. “Get me a price reduction plan in two weeks,” he said. Plans to break up IBM into smaller, supposedly more nimble businesses were well underway when Gerstner arrived. That made no sense to him as a former customer, he said. It was true that customers no longer wanted to be locked into a single supplier like IBM for all their information technology needs. But neither did they relish the task of picking and choosing from among thousands of suppliers to build a working system. “At the end of the day, in every industry, there’s an integrator,” Gerstner writes. And he felt that IBM, with its size and reach, was uniquely positioned to fill that role.

 Gerstner calls his decision to keep IBM together “the most important decision I ever made – not just at IBM, but in my entire business career.” Yet he also makes it clear that it was one of the easiest. For Gerstner the toughest challenge he faced in rejuvenating IBM – and the subject of most of his book – was changing the IBM culture.  “Culture isn’t just one aspect of the game,” he writes. “It is the game. What does the culture reward and punish – individual achievement or team play, risk taking or consensus building?” When he arrived, he found a company totally focused on its internal rules and conflicts. “Units competed with each other, hid things from each other. Huge staffs spent countless hours debating and managing transfer pricing terms between IBM units instead of facilitating a seamless transfer of products to customers.” He found he was presiding over a world-wide collection of powerful fiefdoms, each one jealously guarding its own privileges and prerogatives. He discovered that European employees weren’t receiving his e-mails because the head of IBM-Europe was intercepting them. The exec had deemed the messages “inappropriate for his employees.” Gerstner summoned the exec to

Armonk to inform him that those employees he presumed to protect didn’t belong to him, but to IBM. Gerstner found a company that was operating as if IBM still ruled the computer world. And he’d had personal experience with what that could mean to customers. When he was at American Express, Gerstner recalled, an IBM representative withdrew all support for a massive credit card data center because the manager there had installed a single Amdahl computer in a facility that previously had been 100% IBM-equipped. When Gerstner arrived at IBM, he discovered that IBM, not Microsoft, was the biggest software company in the world, but none of the software IBM sold worked with anything other than IBM hardware.   Gerstner got a lot of publicity for abolishing IBM’s famous white shirt and tie dress code, but that was the least of his change-the-culture efforts. He launched IBM on its successful strategy of offering “solutions” to customers that, in violation of historic IBM tradition, might well include hardware and software manufactured by IBM competitors. He committed IBM to open standards so that its products could be used by competitors and vice versa. He decided that providing computing services – “transfer your IT operations to us” – was more important to IBM’s future than providing hardware.   None of this went down easily.  “Changing the attitude and behavior of thousands of people is very, very hard to accomplish,” Gerstner writes. “You can’t simply give a couple of speeches or write a new credo for the company and declare that a new culture has taken hold. You can’t mandate it, can’t engineer it. What you can do is create the conditions for transformation, provide incentives.” Gerstner sent out a steady stream of e-mails to IBM employees to keep them posted about what was going on. (He includes a sampling of those communications in an appendix.) He changed the compensation system so that rewards were based on total corporate performance rather than division or unit performance. He changed the rules for getting promotions.      Gerstner tells of asking one of IBM’s most senior executives to give him a detailed analysis of a money losing business. Three days later, when he asked about it, the exec said: “I’ll check with the team and get back to you.” After two more similar responses, Gerstner told the exec: “Why

don’t you just give me the name of the person doing the work. I’ll speak directly to him.” He explains that senior executives at IBM were expected to preside, to review. They didn’t do the work. Of course, he changed that, too. Gerstner, who stepped down as CEO in March and retires as chairman of the board in January, says he was lucky at IBM because, despite its insular culture, the place was rich with creative talent that only needed to be set loose. He notes that the head of every major business unit today is a long-time IBMer, as is his successor as CEO, Sal Palmisano.  Mixed in with memories of IBM are Gerstner’s opinions on such subjects as investment bankers. He dislikes them. “They make money coming and going. They make huge fees telling AT&T to buy up everything in sight, then make more huge fees helping AT&T sell off everything.” He loses no opportunity to snipe at Microsoft. He relates how Bill Gates “wasn’t happy” when an IBM security guard failed to recognize him and gave him the wrong identity badge. There are critics who say that IBM’s turnaround isn’t as terrific as Gerstner would have you think (even though last year’s profits were $8 billion), because revenue was boosted by a controversial switch in the IBM pension plan and the stock price was inflated by a major buyback effort

Leadership traits:

1. Inspire action: His actions inspire employee to work hard and compete their challenger as they were facing declines. It is clear from case how he motivated employee and develop successful strategies to meet objectives.

2. have integrity: He possess integrity in him as he made clear action to bring back IBM from road of decline to success. Though he don’t have any technical background as stated, he worked hard to unite employees by setting examples.

3. Motivator: He motivate employee to work hard. He set compensation with their performance in order to make employee work more efficiently as company at that time needed in a lot

4. Confident:

He don’t have technical background in spite of that he made many decision that take IBM to success path like downsizing, bringing all units together, change of culture are few of bold steps taken by him which shows he was quite confident about making decisions.

5. Communicative: He joined all parts of IBM and communicate with all other units of IBM outside America. He use to mail every employee about all the changes and decision taken in IBM headquarters.

6. Passion: He surely have passion of taking IBM back to success route. His decision totally shows his passionate nature about his job.

7. Innovator:

When he joined IBM he immediately changes goals of IBM. He designed new strategies for company. He advised to redesign product or launch new product. For cost cutting and early revenue generation he order to sell extra things.

8. Patience:

When he designed new road map for the company he has to face critics. He faced all critics with patience and humbleness. Later on his decision were proved to b best for the company.

9. trustable:

When he made new goals and implement them on organization, at that time he has to face lot of critics. But he remains stuck to its goals and guide organization to success path. This show that he was loyal to the company and can be trusted in crisis time.

10. Community builder:

He made company as a community of technology where jobs were assigned according to perfection. Before him all departments were competing with each other but after him IBM was like a same unit.

11. Visionary:

When he joined IBM he made new strategies to achieve goals. He made such goals that can lead company to profits. He introduces new things in market that gave rise to IBM. Through this we can understand his visionary power for leadership.

12. Drive to achieve:

His policies and decisions led people to go against him. But he remains with his decisions. In then end his decisions led company to success. He takes company to profit stages again. This shows his power that lead to achievements.

13. Personel chrisma:

When he joined IBM he has to face criticism from employees because of his policies. but still his subordinates follow him in his vision which ultimately lead company to success. He has something that attract people toward him and make them follow him regardless of their likings and disliking. This shows he has charisma in him that was surely his personnel charisma.

14. Tenacity:

He has to face criticism because of his layoff and all other strategies his remain stick to his goals and policies that shows his tenacity ability.

15. Autocratic:

His policies when he joined IBM shows that he was autocratic leader as he do what he thought of doing no matter what ever he has to face.