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Louis V. Gerstner, Jr., KBE (born March 1, 1942) was chairman of the board of IBM from April 1993 until his retirement in December 2002. He served as chief executive officer of IBM from 1993 until March 2002. In January 2003 he assumed the position of chairman of The Carlyle Group, a global private equity firm located in Washington, DC. 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 and Dartmouth College and holds an MBA from Harvard Business School.
Gerstner at IBM Gerstner is credited by many with having saved IBM from going out of business. As described in his memoir, Who Says Elephants Can't Dance?, when he arrived in April 1993, an active plan was in place to disaggregate the company; the prevailing wisdom of the time held that IBM's core mainframe business was headed for obsolescence. The company's own management was in the process of allowing its various divisions to rebrand and manage themselves — the so-called "Baby Blues." Gerstner reversed this plan, realizing from his experiences at RJR and American Express that there remained a vital marketplace need for a broad-based information technology integrator. His decision to keep the company together was the defining decision of his tenure, and it — along with the subsequent refocusing of IBM on the IT services business (which grew to nearly 50% of the company's revenues), the embrace of the Internet as a business phenomenon, and a broad effort to revive the company's culture — is widely seen as having resulted in one of the most remarkable turnarounds in business history. It has to be admitted that Gerstner has many critics. The Economist is one such publication. Fortune magazine also ran a hostile article in the mid-1990s, and suffered immediately when Gerstner gave out instructions that no IBM division was to advertise in Fortune. Even the CEO of IBM UK, Barrie Morgans, commented in an employee forum in Basingstoke in 1993 on Gerstner's style that "anyone can slash and burn". Gerstner was far more successful on reducing IBM's cost structure than on boosting its revenues. It took analysts some time to see what Gerstner and CFO Jerry Yorke were doing -- for example, selling and leasing back many IBM properties, such as La Hulpe in Belgium. Payments to any IBM pension plan in surplus were halted in the mid-1990s. Subsequently, when these pension schemes went into deficit, IBM changed their terms and conditions or, worse still, closed them down. A much-admired company that had previously had a core belief of 'Respect for the Individual' seemed to be at war with many of its employees. Today, more than half of IBM's employees have less than five years' service. In his biography, Gerstner described the turnaround as difficult and often wrenching for an IBM culture that had become insular and Balkanized. Before he arrived, over 100,000 employees had lost their jobs in a company that had maintained a lifetime employment policy from its inception. Layoffs and other tough management measures continued in the first two years of Gerstner's tenure, but the company was saved, and business success has continued to grow steadily since then. Gerstner's knighthood, recommended by UK Prime Minister Blair, was for his services to UK education and his contribution to the Internet. The citation astonished many. No-one, least of all the UK government, has ever provided any details on these contributions. | ||||||||
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