The Info List - Louis V. Gerstner Jr.

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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.[1][2] Gerstner was formerly CEO of RJR Nabisco, and also held senior positions at American Express
American Express
and McKinsey & Company. He is a graduate of Chaminade High School
Chaminade High School
(1959), Dartmouth College
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.[4]


1 American Express 2 IBM 3 Post-IBM 4 Honors 5 References 6 External links

American Express[edit] Gerstner joined American Express
American Express
in 1978 as the executive vice president of its charge card division. A year later he was named president of the Travel Related Services group, which was responsible for American Express
American Express
cards, traveler's cheques, and travel-service offices. At this time, MasterCard
and Visa had begun to compete for the company's market share. Gerstner found new uses and users for the card. In 1980, most department stores did not accept American Express cards — by 1985 retail sales were second only to airline tickets in card purchases. College students, physicians, and women were singled out in various marketing pushes. Corporations were persuaded to adopt the card as a more effective way of tracking business expenses. Gerstner also created exclusive versions appealing to higher-end clients, such as the Gold Card, which carried an annual fee of $65 and came with a $2,000 line of credit, and the Platinum Card, which had a $250 annual fee, a $10,000 check-cashing benefit, and private club memberships for traveling executives. As sales and profits rebounded, Gerstner was promoted to chairman and chief executive officer of AmEx's Travel Related Services in 1982, and president of the parent company in 1985. Although he claimed the position at the age of 43, Gerstner dismissed the speculation that his success was the product of being a workaholic. Gerstner told Leslie Wayne,[5] "I hear that and I can't accept that. A workaholic can't take vacations and I take four weeks a year" (June 30, 1985).[citation needed] As chairman and chief executive officer of the Travel Related Services division, Gerstner spearheaded its successful "membership has its privileges" promotion. Not only was the division continually the most profitable in the company, it led the entire financial services industry. Despite these successes, Gerstner hit a ceiling at American Express, as chief executive James D. Robinson III
James D. Robinson III
was not expected to retire for another 12 years. The analyst Perrin Long at Lipper Analytical told the Los Angeles Times: "Lou is a very personable guy. But more than anything else, he is a leader more than a follower" (March 14, 1989). During Gerstner's 11-year tenure at American Express, membership had increased from 8.6 million to 30.7 million. He left AmEx in 1989 to succeed Ross Johnson as chairman and chief executive officer of RJR Nabisco
RJR Nabisco
following its $25 billion leveraged buyout by Kohlberg Kravis Roberts & Co. IBM[edit] Gerstner was hired as chairman and CEO of IBM
in April 1993. The company's board had forced his predecessor John Akers to resign, looking first within the computer industry for his successor. However Apple's John Sculley, Motorola
chairman George Fisher, and Bill Gates of Microsoft
were not interested (other rumored candidates included Eckhard Pfeiffer of Compaq
and Scott McNealy
Scott McNealy
of Sun Microsystems). IBM then turned to Gerstner, an outsider with a record that suggested success[6][7] whose older brother Richard had run the company's PC division until retiring due to health issues four years earlier.[8] Gerstner was the first IBM
CEO who was hired from outside the company. Upon becoming chief executive of IBM, Gerstner declared: "the last thing IBM
needs right now is a vision", as he instead focused on execution, decisiveness, simplifying the organization for speed, and breaking the gridlock. Many expected heads to roll, yet Gerstner initially changed only the CFO, the HR chief, and three key line executives.[9][10] In his memoir, Who Says Elephants Can't Dance?, he describes his arrival at the company in April 1993, when an active plan was in place to dis-aggregate 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." Then-CEO John Akers decided that the logical and rational solution was to split IBM
into autonomous business units (such as processors, storage, software, services, printers,) that could compete more effectively with competitors that were more focused and agile and had lower cost structures.[11] Gerstner reversed this plan, realizing from his previous experiences at RJR and American Express
American Express
that there remained a vital need for a broad-based information technology integrator.[10] He discovered that the biggest problem that all major companies faced in 1993 was integrating all the separate computing technologies that were emerging at the time, and saw that IBM’s unique competitive advantage was its ability to provide integrated solutions for customers – a company that could represent more than piece parts or components—something he only learned by going beyond just listening to the proponents of different technologies within IBM.[11] His choice to keep the company together was the defining decision of his tenure, as these gave IBM
the capabilities to deliver complete IT solutions to customers. Services could be sold as an add-on to companies that had already bought IBM
computers, while barely profitable pieces of hardware were used to open the door to more profitable deals.[12] While IBM
had been credited with turning the personal computer (PC) into a mainstream product, the company could no longer monopolize its market. A proliferation of cheaper IBM-compatible PC clones that used the same Intel chips and Microsoft
operating system software simply undercut it and eroded market share. Outgoing IBM
chairman and CEO Akers, a company lifer, was excessively immersed in its corporate culture, remaining loyal to traditional ways that masked the real threats.[6][13] As an outsider, Gerstner had no emotional attachment to long-suffering products IBM
had developed to try to regain control of the PC market.[14] Gerstner wrote that in spite of OS/2's technical superiority to the dominant Microsoft
Windows 3.0, his colleagues were "unwilling or unable to accept" that it was a "resounding defeat" as it "was draining tens of millions of dollars, absorbing huge chunks of senior management's time, and making a mockery of our image". By the end of 1994, IBM
ceased new development of OS/2
software. IBM
withdrew from the retail desktop PC market entirely, which had become unprofitable due to price pressures in the early 2000s. Three years after Gerstner's 2002 retirement, IBM
sold the PC division to Lenovo.[15] In his memoir, Gerstner described the turnaround as difficult and often wrenching for an IBM
culture that had become insular and balkanized. After he arrived, over 100,000 employees were laid off from a company that had maintained a lifetime employment practice from its inception.[16] Long allowed by their managers to believe that employment security had little reference to performance, thousands of IBM
employees had grown lax, while the top-performing employees complained bitterly in attitude surveys.[10] In the goal to create one common brand message for all IBM
products and services around the world,[1] under Gerstner's leadership the company consolidated its many advertising agencies down to just Ogilvy & Mather. Layoffs and other tough management measures continued in the first two years of his tenure, but the company was saved, and business success has continued to grow steadily since then.[1][2] From 1993 to Gerstner's retirement in 2002, IBM's market capitalization rose from $29 billion to $168 billion.[17] Despite his success[12] Gerstner also presided over the company's decline, relative to newer rivals, as it lost its once dominant position in the IT industry. Microsoft
grew beyond just PC software in the 1990s, hardware companies Apple and Dell expanded their market share, and entirely new entities such as the Google
search engine emerged and created new computer-based business empires.[18] Gerstner was also the first highly-paid IBM
CEO relative to his home-grown predecessors, earning a personal fortune of hundreds of millions in his role. His philosophy, quoted as "The importance of managers being aligned with shareholders—not through risk-free instruments like stock options, but through the process of putting their own money on the line through direct ownership of the company—became a critical part of the management philosophy I brought to IBM" has been criticized for IBM's management in the late 2000s becoming "fully isolated and immune from the long-term consequences of their decisions".[19][20] Post-IBM[edit] In January 2003, Gerstner assumed the position of chairman of The Carlyle Group, a Washington, DC
Washington, DC
global private equity firm. He retired from its board in October 2008 but remains a senior advisor. In January 2013, Broad Institute
Broad Institute
announced that Gerstner will serve as chairman of its board of directors.[21] Following his success in IBM, Gerstner become a mentor to Howard Stringer, CEO of Sony Corporation
Sony Corporation
tasked with turning around the Japanese corporation.[22] Gerstner established the Gerstner Family Foundation in 1989. Having enjoyed a successful career in business, Gerstner created the foundation to give back to society and is deeply engaged and committed to its work. The program areas – Biomedical Research, Education, and Helping Hands – are of personal importance to Gerstner and his family. Most grants are made in metropolitan New York, Boston, and Palm Beach County, communities where the Gerstner family lives and works.[9] Honors[edit] Gerstner was appointed an honorary Knight Commander of the Order of the British Empire on the recommendation of former United Kingdom Prime Minister, Tony Blair. The award was for his services to UK education and contribution to the Internet. In 2008, Gerstner received the Legend in Leadership Award from the Yale School of Management. References[edit]

^ a b c d DiCarlo, Lisa (November 11, 2002). "How Lou Gerstner Got IBM To Dance". Forbes. Retrieved April 26, 2012.  ^ a b c " IBM
Corp. Turnaround". HBR.org. Retrieved April 26, 2012.  ^ "Forbes.com: Forbes 400 Richest in America 2002". Forbes. Archived from the original on 2011-05-24.  ^ "Former Steering Committee Members". bilderbergmeetings.org. Bilderberg Group. Archived from the original on 2014-02-02. Retrieved 2014-02-08.  ^ Wayne, Leslie, "American Express's Ace in the Hole," New York Times , June 30, 1985 ^ a b Cornwell, Rupert (August 1, 1993). "Profile: The iconoclast at IBM: Lou Gerstner enacted unprecedented cuts at the giant computer firm last week, but he will need to do more than wield the axe to revive it". The Independent. London.  ^ Black, Larry (January 27, 1993). " IBM
fires Akers and slashes dividend". The Independent. London.  ^ Cornwell, Rupert (August 1, 1993). "Profile: The iconoclast at IBM: Lou Gerstner enacted unprecedented cuts at the giant computer firm last week, but he will need to do more than wield the axe to revive it. Rupert Cornwell reports". The Independent. London.  ^ Charan, Ram; Colvin, Geoffrey (June 21, 1999). "Why CEOs Fail It's rarely for lack of smarts or vision. Most unsuccessful CEOs stumble because of one simple, fatal shortcoming". CNN. Archived from the original on January 18, 2014.  ^ a b c [1] ^ a b Denning, Steve. "Why Did IBM
Survive?". Forbes.  ^ a b [2] ^ [3] ^ "Archived copy". Archived from the original on 2012-03-25. Retrieved 2011-06-18.  ^ [4] ^ Berger, Joseph (December 22, 1993). "The Pain of Layoffs for Ex-Senior I.B.M. Workers; In Dutchess County, a Disorienting Time for Employees Less Hardened to Job Loss". The New York Times.  ^ "Louis Gerstner III, Son of Celebrated IBM
Chairman, Dies at 41". Bloomberg.  ^ [5] ^ [6] ^ [7] ^ [8] ^ Gunther, Marc (May 26, 2006). "The Welshman, the Walkman, and the salarymen". CNN. 

Wikiquote has quotations related to: Louis V. Gerstner Jr.

Peter E. Greulich (2014). A View from Beneath the Dancing Elephant: Rediscovering IBM's Corporate Constitution. MBI Concepts Corporation.  ISBN 0-9833734-6-9 Gerstner, Jr., Louis V. (2002). Who Says Elephants Can't Dance? HarperCollins. ISBN 0-00-715448-8. Doug Garr (1999). IBM
Redux: Lou Gerstner & The Business Turnaround of the Decade. Harper Business.  Robert Slater (1999). Saving Big Blue: IBM's Lou Gerstner. McGraw Hill. 

External links[edit]

IBM's biography of Louis V. Gerstner Jr. The Carlyle Group's biography of Gerstner Website for the Gerstner Family Foundation

Business positions

Preceded by John F. Akers CEO of IBM 1993-2002 Succeeded by Samuel J. Palmisano

v t e

American Express

Payment products

Accolades Cards Charge cards Credit cards ExpressPay Traveler's cheques Centurion Card Plum Card

Spun-off companies

Ameriprise Financial First Data
First Data
Corp. Lehman Brothers Merchants Despatch Railway Express Agency Warner-Amex Satellite Entertainment

Notable current and former executives

Henry Wells William Fargo J. C. Fargo Howard L. Clark Sr. Ralph Reed James D. Robinson III Louis V. Gerstner Jr. Sanford I. Weill Harvey Golub Kenneth Chenault Gary Crittenden

Corporate directors

Kenneth Chenault
Kenneth Chenault
(Chairman) Daniel Akerson Charlene Barshefsky Ursula Burns Peter Chernin Vernon Jordan
Vernon Jordan
Jr. Jan Leschly Rick Levin Edward D. Miller Frank Popoff Robert D. Walter Ron Williams


The Adventures of Seinfeld & Superman American Express
American Express
Incentive Services Salad Oil Scandal World Monuments Watch 65 Broadway Falmer Stadium
Falmer Stadium
(The American Express
American Express
Community Stadium) Small Business Saturday Three World Financial Center

v t e



History of IBM Mergers and acquisitions Think (motto) Operating Systems


Cell microprocessor Mainframe Personal Computer IBM
Power Systems Information Management Software Lotus Software Rational Software SPSS ILOG Tivoli Software: Service Automation Manager WebSphere alphaWorks Criminal Reduction Utilising Statistical History Mashup Center PureQuery Redbooks FlashSystem Fortran Connections

Business entities

Center for The Business of Government Cloud computing Global Services International subsidiaries jStart Kenexa Research The Weather Company
The Weather Company
(Weather Underground)



1250 René-Lévesque, Montreal, QC One Atlantic Center, Atlanta, GA

Software Labs

Rome Software Lab Toronto Software Lab


330 North Wabash, Chicago, IL Johannesburg Seattle

Research Labs

Africa Almaden Austin Laboratory Australia Brazil China Laboratory Haifa Laboratory India Laboratory Ireland Thomas J. Watson
Thomas J. Watson
Center, New York Tokyo Zurich Laboratory


Hakozaki Facility Yamato Facility

Cambridge Scientific Center IBM
Hursley Canada Head Office Building IBM
Rochester Somers Office Complex


Academy of Technology Centers for Advanced Studies: CASCON Deep Thunder IBM
Fellow Pulse conference The Great Mind Challenge DeveloperWorks: Develothon Linux Technology Center IBM
Virtual Universe Community Smarter Planet World Community Grid


Automated teller machine Electronic keypunch Hard disk drive Floppy disk DRAM Relational model Selectric typewriter Financial swaps Universal Product Code Magnetic stripe card Sabre airline reservation system Scanning tunneling microscope


Globally Integrated Enterprise Commercial Processing Workload Consumability e-business


Thomas J. Watson
Thomas J. Watson
(1914–1956) Thomas Watson Jr.
Thomas Watson Jr.
(1956–1971) T. Vincent Learson
T. Vincent Learson
(1971–1973) Frank T. Cary (1973–1981) John R. Opel (1981–1985) John Fellows Akers (1985–1993) Louis V. Gerstner Jr.
Louis V. Gerstner Jr.
(1993–2002) Samuel J. Palmisano
Samuel J. Palmisano
(2002–2011) Ginni Rometty
Ginni Rometty

Board of directors

Alain Belda William R. Brody Kenneth Chenault Michael L. Eskew David Farr Shirley Ann Jackson Andrew N. Liveris James McNerney James W. Owens Samuel J. Palmisano Virginia M. Rometty Joan E. Spero Sidney Taurel Lorenzo Zambrano


A Boy and His Atom Common Public License/ IBM
Public License Customer engineer Deep Blue Deep Thought Dynamic infrastructure GUIDE International IBM
and the Holocaust IBM
international chess tournament Lucifer cipher Mathematica IBM
Plex SHARE computing ScicomP Watson Quantum Experience

Authority control

WorldCat Identities VIAF: 118234365 LCCN: n93099549 ISNI: 0000 0000 8331 4742 GND: 12149103X SUDOC: 074256157 BNF: cb144914598 (data) BIBSYS: 309