Revisiting Gerstner’s 46 business thoughts that brought IBM back to life

Gerstner's insights and business ideas in business management.

There are very few successful cases of big companies turning the trend of decline, so Gerstner, known as the legendary CEO, led the blue giant IBM out of the quagmire and let the "elephant dance" the case is very precious. This article combs Gerstner's management thoughts and business insights in the book "Who Says Elephants Can't Dance".

Counting the development history of major global companies, it is easy to see a phenomenon: it is often difficult for giants to reverse the situation after falling into a decline. Sony, Nokia, Kodak, Panasonic, Sharp, General Motors... these once brilliant giants are all typical cases in this regard.

How to explain this phenomenon? Zhang Ruimin, Chairman of the Board of Directors of Haier Group, once made an incisive comment: “There are no successful companies, only companies of the times.” This is true. The momentary glory of many giants is the most important thing is to step on the wave of the times. However, there will be ebb and flow. Once the giants fail to keep up with the changes of the times, they will soon fall behind and decline. Therefore, many companies have been "great", but companies that can be great for a long time are very rare in business history. Large companies that have fallen into decline need to reverse their decline. If there is no fundamental and thorough change, it is tantamount to reversing the development process of the times. This is also destined to eventually fail.

There are very few successful cases of big companies turning the trend of decline, so Gerstner, known as the legendary CEO, led the blue giant IBM out of the quagmire and let the "elephant dance" the case is very precious.

Established in 1911, IBM has been regarded as synonymous with computers for a long time, a symbol of American technological strength and a bastion of national competitiveness. In the mid-1980s, IBM's general-purpose large and medium-sized machines accounted for 70% of the world market. The gross profit margin of mainframes was as high as 85%, and the gross profit margin of medium and small machines was as high as 50%. However, the trend of small computers in the late 1980s made IBM fall behind. After 1990, IBM began to lose money continuously. In 1993, the loss was as high as 8 billion U.S. dollars, and the accumulated loss for three consecutive years was 16.8 billion U.S. dollars.

At that time, almost everyone was not optimistic about IBM's future. The media claimed that it had "one foot into the grave", and Bill Gates even asserted that "IBM has only one way out of bankruptcy." In this situation, the IBM board of directors is eager to find a CEO who can lead the company to revitalize its glory. This position was dubbed by the media at the time as "one of the most difficult jobs in the United States." Almost all top CEOs in the United States were reluctant to accept this position. For example, Jack Welch, then CEO of General Electric, refused to save IBM.

In the end, the IBM board of directors chose Gerstner and told him: All hopes rest on you. If you can't save it, then it's over.

As a result, Gerstner lived up to his trust. In the second year after he took over, IBM achieved a profit of 3 billion US dollars, and it has been harvested year after year. By 2001, IBM's total revenue reached 88.4 billion U.S. dollars and net profit was 7.7 billion U.S. dollars, creating the climax of the "Gerstner myth."

After Gerstner retired, he wrote his glorious years at IBM into a book-"Who said elephants can't dance". Based on this book, this article sorts out Gerstner's insights and business ideas in business operations.

Management philosophy

1. I implement management by principles rather than procedures.

2. The market determines all our actions.

3. I am a person who deeply believes in quality, strong competitive strategy and planning, teamwork, performance pay system and business ethics responsibility.

4. I long for those who can solve problems and help colleagues solve problems; I will expel those who are politicians.

5. I will devote myself to the formulation of the strategy. The rest of the task of executing the strategy is your business. Just let me informally know the relevant information. Don't hide bad news-I hate accidents; don't try to lie in front of me; solve the problem outside the production line, don't bring the problem to the production line.

6. Move fast. Don't be afraid of making mistakes, because even making mistakes is because we move too fast rather than too slow.

7. I rarely have the concept of hierarchy. No matter who it is, and regardless of his position, as long as it helps to solve the problem, everyone should discuss it together. The committee meetings and various meetings should be reduced to a minimum. Abolish the committee's decision-making system. Let us communicate more frankly and straightforwardly.

8. I am not proficient in technology, I need to learn, but don't expect me to be a technical expert. The person in charge of the branch must be able to explain various business terms for me.

Principles of IBM management

1. The market is the driving force behind all our actions.

IBM must focus on serving customers and beating its competitors in the process. The success of a company first comes from the successful customer service area, not anywhere else.

2. We are a technology company, a technology company pursuing high quality.

Technology will always be our greatest advantage. The most important thing we need to do is to work hard to transform knowledge into products to meet all the needs of customers.

3. Our most important success criteria are customer satisfaction and the realization of shareholder value.

Wall Street analysts have asked me this question, that is, what are the criteria for measuring the success of IBM in the future operating profit and operating income growth? Or something else? And the best measure of the company’s success I know is to provide shareholder value. Moreover, if a company cannot satisfy its customers, it will not be a successful company in finance or any other aspect.

4. We are an innovative company. We must minimize bureaucracy and always pay attention to productivity.

Most entrepreneurial companies will embrace innovation, dare to take risks, and pursue growth by expanding old businesses and opening up new businesses.

5. Never ignore our strategic long-term planning.

If you want to succeed in your career, you must have a sense of direction and responsibility. Because the sense of direction and mission allows you to know what is best for you and what is most important when you do anything.

6. Our thoughts and actions must have a sense of urgency.

I like to call this "constructive impatience." We are all good at investigating, researching, meeting and discussing. However, in this industry in this era, speed is often more useful than insight. It is not that plans or strategies should not be developed, but that these rules and strategies will delay our strategy of taking immediate action now.

7. Outstanding and dedicated employees will be omnipotent, especially when they work together as a team.

The best way to end bureaucracy and fighting in the nest is to let everyone know: what we cherish and what we will reward is the spirit of unity and cooperation, especially the teamwork spirit that focuses on providing value to customers.

8. We will pay attention to the needs of all employees and the needs of all communities where our business can be carried out.

Corporate transformation

1. Transforming the intention of reform into the practice of reform is another matter (a completely different thing).

2. Reengineering is difficult, boring and painful. At that time, one of my senior managers said: Reengineering is like burning a fire in your head and then using a big stick to extinguish the fire.

3. I have many experiences in reversing the decline of the company. The first thing I learned is: if you have to do something very bad, do it as soon as possible and make sure that everyone knows what you are doing and why. do. When you are waiting for the time to be ripe to launch a big move, whether it is delaying the problem, hiding the problem, or partially solving the problem sporadically, there will always be negative effects. I believe that the best way is to quickly put the problem behind and move on.

4. The indispensable prerequisite for any company to successfully achieve reform is to publicly acknowledge the crisis it faces. If employees do not believe that there is a crisis in the company, they will not make sacrifices to implement reforms. Because no one likes reform. Whether you are a senior manager or a doorman, reform means uncertainty and lurking pain.

5. If the reward system does not match your new strategy, then you will not be able to achieve organizational transformation.

6. Before substantive reforms become systemic and continuous reforms, the CEO’s leadership ability is the ability to control execution, that is, CEOs must truly participate in the reform process, rather than urging and entrusting others to do it. , And then was shocked when the reform plan could not be implemented.

Corporate culture

1. Culture is the DNA of an enterprise.

2. During the 10 years of working at IBM, I discovered that company culture is not just an aspect of the game it is the game itself! Fundamentally speaking, an organization is nothing but a collection of values ​​created by its employees. Vision, strategy, marketing, and financial management—in fact, all management systems have both good and bad sides. However, without these factors (the DNA of these organizations), then all organizations-no matter business, government, or any other field of human activities, would not be able to achieve long-term success!

3. A successful organization almost always creates a cultural atmosphere that reinforces the factors that make the organization stronger. When the environment changes, the organizational culture will hardly change. In fact, at this time, the organizational culture will become a huge obstacle to organizational transformation and changes in their adaptability.

4. To institutionalize these beliefs (corporate culture) is not just a matter of putting up slogans in all offices (although these slogans are indeed everywhere). The beliefs should also be reflected in the company's salary, welfare system, Management system, employee education and training plan, marketing, and customer support.

5. All you can do is create conditions for the transformation of the company. You can encourage, you can point out, and clarify the realities and goals of the trial production. But in the days to come, you must learn to trust. In fact, in the ultimate sense, management does not allow managers to change the culture but invites employees to change the culture themselves.

6. Fundamentally, the deepest goal of my cultural reform is to make IBM employees believe in themselves again—believe that they have the ability to make their own decisions and determine their own destiny; moreover, believe that they already know what they should do what. This is to free them from their frustration, wake them up and let them know who they are-don't forget, you are IBM! Moreover, let them be able to think and act in unity like a person who is thirsty for knowledge and learning and has an active spirit. In other words, while I try to make employees listen to me, understand where we need to go, and follow me in that direction, I must also teach them not to be blind followers. This is not a logical and linear challenge. It is a counter-intuitive, social-psychological suggestion-centered and perceptual thing, rather than a rational thing.

Execution

1. People will only do what you check, not what you expect. Execution is about transforming strategy into an action plan and measuring its results. This is a specific and complex task. It also requires a deep understanding of where the company is currently and how far the company is from its ideal location. Good execution includes setting a measurable goal and holding people accountable for this goal.

2. A responsibility system must be implemented during the execution of the strategy, and when the responsibility is not fulfilled, the policy must be changed quickly. Managers must also report their work performance as required and explain the reasons for their successes and failures. The most important thing is not to believe in weather forecast expectations-you can only believe in the truth of taking precautions.

3. I think effective strategy execution in a company is based on the following three foundations, namely, world-class business processes, strategic transparency, and high-performance corporate culture.

4. Super strategic execution is not only to do the right thing but also to do the right thing faster, more often and more effectively than the competition.

5. Execution is the real key factor that contributes to the success of a strategy. Completing the task, completing the task correctly, and completing the task better than the next person is more important than dreaming of a new vision.

6. High-level strategy execution is not just as simple as persuading and conveying information. In a great company, strategy execution will flow naturally and instinctively, rather than being guided by procedures or rules.

7. If you want to outperform your competitors in terms of strategy execution, then you must clearly communicate the relevant company strategy and values ​​to all your employees, and strengthen these values ​​in every behavior of the company. Allow employees to have the corresponding freedom of action, trust them, and believe that they will implement the company's strategy according to these values.

Business ideas

1. Powerful, dedicated and effective are the company's consistent governance methods that meet the most stringent standards.

2. A successful company must have a strong marketing network that is customer-oriented or market-oriented.

3. I must make everyone think about it. I need to convince the employees that they are working for a unified company, the company has only one team, there is no independent geographical division and separate governance.

4. Once a customer buys a product from a company, the company will train its employees to be familiar with the product and how to provide supportive services to customers, so that it is difficult for its competitors to take away their customers.

5. All high-performance companies are led and managed through principles rather than procedures. Organizational decision-making should be made by leaders who understand the main driving force of business success. At the same time, these leaders must be able to apply these principles to practice in a smart, flexible, and local context based on specific circumstances.

6. It is common for a company to lose its core competitiveness. Competitors are pleased with this and have prospered since then, but this company has fallen into a bottomless abyss.

7. Historical experience shows that truly great and successful companies can stick to their basic business and carry out difficult self-renewal at certain times. These successful companies will never rush into a new industry trend that they don't know the depth of.

8. Bottom line: A successful and focused company must be a company that has a deep understanding and thorough analysis of its customers' needs, competitive environment, and economic status. And this comprehensive analysis can also be transformed into the basis of specific strategies for daily activities.

9. The best company leaders will bring a high-performance company culture to their companies: they will set goals and requirements for their organizations, formulate measurement methods, and give their employees corresponding responsibilities; they can initiate reforms, and can continuously Promote your own organization take flexible measures and take action faster than your competitors.

10. Long-term planning can bring a sense of confidence and comfort, but this sense of confidence and comfort is very dangerous. Long-term plans are the most provocative, and they can also be used in an organization to excite employees and take on work for long-term plans. But in themselves and essence, they have not played a role in guiding the way, that is, they have not pointed out how to turn the passionate vision into reality for the organization.

11. The most important additional function of a company's management team is to ensure that the company's development strategies are formulated by the company's operating units based on pragmatic analysis and to ensure that these strategies are both far-sighted and operational.