Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change by Jr. Louis V. Gerstner
Authors: Jr. Louis V. Gerstner
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multiple units.
It wasn’t long before the company’s culture decided that the CEC
had fully replaced the MC as the ultimate honorific the company could bestow. I have never viewed getting a seat on a committee as something a successful person should truly value. However, sometimes you have to work within the existing system. If all the talented IBMers wanted to work harder in order to get a seat on the CEC, under the circumstances that was okay with me.
At the same time, I created a Worldwide Management Council WHO SAYS ELEPHANTS CAN’T DANCE? / 75
(WMC) to encourage communication among our businesses. The WMC had thirty-five members and was to meet four or five times a year in two-day sessions to discuss operating unit results and company-wide initiatives. In my mind, however, its primary purpose was to get the executive team working together as a group with common goals—and not to act as some United Nations of sovereign countries. These meetings represented a chance for our top executives to grab one another and say “I’ve got a great idea, but I need your help.”
Building a New Board
One of the most revolutionary, but least noticed, changes in the early days involved the Board of Directors. When I arrived there were eighteen directors, including four insiders: John Akers, Jack Kuehler, John Opel (IBM’s CEO before Akers), and Paul Rizzo. I thought this was an unwieldy size with too many insiders, particularly given the dominance of current and former employees on the powerful Executive Committee.
Clearly the CEO search, the media’s public flogging of the company, and the sharp, extended criticism at the annual meeting had traumatized many members of the board. I quietly approached a few of them, especially Jim Burke and Tom Murphy, for a series of discussions on corporate governance.
With my encouragement, the Directors’ Committee decided it would announce that the board should be reduced in size to make it more manageable. At the same time, we would add new people to bring in some different perspectives. After the announcement, it didn’t take anyone more than a minute to realize that meant a significant amount of retirements would be in order.
I think most of the directors had mixed feelings about sticking around at that point, and some welcomed the opportunity for a graceful exit. Burke and Murphy masterfully orchestrated a proposal that
76 / LOUIS V. GERSTNER, JR.
every director offer his or her resignation and that the Directors’
Committee would sort out the right structure for the ongoing board.
As a result, five directors left in 1993, then four more in 1994.
Murphy and Burke themselves retired, one year earlier than required by IBM’s retirement rules. Their move was a sign to the others that it was time to make room for the newcomers. A few were willing to go, but others found the process distasteful and personally difficult.
Nevertheless, we got it all done. To the amazement of everyone, there was never so much as a peep in the media.
By the end of 1994 we had a twelve-member board. I was the only insider. Only eight remained from the eighteen who had made up the board just a year before.
Starting in 1993 we began introducing newcomers, beginning with Chuck Knight, the chairman and CEO of Emerson Electric Co. I had known Chuck as a fellow board member at Caterpillar. He was tough and demanding of himself, the CEO, and his fellow board members, and I admired that. He was highly respected as one of the premier CEOs in America, and his selection was the important first step in the rebuilding of the board.
In 1994 we added Chuck Vest, president of MIT and Alex Trotman, chairman and CEO of Ford Motor Company. Cathie Black, president and CEO of the Newspaper Association of America, and Lou Noto, chairman and CEO of Mobil Corporation, joined in 1995. They were followed by Juergen Dormann, chairman of Hoechst AG, in 1996.
Minoru Makihara, president of Mitsubishi Corporation and one of
It wasn’t long before the company’s culture decided that the CEC
had fully replaced the MC as the ultimate honorific the company could bestow. I have never viewed getting a seat on a committee as something a successful person should truly value. However, sometimes you have to work within the existing system. If all the talented IBMers wanted to work harder in order to get a seat on the CEC, under the circumstances that was okay with me.
At the same time, I created a Worldwide Management Council WHO SAYS ELEPHANTS CAN’T DANCE? / 75
(WMC) to encourage communication among our businesses. The WMC had thirty-five members and was to meet four or five times a year in two-day sessions to discuss operating unit results and company-wide initiatives. In my mind, however, its primary purpose was to get the executive team working together as a group with common goals—and not to act as some United Nations of sovereign countries. These meetings represented a chance for our top executives to grab one another and say “I’ve got a great idea, but I need your help.”
Building a New Board
One of the most revolutionary, but least noticed, changes in the early days involved the Board of Directors. When I arrived there were eighteen directors, including four insiders: John Akers, Jack Kuehler, John Opel (IBM’s CEO before Akers), and Paul Rizzo. I thought this was an unwieldy size with too many insiders, particularly given the dominance of current and former employees on the powerful Executive Committee.
Clearly the CEO search, the media’s public flogging of the company, and the sharp, extended criticism at the annual meeting had traumatized many members of the board. I quietly approached a few of them, especially Jim Burke and Tom Murphy, for a series of discussions on corporate governance.
With my encouragement, the Directors’ Committee decided it would announce that the board should be reduced in size to make it more manageable. At the same time, we would add new people to bring in some different perspectives. After the announcement, it didn’t take anyone more than a minute to realize that meant a significant amount of retirements would be in order.
I think most of the directors had mixed feelings about sticking around at that point, and some welcomed the opportunity for a graceful exit. Burke and Murphy masterfully orchestrated a proposal that
76 / LOUIS V. GERSTNER, JR.
every director offer his or her resignation and that the Directors’
Committee would sort out the right structure for the ongoing board.
As a result, five directors left in 1993, then four more in 1994.
Murphy and Burke themselves retired, one year earlier than required by IBM’s retirement rules. Their move was a sign to the others that it was time to make room for the newcomers. A few were willing to go, but others found the process distasteful and personally difficult.
Nevertheless, we got it all done. To the amazement of everyone, there was never so much as a peep in the media.
By the end of 1994 we had a twelve-member board. I was the only insider. Only eight remained from the eighteen who had made up the board just a year before.
Starting in 1993 we began introducing newcomers, beginning with Chuck Knight, the chairman and CEO of Emerson Electric Co. I had known Chuck as a fellow board member at Caterpillar. He was tough and demanding of himself, the CEO, and his fellow board members, and I admired that. He was highly respected as one of the premier CEOs in America, and his selection was the important first step in the rebuilding of the board.
In 1994 we added Chuck Vest, president of MIT and Alex Trotman, chairman and CEO of Ford Motor Company. Cathie Black, president and CEO of the Newspaper Association of America, and Lou Noto, chairman and CEO of Mobil Corporation, joined in 1995. They were followed by Juergen Dormann, chairman of Hoechst AG, in 1996.
Minoru Makihara, president of Mitsubishi Corporation and one of
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