Leader - Bob Moffat

Bob Moffat is well past his twelfth hour at the office, but he shows no sign of flagging. 96 on this Thursday afternoon in late summer, he is presiding over his fifth meeting of the day in a windowless conference room just three steps from his office. Moffat has one of the more thankless big jobs of the moment -- not just at his company, IBM, but in the larger world of technology.

Moffat runs IBM's personal-computer business. Although his group -- which also includes printers and point-of-sale terminals -- accounts for $1 of every $6 in IBM's revenue, it generates not a penny of the $22 million in profits that the company brings in daily.

The economic slowdown has turned the competition in the PC business from fierce to brutal, a cutting-edge sector with profit margins that are similar to those of the grocery business -- and with about the same glamour quotient. What's more, inside the PC industry, a business that IBM helped invent, the company is considered to be an aging warrior -- one that might at any moment simply bow out. IBM doesn't make typewriters anymore either.

But for this final meeting of the day, Bob Moffat isn't imagining his own surrender. Just the opposite: He's imagining the surrender of one of his most vigorous competitors -- and the dramatic strengthening of another.

Moffat has asked six lieutenants to spend an hour figuring out what would happen to IBM if Compaq were to attempt to sell its PC business to Dell. (The session, it turns out, takes place a month before Compaq does attempt to sell out -- its entire business -- to Hewlett-Packard.) The exercise should be a refreshing, mind-clearing way to end the day, except that all six people at the meeting -- four in person, two on speakerphone -- are so pessimistic. All six think that if such a deal were to happen, Dell would so dominate the PC world that the company would have the strength of Intel or Microsoft -- dominating suppliers, slowing down and possibly stifling innovation. IBM would be left to pick up scraps. The only bright spot, offered by a senior marketing manager: "There is some opportunity if IBM is going to be the number-two PC maker in the world. Some people want to go with number two."

Moffat -- who imagined the mind-bending scenario based on what he's been reading and hearing, and who wanted to tease out the implications -- closes by looking around the table with satisfaction. "Well, I got out of this what I wanted. If we were to wake up one morning three weeks from now and read that this had just happened, we certainly would not have had a conversation as rational as this."

After the room clears, Moffat waves away the gloom. He has spent far too many years in the battle -- and has seen technology leadership change hands far too many times -- to think that IBM can't hold its own. "If Dell buys Compaq's PC business -- and I have no special knowledge of what might happen, but there will be a shakeout -- there will be plenty of opportunity for us."

He's grinning.

The Power of Purpose

You have to have the stubborn confidence of Bob Moffat to survey his business and see opportunity. When Moffat took over IBM's personal-computer division in July 2000, his group had lost $1.5 billion in the past three years -- a time when, in contrast, Dell had made $4.8 billion. It had been four years since IBM's PC group had managed to put together two profitable quarters in a row. All this as the industry was exploding.

Since then, the PC business has been almost all downhill. "If we thought about getting into the PC business today," says Moffat, "we wouldn't do it. The economic returns suck. But we're in it, and we can't get out."

The first insane thing that Moffat did was promise profits for his first quarter in charge. Inspired, his division delivered $99 million in profits for the first two quarters of his reign. Moffat did so well so quickly that his bosses, chairman and CEO Lou Gerstner and president and COO Sam Palmisano, added two more businesses to his portfolio: printers and point-of-sale machines. During the first half of 2001, as the market shrank and competition intensified, Moffat's group lost just $66 million. Besides Dell, only IBM reported increased shipments of computers in both of the first two quarters.

But more than stabilizing the financials of the business, Moffat has reinvigorated the 15,000 people who work for him. "When I took this job, the place was in disarray. People had their heads down. No one cared. There was no leadership," he says. "There was a strategy for the business, but no one knew it. It was buried in white papers" -- an IBM staple. "I didn't change the strategy. I just articulated it. That's what people needed: a sense of purpose."