Thus began Lou Gerstner's transformation into a truly great CEO. Early in his career, Gerstner appears to have seen the role of a company as little more than an economic machine, and a platform for winning and personal success. But IBM transformed Lou Gerstner at least as much as Lou Gerstner transformed IBM. He became, perhaps for the first time, a leader with ambition first and foremost for the cause and company, far beyond himself. Gerstner could have played the role of heroic emergency room surgeon, dashing in to save the patient, only to move on to his next glamorous save. But instead, he stayed, nursing the patient back to health, training him not just to walk again but to run the marathon at world-class pace. As he left IBM, Gerstner wrote: "Along the way, something happened--something that, quite frankly, surprised me. I fell in love with IBM."
During the years between Watson Jr. and Gerstner, IBM lost sight of the key dynamic of an enduring great company: adherence to core values combined with a willingness to challenge and change everything except those core values--keeping clear the distinction between "what we stand for" (which should never change) and "how we do things" (which should never stop changing). Gerstner was IBM's Martin Luther, destroying outdated forms that got between IBM and its ultimate authority, the customer. Most important, Gerstner reminded IBM that, by God, it was IBM.
There is a symbiotic relationship between great institutions and great CEOs. The CEO is transformed by committing to a bigger purpose than mere personal success, and in doing so, the company is transformed into greatness. Watson Sr. could be petty, mean, and vain. Once, he banished an executive to a dreary resort for a week during the rainy season just to make the point, "You are not indispensable." More than once while reading Maney's biography of Watson Sr., I found myself wondering, "Why would anyone want to work for this tyrant?" But they not only worked for him, they loved him. And they did so because, in the end, he became more ambitious for IBM and its people than for himself. The power of this beyond-self ambition was so large that it could drive a son to sacrifice the best years of his life to being CEO of IBM and could leap across 60 years and transform Lou Gerstner from a good CEO into a great one.
Taken together--1,174 pages in total--these books form an epic trilogy. You will not find elves, trolls, and wizards in it, but something more inspiring: human beings with gigantic flaws who built a great institution, and who, in doing so, rebuilt themselves. nFC
By Kevin Maney
Tom Watson Sr. turned a small, struggling business into one of the most significant companies in America. Watson Sr. exemplifies the principle of being a clock-builder, not just a time-teller--an entrepreneurial leader who understands that his or her ultimate product is not a nifty gadget or imaginative new service but the company itself and what it stands for. Whereas a time-teller acts as a visionary genius with a single great idea, a clock-builder constructs an organization that can prosper through many industry life cycles. Watson understood that markets and technologies come and go, but a great company with outstanding people can evolve and adapt for decades, perhaps even centuries. Central to building the clock is Watson's most enduring invention: a strong, almost cultlike corporate culture built upon ferociously held core values.
By Thomas J. Watson Jr. & Peter Petre
Tom Watson Jr. took a great company and made it even greater. His story teaches the power of BHAGs--big hairy audacious goals--to keep a successful company from becoming trapped in the "we've arrived" syndrome. A BHAG serves as a powerful mechanism to stimulate progress--a finish line to shoot for, a summit to reach, the business equivalent of the NASA moon mission. Whereas many companies languish in the second generation after the driving intensity of a founder, Watson Jr. was unusual in challenging the company to new levels: We've only climbed Mount Denali, he said in essence. The question is, What is Mount Everest? The company lagged in computers, but Watson Jr. used the IBM 360 as his Mount Everest BHAG to vault IBM to the leading spot in the new digital economy, a position it held for many years.
By Louis V. Gerstner Jr.
Lou Gerstner did what many thought was impossible: He returned IBM to greatness after it had lost its way. Gerstner exemplifies the principle of turning a culture of bureaucracy into a culture of discipline. In a culture of bureaucracy, people have little freedom and lots of rules. In a culture of discipline, people have lots of freedom within a framework of responsibilities and values. Gerstner decoupled core values (which must remain intact) from cultural norms and operating practices (which must evolve in response to a changing world). Lose your core values, and you lose your soul. Refuse to change your practices, and the world will pass you by. Gerstner overturned narrow traditions and stupid rules, while simultaneously revitalizing IBM's core values and semineurotic passion for superiority--a neat hat trick and a lesson for us all.
Jim Collins is author of Good to Great (HarperBusiness, 2001) and coauthor of Built to Last (HarperBusiness, 1994).
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