Who Says Elephants Can’t Dance?

Lou Gerstner is widely regarded as the man who turned IBM around. During his tenure as the CEO of IBM from 1993 to 2001, IBM’s revenues grew from $62.7 billion to $85.9 billion and its stock price grew ten times. Everybody wanted to know how Gerstner did it, and hence the book promoting: who says elephants can’t dance?.

Gerstner’s book is not an autobiography as such – it is more of an entertaining corporate narrative, a story of a CEO’s fight to save his company from obsolescence. The story of how Gerstner turned the Big Blue around is just as entertaining as how Jack Welch turned General Electric around. While Welch and Gerstner were contemporaries and both equally successful, they are as different as two individuals could be.

“Fixing IBM was all about execution. We had to stop looking for people to blame, stop tweaking the internal structure and systems. I wanted no excuses.”

Gerstner was more of a classical business executive, who had been through the usual corporate grind in America, rising through the ranks through hard work, discipline and a bit of good fortune. He had successful tenures at McKinsey, American Express, and RJR Nabisco, before being appointed as the IBM CEO in 1993.

Back then, IBM was in shambles, unable to take on the rising competition from the likes of Microsoft that were younger and nimble. When Gerstner took charge of IBM, they had already lost half their share of the computer market in less than a decade.

And they were following a losing business model. As Gerstner writes, “On average, our competitors were spending 31 cents to produce $1 of revenue, while we were spending 42 cents for the $1 of revenue, while we were spending 42 cents for the same end.”

So, how did Gerstner turn around the giant ship? Well, he first got the company back to how Tom Watson Sr., its legendary founder wanted it to be. He got the company back to following Tom Watson Sr.’s beliefs, which were:

  • Excellence in everything we do.
  • Superior customer service.
  • Respect for the individual.

Everything Gerstner did after that, followed from these beliefs. The most important thing Gerstner did was to turn IBM around from being a maker of computer hardware to the world’s #1 provider of IT services. He made the IBM Global Services into something significant, the mainstay of the company, one that hired 50% of the IBM workforce.

Gerstner chucked businesses in which IBM no longer enjoyed a competitive advantage. Off went the hardware division. He made the company more responsive to customer concerns. One of the simplest things Gerstner did was to abolish the ridiculous IBM dress code, which was mocked by one and all. As he says, changing IBM culture was like “taking a lion raised for all of its life in captivity and suddenly teaching it to survive in the jungle.”

But why the title “Who Says Elephants Can’t Dance”? Gerstner explains: “Big matters. Size can be leveraged. Breadth and depth allow for greater investment, greater risk taking, and longer patience for future payoffs. It isn’t a question of whether elephants can prevail over ants. It’s a question of whether a particular elephant can dance. If it can, the ants must leave the dance floor.”

Indeed. It’s a fascinating book, with excellent business lessons for young executives trying to make a name for themselves in giant companies like IBM, GE, Siemens and so on. No we know: who says elephants can’t dance?