Lou Gerstner

Louis Vincent Gerstner Jr. (born March 1, 1942) is an American businessman, best known for his tenure as chairman of the board and chief executive officer of IBM from April 1993 until 2002, when he retired as CEO in March and chairman in December.

He is largely credited with turning IBM's fortunes around.

Gerstner was formerly CEO of RJR Nabisco, and also held senior positions at American Express and McKinsey & Company.

He is a graduate of Chaminade High School (1959), Dartmouth College (1963) and holds an MBA from the Harvard Business School.

Gerstner was formerly the chairman of the board of directors of the Broad Institute of MIT and Harvard and is currently chairman emeritus of the board of the Gerstner Sloan Kettering Graduate School of Biomedical Sciences.

Gerstner is the author of Who Says Elephants Can't Dance, the best-selling account of IBM's transformation; and he is the co-author of the book Reinventing Education: Entrepreneurship in America's Public Schools.

Lou Gerstner joined American Express in 1978 and headed its Travel Related Services unit.

As sales and profits rebounded, Gerstner was promoted to chairman and chief executive officer of AmEx's Travel Related Services in 1982, and president of the parent company in 1985.

Although he claimed the position at the age of 43, Gerstner dismissed the speculation that his success was the product of being a workaholic.

Gerstner told Leslie Wayne, "I hear that and I can't accept that. A workaholic can't take vacations and I take four weeks a year."

As chairman and chief executive officer of the Travel Related Services division, Gerstner spearheaded its successful "membership has its privileges" promotion.

Not only was the division continually the most profitable in the company, but it also led the entire financial services industry.

Despite these successes, Gerstner hit a ceiling at American Express, as chief executive James D. Robinson III was not expected to retire for another 12 years.

During Gerstner's 11-year tenure at American Express, membership had increased from 8.6 million to 30.7 million.

Under his leadership, the company's market share increased significantly by 1985.

He achieved this by finding new uses and users for the card, such as college students, physicians, and women, as well as persuading corporations to adopt the card as a more effective way of tracking business expenses.

He also created exclusive versions of the card for higher-end clients, such as the Gold Card and the Platinum Card.

He left AmEx in 1989 to succeed Ross Johnson as chairman and chief executive officer of RJR Nabisco following its $25 billion leveraged buyout by Kohlberg Kravis Roberts.

Gerstner was hired as chairman and CEO of IBM in April 1993.

Under pressure from investors, his predecessor John Akers was forced to resign.

The board initially looked within the computer industry for his successor.

However Apple's John Sculley, Motorola chairman George Fisher, and Bill Gates of Microsoft were not interested (other rumored candidates included Eckhard Pfeiffer of Compaq and Scott McNealy of Sun Microsystems).

IBM then turned to Gerstner, an outsider with a record that suggested success whose older brother Richard had run the company's PC division until retiring due to health issues four years earlier.

Gerstner was the first IBM CEO who was hired from outside the company.

Upon becoming chief executive of IBM, Gerstner declared: "the last thing IBM needs right now is a vision", as he instead focused on execution, decisiveness, simplifying the organization for speed, and breaking the gridlock.

Many expected heads to roll, yet Gerstner initially changed only the CFO, the HR chief, and three key line executives.

In his memoir, Who Says Elephants Can't Dance?, he describes his arrival at the company in April 1993, when an active plan was in place to dis-aggregate the company.

The prevailing wisdom of the time held that IBM's core mainframe business was headed for obsolescence.

The company's own management was in the process of allowing its various divisions to rebrand and manage themselves — the so-called "Baby Blues."

Then-CEO John Akers decided that the logical and rational solution was to split IBM into autonomous business units (such as processors, storage, software, services, printers,) that could compete more effectively with competitors that were more focused and agile and had lower cost structures.

Gerstner reversed this plan, realizing from his previous experiences at RJR and American Express that there remained a vital need for a broad-based information technology integrator.

He discovered that the biggest problem that all major companies faced in 1993 was integrating all the separate computing technologies that were emerging at the time, and saw that IBM's unique competitive advantage was its ability to provide integrated solutions for customers – a company that could represent more than piece parts or components—something he only learned by going beyond just listening to the proponents of different technologies within IBM.

His choice to keep the company together was the defining decision of his tenure, as these gave IBM the capabilities to deliver complete IT solutions to customers.

Services could be sold as an add-on to companies that had already bought IBM computers, while barely profitable pieces of hardware were used to open the door to more profitable deals.

One of the strategic visions that Gerstner set for IBM in 1993 was to make e-business its heart and soul.

He believed in the potential of B2B e-commerce and wanted to expand the application of the internet to more than just web-page browsing and consumer marketing.

He argued that a network-centric approach would shift the workload from personal computers to larger enterprise-systems and allow the internet to be embedded into all aspects of business operations.

IBM's initial vision for how e-business could transform the world included electronic debit services that would allow customers to place orders online and eventually shop at virtual stores, creating virtual databases of movies, books, and music that would be available from anywhere in the world, and more.

Soon after, Gerstner announced e-business as IBM's growth strategy and formed the IBM Internet Division, led by Irving Wladawsky-Berger.

In 1996, IBM's marketing department established the term e-business for any kind of business or commercial transaction conducted over the internet.