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Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround

Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround

List Price: $27.95
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Rating: 5 stars
Summary: Gerstner wins with experience, insight, creativity, guts
Review: Gerstner's drastic changes may have disrupted the lives of many employees, but far more would have suffered if IBM had continued down the road to dissolution he diverted it from. In this book Gerstner distills his insights into modern business imperatives in a clear, readable, lively style open to the vast majority of us citizens who do not subsist on electrons and silicon chips.

Rating: 4 stars
Summary: View from the top of IBM's recent adaptations
Review: "Who Says Elephants Can't Dance" is the history of Louis Gerstner, Jr.'s tenure at IBM. Mr. Gerstner joined IBM at a critical time when sales were slumping and the behemoth of a company was laying people off almost every quarter. What they needed was someone who could turn the company around and take it to new heights. What they had was a complex bureaucracy that allowed little change and tended to support the continued decline of the company. Of course we all know now that Mr. Gerstner was able to change IBM and produce a viable thriving company able to compete in the world markets once again. This is the story of what happened from Louis Gerstner's own hand.

Mr. Gerstner provides insight into his viewpoint of what was happening in the company and his own fears and concerns from before the day he was named CEO until his retirement in 2002. If you want to know what was happening at the top and what he was thinking as he went along, you will want to read this book. If you read and liked Lee Iococca's book on his turnaround of Chrysler you will find this book similar and also very interesting in its own right. A study in tough management and changing direction with a company that has its own momentum, "Who Says Elephants Can't Dance" is a recommended read.

Rating: 5 stars
Summary: The grand turnaround straight from the source
Review: This is the story of IBM's miraculous turnaround in Lou's own words. I use "Lou's own words" with intent here, as there was no ghost writer or co-author. The story of the revival of an American icon is written from the viewpoint of the man picked to do it himself.

The book is organized into 4 sections: Getting Hold, Strategy, Culture, Lessons Learned and Observations. (ok, so that's 5 sections)

Getting Hold covers Gerstner's initial immersion into the new environment, and his analysis of the problems. He also covers his famous comment that "the last thing IBM needs is vision" and explains his view in the need for tactics and execution. This flies in the face of what one might expect from a former consultant, and is consistent with other recent books such as "Execution" by Charan and Bossidy.

Strategy covers how Gerstner came to the belief that IBM should not be broken up. This was in contrast to the spinoff frenzy of the times, and came from his view as a former customer that the market needed someone to pull all the technology pieces together, and that was IBM's only competitive advantage. The strategy is covered in business terms accessible to people outside the industry.

Perhaps the biggest "Aha" in the book is the story of Gerstner battling the legendary IBM culture. This is covered in the Culture section, along with his stories of how he tried to insure that his changes are permanent. The importance of this culture change is highlighted in Gerstner's pride that his successor is a blue bleeding IBM life. (Ultimately Lou admits that even after 10 years he was still an outsider)

The lessons learned and observations sections are less a narrative of the IBM turnaround, and more lessons on turnarounds in general, and the computing industry. For students of management, this will hold the most value.

There were two downsides of the book. First is coming to grips with some of the inconsistencies in the methods used to turn around IBM. For a while, Gerstner rails against processes, instead challenging people to focus on customer needs. While reading it, one wonders how a complex organization can integrated many businesses without good processes. Later on Gerstner extols the virtues of his re-engineering project, especially along several key processes vital for turning around IBM. Makes sense, but contradicts his earlier writing.

The other downside is answering why IBM needed an outsider to change it. Gerstner points out several times that IBM was a great company that just appeared stuck in some bad behaviors. Current management wisdom holds that insiders are better turnaround artists than outsiders. Why is this the exception that proves the rule? Is modesty the answer? (It is generally left to the reader to assume that a customer's viewpoint was needed)

I would not let these detract from what was otherwise an interesting (and overdue) story of one of today's great turnarounds. The material comes straight from the source (as compared to the story of Ghosn's turnaround of Nissan) and from an individual of much higher personal integrity than Sunbeam's Al Dunlap.

Rating: 4 stars
Summary: Very interesting recounting of a tough time period
Review: Damage Assessment
a. System/390 had a 58 percent declined in sells
b. The company wanted to increase the bank credit to $4.7 billion
c. IBM operated in 44 countries, peaked at $27 billion in 1990, between 1990 and 1992 pertax profits had declined from 18 percent in 1990 to 6 percent in 1992.
d. Two perceptions emerged: 1. Rapid declining mainframe sell 2. Higher prices than competitors
e. 90 percent of the companies profits originated from large servers and software.

Style
1. A private cadre of advisors
2. Sell off unnecessary IBM assets: art and property $31 million in art sells, $1.5 billion for the sell of the Federal Systems Company.
3. Increase the number of stock options in company circulation: In 1992, 1300 employees had stock options and nine years later 72,500 employees; stock based options became the largest compensation for executive pay; and executive put their own money in on the purchase of the stock options.
4. Increase the share price of the stockholders. (Gerstner boasts a twice stock split and 800 percent growth and 100,000 new employees in his tenure)
5. If your competition is drowning, take a firehose to their mouth.
6. Build user based support and systems
7. The employee is not entitle to a job and performance is the measure of profit sharing and job security. Performance products satisified customers, increase profits, and ensures the survival of the company.
8. Ignore the IBM culture and focus on market driven change.

Reengineering ($9.5 billion dollar savings - Jim York lead the effort)
a. Consolidate the data centers and financial structures
b. Formulate Market-Driven strategies
c. Stop the hemoraging of cash.
d. Keep the company together
e. Keep with the mainframe and stop the declining sells of the System 390.
f. Lower the price of the large servers
g. Implement CMOS technology into mainframe architecture, $1 billion investment and a $19 billion dollar return by 2001.
h. Belief the Networked model would become the model of the future
i. Increase the role of outsourcing to establish and IT dominance in service and software
j. Reorganize the board: Chuck Knight, Chuck Vest, Juergen Dormann, Minoru Makihara, Ken Chenualt, and Sidney Taurel.
k. Increase Hardware development cycle to sixteen month from four years
l. Increase ontime deliveries from 30 percent in 1995 to 95 percent in 2001
m. $2 billion in IT expenses: consolidate from 155 data centers to 16, 31 communication networks into one.
n. Sell 8,000 acres of land.

Profitable by 1994
a. Use stock options and company ownership to drive productivity
b. The focus on the stock price was subject to the hype of the dot.com boom. If stocks were the truth measurement of the valuation of the company, they were over inflated.

Develope a customer strategy
a. Customer segmentation
b. Move from direct sales force to customer centric sales force

Right size
a. Layoff a 100,000 employees
b. Shutdown unprofitable departments

Develop and intermediate Business Strategy
a. Service Marketing: innovate software to support customer requirements, encourage technical sales to support innovation as a source of more sales, and segment service to handle a global customer.
b. Market eBusiness: market and promote the internets as a global business solution, promote IBM as a software leader in global businesses.
c. Market "Solutions for a small planet" - part of customer segmentation
d. Software Marketing: shift to open environments, standard with api protocols, integrate software from multiple hardware platforms and protocols.

Rating: 4 stars
Summary: Who says Elephants can't dance?
Review: I always wonder how did IBM turnaround from the brink of death. I enjoyed the book very much. I have no doubt that Gerstner is a great leader and a very capable man, however, I couldn't help in thinking what the outcome would be if there were not so much talents and resources inside the company. Who had said "circumstances, cicumstances!"

Rating: 3 stars
Summary: More about history than management
Review: While this is a good book of an historic turnaround, there is little one can take away and apply. Between Gerstner's excessive modesty and the way he focuses more on his actions than the reasoning behind them, there is not much to learn here. Nonetheless, it is an enjoyable story.

Rating: 4 stars
Summary: Good Weekend Read...
Review: Some books sweep you off the feet by their accurate narration of larger-than-life issues and of the results that sweep people off their feet... This book is in the same league, and does a lot if you are blessed with a lot of imagination... Organized into five parts: (1) Gerstner's beginnings at IBM, (2) Strategy, (3) Culture, (4) Lessons Learned, and (5) Observations, the book is a racy description of IBM's flirt with history-rubbish, and of the slow and painful recovery. Spanning IBM's history from 1992 to 2001, the book provides a perfect view from the hot-seat and is especially relevant if you are aspiring to become a CEO of a fortune 500 company. The last section contains Gerstner's views on society, industry etc, and provides an even better glimpse of the man himself. The book is especially relevant if one wants to understand the IT industry and the source of all its problems and virtues, but only to a certain extent. The insights are available in bits and pieces only, and one has to connect the dots oneself. Another problem with the book is that the thoughts in various places aren't really fully developed, and one has to look someplace else for all the answers. 'Big Blues, the Unmaking of IBM (by Paul Carroll, Jim Wade) provides a much better description of the firm, is what I think.

Overall, it's a good buy, and will make for a good weekend read.

Rating: 2 stars
Summary: An European perspective
Review: As I recall, the title originates from the time that IBM wanted to market its Personal Computer. As the goal was to do that in a minimum amount of time and effort, a very unlike IBM approach was followed: operating software was obtained from a whizkid, who copied existing code and modified it; hardware components, except for the solid keyboard, where ordered from outside manufacturers. All IBM did was assembling it.
One IBM executive at the time said that eliphants can't dance, as he did not believe this approach would be feasible. At the introduction the PC was demonstrated to him with a dancing elephant on the green monitor screen.
Since then IBM gradually lost grip on the market ending to almost a disaster in the beginning of the 90's, when Gerstner was hired to save the company. And he did save it. Not by breaking it down into components, but keeping it together and promoting the immense power of having all expertise in one company, that in his view should literally fight a war against competition to survive.

The best article describing Gerstner's view on the tasks he had to fulfil for IBM were in Times Magazine, of which I found no reflection in his book, unfortunately. Perhaps, he'd better hired a ghost writer, afterall.

Rating: 4 stars
Summary: Interesting but not Insightful
Review: The subtitle of this book is "Inside IBM's Historic Turnaround." A more appropriate subtitle might have been, "Inside Lou Gerstner's Mind." If you are looking for the intrigue and drama of IBM's near death and resurrection, this book is not it.

It is a pretty good read, though. The first three parts are very interesting. They detail what Gerstner found at IBM and what he saw as the good worth keeping and the bad that needed tossing. Perhaps the funniest part of the book is on page 197 of the hardback that includes a glossary of IBM terms. In fact, there are many points of the book where one can imagine Gerstner with a perplexed look thinking, "Now, what in the #%&* did he just say?"

The fourth part of the book really drags and doesn't offer any real vision of the future. Gerstner's talent is execution, not vision unlike, say, Bill Gates.

I read "The Maverick and His Machine: Thomas Watson, Sr., and the Making of IBM" before reading this book. I could see how some of the culture that Mr. Watson created in founding IBM had become more important that the business when Mr. Gerstner arrived. I recommend the books as a one-two punch.

Overall, this is a good book, not too self-congratulatory nor too technical and analytical.

Rating: 5 stars
Summary: Great Book
Review: Very real account of how Gerstner turned IBM around. Having worked for IBM years, I can relate to what he says in this book. Check it out.


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