LEADERSHIP AND PROFESSIONAL

DEVELOPMENT
Assignment
Leaders traits

Submitted to
Prof. Amjad Ali

Submitted By
Ali Murtaza
L1F12BBAM0445

Section
E

Person:

Louis Vincent Gerstner Jr. (born March 1, 1942 in Mineola, New York) 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 around IBM's fortunes.
He 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.
He is a former member of the Steering Committee of the Bilderberg Group.

Introduction and life history:

He took over as CEO in 1993, a year the company posted an $8 billion loss, and IBM shares that
had sold for $43 in 1987 could be had for $12. IBMs prospects for survival are very bleak,
wrote the authors of the book Computer Wars. The Economist doubted whether a company of
IBMs size, however organized, can ever react quickly enough to compete. And Larry Ellison of
Oracle commented: IBM? We dont even think about those guys anymore. Theyre not dead,
but theyre irrelevant.
He declined the job when it was first offered, he says, because he felt he didnt have the technical
know-how to handle it. But it turned out that his most important decisions werent based on
technology but on his past experiences as an IBM customer.
For Gerstner, the first order of business was making the company solvent. Under his guidance,
IBM cut billions in expenses (partly through massive layoffs) and raised cash by selling assets.
Gerstner says that few people even understood how perilously close the firm was to running out
of cash. In 1993, more than 90% of IBMs profit came from its mainframe sales, which were
sinking fast. Conventional wisdom had it that the main frame was simply losing out to personal
computers. But Gerstners 11 years as head of American Expresss travel-related services
division told him otherwise.

You cant run a world-wide credit card business on a PC. You cant run an airline on a PC. Main
frames were still needed. IBMs problem, he learned, was not product but price. He asked why
the company hadnt lowered its prices to meet the competition. Because well lose substantial
revenues and profits when we need them badly, he was told. Not exactly long-term thinking.
Get me a price reduction plan in two weeks, he said.
Plans to break up IBM into smaller, supposedly more nimble businesses were well underway
when Gerstner arrived. That made no sense to him as a former customer, he said. It was true that
customers no longer wanted to be locked into a single supplier like IBM for all their information
technology needs. But neither did they relish the task of picking and choosing from among
thousands of suppliers to build a working system. At the end of the day, in every industry,
theres an integrator, Gerstner writes. And he felt that IBM, with its size and reach, was
uniquely positioned to fill that role.

Gerstner calls his decision to keep IBM together the most important decision I ever made not
just at IBM, but in my entire business career. Yet he also makes it clear that it was one of the
easiest.
For Gerstner the toughest challenge he faced in rejuvenating IBM and the subject of most of
his book was changing the IBM culture. Culture isnt just one aspect of the game, he writes.
It is the game. What does the culture reward and punish individual achievement or team play,
risk taking or consensus building?
When he arrived, he found a company totally focused on its internal rules and conflicts. Units
competed with each other, hid things from each other. Huge staffs spent countless hours debating
and managing transfer pricing terms between IBM units instead of facilitating a seamless transfer
of products to customers.
He found he was presiding over a world-wide collection of powerful fiefdoms, each one
jealously guarding its own privileges and prerogatives. He discovered that European employees
werent receiving his e-mails because the head of IBM-Europe was intercepting them. The exec
had deemed the messages inappropriate for his employees. Gerstner summoned the exec to

Armonk to inform him that those employees he presumed to protect didnt belong to him, but to
IBM.
Gerstner found a company that was operating as if IBM still ruled the computer world. And hed
had personal experience with what that could mean to customers. When he was at American
Express, Gerstner recalled, an IBM representative withdrew all support for a massive credit card
data center because the manager there had installed a single Amdahl computer in a facility that
previously had been 100% IBM-equipped. When Gerstner arrived at IBM, he discovered that
IBM, not Microsoft, was the biggest software company in the world, but none of the software
IBM sold worked with anything other than IBM hardware.
Gerstner got a lot of publicity for abolishing IBMs famous white shirt and tie dress code, but
that was the least of his change-the-culture efforts. He launched IBM on its successful strategy of
offering solutions to customers that, in violation of historic IBM tradition, might well include
hardware and software manufactured by IBM competitors. He committed IBM to open standards
so that its products could be used by competitors and vice versa. He decided that providing
computing services transfer your IT operations to us was more important to IBMs future
than providing hardware.
None of this went down easily.
Changing the attitude and behavior of thousands of people is very, very hard to accomplish,
Gerstner writes. You cant simply give a couple of speeches or write a new credo for the
company and declare that a new culture has taken hold. You cant mandate it, cant engineer it.
What you can do is create the conditions for transformation, provide incentives.
Gerstner sent out a steady stream of e-mails to IBM employees to keep them posted about what
was going on. (He includes a sampling of those communications in an appendix.) He changed
the compensation system so that rewards were based on total corporate performance rather than
division or unit performance. He changed the rules for getting promotions.
Gerstner tells of asking one of IBMs most senior executives to give him a detailed analysis of a
money losing business. Three days later, when he asked about it, the exec said: Ill check with
the team and get back to you. After two more similar responses, Gerstner told the exec: Why

dont you just give me the name of the person doing the work. Ill speak directly to him. He
explains that senior executives at IBM were expected to preside, to review. They didnt do the
work. Of course, he changed that, too.
Gerstner, who stepped down as CEO in March and retires as chairman of the board in January,
says he was lucky at IBM because, despite its insular culture, the place was rich with creative
talent that only needed to be set loose. He notes that the head of every major business unit today
is a long-time IBMer, as is his successor as CEO, Sal Palmisano.
Mixed in with memories of IBM are Gerstners opinions on such subjects as investment bankers.
He dislikes them. They make money coming and going. They make huge fees telling AT&T to
buy up everything in sight, then make more huge fees helping AT&T sell off everything. He
loses no opportunity to snipe at Microsoft. He relates how Bill Gates wasnt happy when an
IBM security guard failed to recognize him and gave him the wrong identity badge.
There are critics who say that IBMs turnaround isnt as terrific as Gerstner would have you
think (even though last years profits were $8 billion), because revenue was boosted by a
controversial switch in the IBM pension plan and the stock price was inflated by a major
buyback effort

Leadership traits:

1. Inspire action:
His actions inspire employee to work hard and compete their challenger as they were
facing declines. It is clear from case how he motivated employee and develop successful
strategies to meet objectives.
2. have integrity:
He possess integrity in him as he made clear action to bring back IBM from road of
decline to success. Though he dont have any technical background as stated, he worked
hard to unite employees by setting examples.
3. Motivator:
He motivate employee to work hard. He set compensation with their performance in
order to make employee work more efficiently as company at that time needed in a lot
4. Confident:

He dont have technical background in spite of that he made many decision that take IBM
to success path like downsizing, bringing all units together, change of culture are few of
bold steps taken by him which shows he was quite confident about making decisions.
5. Communicative:
He joined all parts of IBM and communicate with all other units of IBM outside America.
He use to mail every employee about all the changes and decision taken in IBM
headquarters.
6. Passion:
He surely have passion of taking IBM back to success route. His decision totally shows
his passionate nature about his job.
7. Innovator:
When he joined IBM he immediately changes goals of IBM. He designed new strategies
for company. He advised to redesign product or launch new product. For cost cutting and early
revenue generation he order to sell extra things.
8. Patience:
When he designed new road map for the company he has to face critics. He faced all
critics with patience and humbleness. Later on his decision were proved to b best for the
company.
9. trustable:
When he made new goals and implement them on organization, at that time he has to face
lot of critics. But he remains stuck to its goals and guide organization to success path. This show
that he was loyal to the company and can be trusted in crisis time.
10. Community builder:
He made company as a community of technology where jobs were assigned according to
perfection. Before him all departments were competing with each other but after him IBM was
like a same unit.
11. Visionary:
When he joined IBM he made new strategies to achieve goals. He made such goals that
can lead company to profits. He introduces new things in market that gave rise to IBM. Through
this we can understand his visionary power for leadership.
12. Drive to achieve:
His policies and decisions led people to go against him. But he remains with his
decisions. In then end his decisions led company to success. He takes company to profit
stages again. This shows his power that lead to achievements.
13. Personel chrisma:

When he joined IBM he has to face criticism from employees because of his policies. but
still his subordinates follow him in his vision which ultimately lead company to success. He has
something that attract people toward him and make them follow him regardless of their likings
and disliking. This shows he has charisma in him that was surely his personnel charisma.
14. Tenacity:
He has to face criticism because of his layoff and all other strategies his remain stick to
his goals and policies that shows his tenacity ability.

15. Autocratic:
His policies when he joined IBM shows that he was autocratic leader as he do what he
thought of doing no matter what ever he has to face.