Who says elephants can't dance?

author: Louis Gerstner

date completed: 2022-02-09

--"I have always believed you cannot run a successful enterprise from behind a desk. That's why, during my nine years as CEO of IBM, I have flown more than 1 million miles and met with untold thousands of IBM customers, business partners, and employees."

--"Free cash flow...is the single most important measure of corporate soundness and performance.".

--"I look for people who work to solve problems and help colleagues. I sack politicians."

--"Hierarchy means very little to me. Let's put together in meetings the people who can help solve a problem, regardless of position. Reduce committees and meetings to a minimum. No committee decision making. Let's have lots of candid, straightforward communications."

--"Move fast. If we make mistakes, let them be because we are too fast than too slow."

--"I've had a lot of experience turning around troubled companies, and one of the first things I learned was that whatever hard or painful things you have to do, do them quickly and make sure everyone knows what you are doing and why. Whether dwelling on a problem, hiding a problem, or dribbling out partial solutions to a problem while you wait for a high tide to raise your boat - dithering and delay almost always compound a negative situation. I believe in getting the problem behind me quickly and moving on."

--"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 long-term projects that people could wait for that would somehow produce a magic turnaround. I wanted - IBM needed - an enormous sense of urgency."

--Start with the customer need and value proposition you can deliver to them. Don't be an internally-focused, process-driven organization.

--"The sine qua non of any successful corporate transformation is public acknowledgement of the existence of a crisis. If employees do not believe a crisis exists, they still not make the sacrifices necessary for change."

--"Policy of executives having "skin in the game": no stock options unless they concurrently put their own money into direct purchases of IBM stock. Every executive had to be in the same position as a shareholder: stock up, we'll feel good; stock firm, we'll feel pain (real pain, not the loss of a theoretical option gain)."

--Compensation should be performance-based and differentiated versus market, not pay for seniority/length of employment.

--Don't make bonuses tied to the performance of individual units, tie them to the performance of overall organization. Prevents "me-centered" culture where units benefit at expense of coworkers and organization.

--"In the end, an organization is nothing more than the collective capacity of its people to create value. Vision, strategy, marketing, financial management - any management system, in fact - can set you on the right path and carry you for a while. But no enterprise - whether in business, government, health care, or any area of human endeavor - will succeed over the long haul if those elements aren't part of its DNA."

--"Nothing can stop a cultural transformation quicker than a CEO who permits a high-level executive - even a very successful one - to disregard the new behavior model."

--Drive organization and cultural action by making the company outward-facing. Focus the company on customers and competition rather than insular, inward-looking obsession.

--Successful executives:
1) are focused
2) are superb at execution
3) abound with personal leadership

--"History shows that truly great and successful companies go through constant and sometimes difficult self-renewal of the base business. They don't jump into new pools where they have no sense of the depth or temperature of the water." Seek to expand compete where your resources, activities, and competitive advantage can apply, not in unrelated businesses.

--Avoid acquisition fever. "Acquisitions that fit within an existing strategy have the most likely probability of success (eg acquire customers, new tech). Those that represent attempts to buy new positions in new marketplaces or that involve smashing together two very similar companies are fraught with risk."

--"Vision statements are for the most part aspirational, and they play a role in creating commitment and excitement among an institution's employees. But in and of themselves they are useless in terms of pointing out how the institution is going to to turn an aspirational goal into a reality."

--Coming up with a strategy is only the start of the battle. The hard part is allocating resources to that strategy and executing. Strategy without resources and follow-up is immediately obsolete.

--Starve the losers and invest resources in new big bets. Don't reinforce failure

--"Execution - getting the task done, making it happen - is the most unappreciated skill of an effective business leader...Getting it done, getting it done right, getting it done better than the next person is far more important than dreaming up new visions of the future."

--"People do what you inspect, not what you expect. Execution is all about translating strategies into action programs and measuring their results. It's detailed, it's complicated, and it requires a deep understanding of where the institution is today and how far away it is from where it needs to go. Proper execution involves building measurable targets and holding people accountable for them."

--"Execution is the tough, difficult, daily grind of making sure the machine moves forward meter by meter, kilometer by kilometer, milestone by milestone. Accountability must be demanded, and when it is not met, changes must be made quickly. Managers must be asked to report on their performance and explain their successes and failures. Most important, no credit can be given for predicting rain - only for building arks."

--"Personal leadership is about visibility - with all members of the institution. Great CEOs roll up their sleeves and tackle problems personally. They don't hide behind their staff. They never simply preside over the work of others. They are visible every day with customers, suppliers, and business partners."

--"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."

---