The Business Blog at Intuitive.com

Dave Taylor has been involved with the Internet since 1980 and is widely recognized as an expert on both technical and business issues. He has been published over a thousand times, launched four Internet-related startup companies, has written twenty business and technical books and holds both an MBA and MS Ed. Dave maintains three weblogs, The Business Blog at Intuitive.com, focused on business and industry analysis, the eponymous Ask Dave Taylor devoted to tech and business Q&A and The Attachment Parenting Blog, discussing topics of interest to parents. Dave is an award-winning speaker, sought after conference and workshop participant and frequent guest on radio and podcast programs.

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

I go for lots of long walks and rather than just listen to music on my iPod, I've been catching up on some of the more interesting business books in the market. I recently finished up Jim Collins' Good to Great, which I thought was very good, thought provoking, and also a bit of a business book cliché with its cutesy new metaphor each chapter. Still, very worth reading / listening.

Now, since I've been working with some of the senior execs at IBM on a new project and getting a glimpse of the internal business infrastructure, I'm listening to Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround, former IBM CEO Lou Gerstner's story of his 1990's corporate turnaround of IBM.

I'm mostly through the book now, but so far what most strikes me is the extravagant lifestyle of large, publicly traded corporate CEOs. Gerstner started out at high powered consulting firm McKinsey & Co. (business guru Tom Peters is another famous McKinsey alum), headed the American Express credit card and travel divisions, then was at RJR Nabisco through the infamous leveraged buyout by KKR and subsequent implosion of the corporation. Next stop? The top job at IBM. He even shares that then President Bill Clinton was ready to ask Gerstner take the job. High profile? Oh yeah.

But then Gerstner comes across as remarkably arrogant and elitist as he shares the "tedious obligation" of having to go to formal fundraising events for major charities, the experience of having a fancy multi-story apartment in a chic area of New York City and a second house on the beach in Florida. Yet when he joins IBM, Gerstner complains about the stodginess of the executive team but has no compunction flying around on the IBM corporate jet or having his "driver" show up in the morning to chauffeur him to the office.

I realize that when you're the boss of a multi-billion-dollar corporation, there are certain perquisites that not only go with the job, but are expected, but it seems awful disingenuous to talk about cutting costs, rethinking executive reporting structures, and maximizing the cash reserve of a company when you can't hop on a commercial flight or drive yourself to work...

On the plus side, the book is compelling, interesting listening so far, and Gerstner shows that he had a keen eye for corporate dysfunction and that IBM really was a company on the rocks, stifled and drowning in a frozen bureaucracy rife with "lifers". His description of how senior management meetings were nothing so much as the IBM version of multinational diplomatic negotiations is quite fascinating, for example.

What's most interesting is that IBM is presented as a culture of smug insularity, where Gerstner characterizes the corporate view in 1993 as one that blames the media and public relations for their problems. "If only we got better press," they said, "all our problems would go away." Yet, the core problems with IBM were the same as with many companies who become disconnected from their market and customer base: instead of being customer-centric, instead of starting with the customer needs, IBM was product-centric, assuming that it could charge whatever it wanted for its hardware and software and that people would be forced to buy it.

But two events were conspiring to derail them: the growing irrelevance of mainframes and their lack of any ongoing competitive analysis. Pricing was set based on a required target profit margin, without even considering what alternatives customers could choose. It's no wonder their sales were plummeting during the early 1990s! But how many companies do you know that get painted into this corner after a few years of success in the market?

Okay, not here's the truth in advertising part: I was about 80% through the audio book when I took a two week holiday, and try as I might, I can't get engaged again, so I'm listening to "Hitchhiker's Guide to the Galaxy" instead, as a neural holiday. Nonetheless, "Who Says Elephants Can't Dance" is still on my recommended list both for its analysis of the IBM transitional period and because of the casual arrogance of Gerstner and his ilke. Why not just listen for yourself, though? Spring the few bucks for the audible.com download -- it's quick, painless and iPod ready.

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