Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change

Synopsis

Learn from one of the best turnaround leaders of all time, Lou Gerstner of IBM. If your company or division is in crisis mode, take a page from Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change on what to do at the helm of a quickly sinking ship.

Gerstner's approach for leading IBM back from the brink can be applied in many scenarios. Understand the importance of cash and how to free up more of it. Tackle a toxic culture with robust communication and do away with ineffective practices. Reinvigorate employees with a market-driven strategy and a sense of urgency to beat competitors.

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Can you elaborate on the importance of cash and how to free up more of it as explained in the book?

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Cash is crucial for any business as it allows for operational flexibility and investment in growth opportunities. In the context of the book, freeing up more cash could involve eliminating ineffective practices, improving efficiency, and focusing on market-driven strategies. This could involve cutting unnecessary costs, streamlining processes, and investing in areas that generate the most revenue. It's about making strategic decisions that improve the financial health and competitiveness of the business.

How do the theories presented in 'Who Says Elephants Can't Dance?' challenge existing paradigms or practices in the field of business management?

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The theories presented in 'Who Says Elephants Can't Dance?' challenge existing paradigms in business management in several ways. Firstly, Gerstner emphasizes the importance of cash flow over traditional metrics like profit or revenue. This challenges the conventional focus on profitability as the primary measure of business success. Secondly, Gerstner advocates for robust communication to tackle toxic cultures, which contrasts with traditional top-down management styles. Lastly, he promotes a market-driven strategy and a sense of urgency to beat competitors, challenging the complacency that can come with established business practices.

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The case of IBM's turnaround and Gerstner's leadership shows that the winning strategy and the culture behind its execution are equally important.

Top 20 insights

1. According to Gerstner, free cash flow is the most important measure of a business. He learned this as the head of RJR Nabisco, when billions in assets were offloaded to pay debts. He applied the same to IBM to stabilize finances.
2. IBM had been so successful that it felt like a bubble: there was little focus on how customer needs or competitors were evolving. To change this dynamic, Gerstner became a microphone for customer complaints and let the marketplace – instead of the whims of executives – dictate all activities.
3. Gerstner initially saw IBM's financials and thought the company's chance of survival was no more than 20%. To prevent demise, he slashed expenses through consolidation of functions, sold high-value items like real estate and fine art, and ultimately layoffs.
4. Gerstner's toughest challenges were "soft" problems like morale, company culture, and values.
5. A culture without internal politics frees up employees to focus more on customers and competitors rather than their colleagues. This was a key step to rebuild IBM's market position. Gerstner publicly crucified turf battles and backstabbing.
6. Formal presentations can be distracting and unproductive. In one of Gerstner's initial meetings with a senior executive, he politely clicked off the screen and said, "Let's just talk about your business." This led to a more transparent discussion of the situation.
7. While it's essential to obtain the right market position, don't ignore the value of a rigorous and strategic R&D team. This was crucial to IBM's success. A billion-dollar investment in new technology for a key product pulled them through the downturn and allowed them to slash prices and retain the same margin.
8. Look to your customers for potential hires; they have major insights into your company's blind spots. Gerstner gained credibility with customers when he said he had been a customer himself longer than he would be CEO of IBM, and therefore echoed their main concerns.
9. When competitors have gained significant ground on one of your products, consider dramatic price cuts as a last-ditch effort. Over seven years, IBM decreased the price of its mainframe from $63,000 to $2,500 a month – a decline of 96%. Miraculously, this led to growth in volume of about 50% each year over the next three years.
10. If you think your team is out of touch with customers, mandate actions to get everyone back on track. Gerstner required 50 of IBM's most senior employees and their direct reports to visit five of their biggest customers in three months, then report back to him with a two-page memo.
11. Restore a greater sense of ownership among mid-level staff and empower them to make decisions. Gerstner abolished IBM's famed "Management Committee," a body of senior executives who met biweekly to review all big decisions. The Management Committee diffused responsibility and leadership.
12. Don't just bend your business model to conform to what's popular or what might deliver short-term wins. Many urged Gerstner to break up IBM into individual business units, the popular structure of the time. Gerstner saw beyond that hype and envisioned IBM as an integrator for customers. This move ultimately saved IBM.
13. Beware of leaders who spin grand visions without the right basics. During an early keynote address, while reporters clamored for Gerstner to deliver a vision, he instead harped on the need to focus on profitability and the correct economics before a change in direction.
14. Consider making promotions from within. Gerstner says, "I think it would have been absolutely naïve…if I had come into a company as complex as IBM with a plan to import a band of outsiders…"
15. A CEO's responsibility during a crisis is not to directly change employee behavior, but rather to communicate that a crisis exists and how it will come to an end.
16. Communications from the CEO, especially during a crisis, should be as direct as possible. Rather than assume that the message will "trickle-down," Gerstner composed emails directly to employees, which became known as "Dear Colleague" letters.
17. A more creative delivery of your message can lead to better persuasion. A marketing executive at IBM made the case for consolidation to one ad agency, given the proliferation of logos and branding across business units. When her colleagues entered the meeting, they found every wall adorned with the advertising, packaging, and marketing collateral of all of IBM's agencies.
18. Compensation policies can reinforce company culture and lead to complacency among staff. Gerstner boosted employee performance and scrapped old rules like no layoffs and flat raises, then replaced them with variable rewards based on performance.
19. If competitors are picked off your best performers during your crisis, try offer very lucrative stock options to your rising stars. This sends the message that you value them while also keep them invested to stick around for the long term.
20. If you're unsure about a business model for your startup, consider Gerstner's assertion that "service businesses are much more difficult to manage [than product businesses]." There is a greater risk that you'll fall short of customer expectations and more ambiguity in the delivery of the service versus a product.

Summary

Surviving a crisis requires bold leadership, a strategy for the future, tough decisions, and the ability to motivate and inspire others to come along with you. IBM's turnaround leader Louis Gerstner implemented these tactics and more, making calls to keep IBM together, dramatically reduce prices, enter the new realm of services, and reorganize around industries rather than geographies. Learn his reasonings and how he kept IBM afloat after giving the business no more than a 20% chance of making it through their downturn. An even bigger challenge was the culture clash that stormed as he imbued IBM with new values of competitiveness and customer-focus in place of complacency and staunch traditionalism. Learn his communication philosophy and the nine strategies he chose to motivate others.

Questions and answers

How did Lou Gerstner's approach challenge existing practices in business leadership?

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Lou Gerstner's approach to business leadership challenged existing practices in several ways. Firstly, he made bold decisions to keep IBM together during a crisis, which included reducing prices and entering the new realm of services. Secondly, he reorganized IBM around industries rather than geographies, a significant shift from traditional business structures. Lastly, he tackled the company's culture, replacing complacency and staunch traditionalism with competitiveness and customer-focus. His communication philosophy and the nine strategies he chose to motivate others were also key aspects of his transformative leadership.

What were the key takeaways from Lou Gerstner's leadership at IBM?

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The key takeaways from Lou Gerstner's leadership at IBM include his bold and strategic approach to crisis management. He made tough decisions such as keeping IBM together, reducing prices dramatically, and entering the new realm of services. He also reorganized IBM around industries rather than geographies. Gerstner faced a significant challenge in changing IBM's culture, replacing complacency and staunch traditionalism with competitiveness and customer-focus. His communication philosophy and the nine strategies he used to motivate others are also noteworthy.

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Strategic bets

IBM stays together

From the beginning, Gerstner's vision in a united IBM with a strong services arm was at the forefront of his leadership. One of the first decisions he made upon coming into IBM was the decision to keep IBM together rather than sell off the individual business units. Industry analysts suggested that IBM would be able to best realize shareholder value by breaking apart and showing their cards with their more valuable units. However, in a world where there were endless companies offering "puzzle pieces" but few players willing and able to be the "integrator," Gerstner knew IBM would meet a valuable need by staying together and playing that role. He was confident in his position because of his previous experience being an IBM customer as head of American Express and later RJR Nabisco.

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What lessons can entrepreneurs and managers learn from Gerstner's approach to organizational structure?

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Entrepreneurs and managers can learn several lessons from Gerstner's approach to organizational structure. Firstly, the importance of unity in an organization. Gerstner believed in keeping IBM together rather than selling off individual business units. This decision was against the industry analysts' suggestions, showing the importance of strong leadership and conviction in one's decisions. Secondly, the value of being an integrator in a market full of specialized entities. Gerstner saw the opportunity for IBM to meet a valuable need by staying together and playing the role of an integrator. Lastly, the value of past experiences. Gerstner's confidence in his position was bolstered by his previous experience as an IBM customer.

How did Gerstner's vision challenge the existing paradigm of breaking apart business units for shareholder value?

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Gerstner's vision challenged the existing paradigm by advocating for unity and integration rather than division. At a time when industry analysts suggested that IBM would best realize shareholder value by breaking apart and selling off its more valuable units, Gerstner decided to keep IBM together. He saw a gap in the market where there were many companies offering individual services, but few who could integrate these services. Drawing from his experience as an IBM customer in his previous roles, he was confident that IBM could meet this need by staying together and playing the role of an integrator.

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When his tenure started, there was a flurry of activity cleaning up financials and working with investment bankers to prepare for individual IPOs. He quickly put an end to that and began making a series of tough decisions to stop the "hemorrhaging of cash" and maintain a quickly-eroding market share.

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Can you elaborate on the cultural changes implemented by Lou Gerstner at IBM and their impact on the company's turnaround?

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Lou Gerstner implemented several cultural changes at IBM that played a crucial role in the company's turnaround. Firstly, he shifted the company's focus from hardware to services, which was a significant departure from IBM's traditional business model. Secondly, he fostered a customer-centric culture, emphasizing the importance of understanding and meeting customer needs. Thirdly, he dismantled the company's bureaucratic structure, promoting a more collaborative and agile work environment. These changes not only helped IBM recover from its financial crisis but also repositioned it as a global leader in the IT services industry.

What are the key takeaways from Lou Gerstner's leadership that are actionable for entrepreneurs or managers?

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1. Prioritize financial stability: Gerstner halted the hemorrhaging of cash at IBM, demonstrating the importance of financial health for any organization.

2. Make tough decisions: Gerstner wasn't afraid to make difficult choices to maintain market share, showing that effective leadership often requires courage and decisiveness.

3. Challenge outdated structures: Gerstner's turnaround of IBM involved tackling outdated organizational structures, suggesting that entrepreneurs and managers should be willing to innovate and adapt.

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Slash prices and cut costs to stay in the game

IBM had been a pioneer and the dominant player in the "mainframe" world for years. Come 1992, however, the space was much more competitive and IBM was struggling. It seemed unthinkable to lower prices at a time when the business was already losing so much money. But Gerstner was convinced this was the only way. What he saw that others did not was that IBM was "milking" a dying product line. The days of premium pricing on their mainframe were dwindling, and it was a matter of time before competitors inched them out. The only way to stay in the game was to participate in the price war. Luckily, IBM also had a trick up its sleeve to maintain profitability through the price changes. Several years prior, IBM had made a billion-dollar investment in new "technical architecture" for its mainframe product. IBM's size and many years in the business enabled them to make this crucial investment that greatly increased the product's profitability relative to competitors.

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How has IBM's turnaround strategy influenced corporate strategies or business models in the tech industry?

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IBM's turnaround strategy under Lou Gerstner has greatly influenced corporate strategies and business models in the tech industry. Gerstner's approach was to lower prices to stay competitive, even when the business was losing money. This was a significant shift from the traditional model of maintaining premium pricing. Additionally, IBM invested heavily in new technical architecture for its mainframe product, which increased its profitability relative to competitors. This strategy of investing in technology to improve profitability has been adopted by many tech companies. Furthermore, IBM's turnaround demonstrated the importance of agility and adaptability in a rapidly changing industry, principles that are now widely recognized in the tech sector.

What is the potential for the strategies used in IBM's turnaround to be implemented in real-world scenarios today?

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The strategies used in IBM's turnaround have significant potential to be implemented in real-world scenarios today. These strategies include recognizing and adapting to market changes, investing in new technologies, and restructuring pricing models to stay competitive. However, the implementation of these strategies would depend on the specific circumstances of the organization, including its size, industry, and the nature of its challenges. It's also important to note that successful implementation requires strong leadership and a willingness to make tough decisions.

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"If this enormously complex project could be pulled off, it would permit substantial price reductions in the S/390 without commensurate loss in gross profit."

Thankfully, the bet on cutting prices and using the new CMOS technology was successful. Mainframe volume grew dramatically after these decisions.

Many credit this pair of decisions – cutting prices and investing in CMOS – with protecting IBM through their near-collapse. Though the choice to invest in CMOS was made before Gerstner's arrival, his decision to lower prices and weather a short-term decline in revenue ensured the long-term future of the business.

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How might a company in a traditional sector like manufacturing apply IBM's innovative approaches to their own restructuring efforts?

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A manufacturing company can apply IBM's innovative approaches to their restructuring efforts by first identifying the areas that need improvement or change. This could be outdated organizational structures, inefficient processes, or underperforming departments. Once these areas are identified, the company can then implement changes such as expense cuts, layoffs, or selling off non-essential assets, similar to how IBM sold off its fine art and valuable real estate in the early 1990s. The company should also be open to making tough decisions, as IBM did when it reduced its number of employees by approximately 25% between 1992 and 1994. It's important to note that these changes should be made with the goal of improving the company's overall performance and competitiveness.

Can you analyze the implications of IBM's decision to sell off their fine art and valuable real estate during their restructuring?

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IBM's decision to sell off their fine art and valuable real estate during their restructuring had significant implications. Firstly, it was a strategic move to generate immediate cash flow during a financially challenging period. This helped the company to survive and maintain operations. Secondly, it signaled a shift in IBM's priorities, focusing more on core business operations rather than non-essential assets. Lastly, it was a part of a broader cost-cutting strategy, which included layoffs, to make the company leaner and more efficient. However, such decisions might have had a short-term negative impact on employee morale and public perception.

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Surviving in 1993 also meant making some tough calls regarding expense cuts and layoffs. While IBM had a rumored policy of "no layoffs," thousands of employees had in fact left IBM since 1990. Difficult decisions were made, and the number of employees declined by approximately 25% between 1992 and 1994, falling from 301,500 in 1992 to 256,200 in 1993 and then 219,800 in 1994. Interestingly, IBM also owned millions of dollars of fine art and valuable real estate, which were sold in the early 1990s as a means of survival.

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Becoming a services player

Gerstner's background as an IBM customer informed his decisions both to keep the company together and to invest heavily in becoming a services player. While customers were faced with an endless supply of technology solutions, no one was effectively stepping up to the plate to help them put it all together, solving their business problems with technology solutions. Gerstner wanted to take them there, shoulder to shoulder with Dennie Welsh, who's heading up IBM's Integrated Systems Services Corporation. Welsh was the one to initially come to Gerstner with the vision for a services company. The type of service offering he pitched to Gerstner fit precisely with the strategy both to remain an integrated IBM as well as matched the need for holistic technology solutions that Gerstner had experienced as a CEO in other industries. However exciting, both men agreed it would be an uphill battle working against IBM culture to implement the new strategy. Despite all the extra effort it required, the move to make IBM a services leader paid off. In 1992, services revenue was $7.4 billion. In 2001, it was $30 billion.

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Reorganizing around global industries

The vision that Gerstner had for IBM would not have been able to take hold without several other efforts taking place in the background. One of these critical pieces was "organization," or how IBM was structured, including who is responsible for which products, services, or geographic territories and who reports to whom.

Questions and answers

What potential obstacles might companies face when applying the concepts from "Who Says Elephants Can't Dance?", and how could they overcome them?

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Companies might face several obstacles when applying the concepts from "Who Says Elephants Can't Dance?". These could include resistance to change from employees, lack of clear customer segmentation, rapidly changing industry standards, and the complexity of reorganizing a large organization. To overcome these, companies could foster a culture of adaptability and continuous learning, develop clear customer segmentation strategies, stay abreast of industry trends and standards, and plan the reorganization meticulously with clear communication and involvement of all stakeholders.

How does IBM's turnaround challenge existing paradigms or practices in the field of organizational restructuring?

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IBM's turnaround under Lou Gerstner challenged existing paradigms in organizational restructuring by focusing on three areas of complexity: customers, technology, and employees. Instead of a traditional top-down approach, Gerstner emphasized the importance of understanding and serving diverse customer needs, adapting to rapidly changing technology, and leveraging the intelligence and opinions of all employees. This approach was a departure from the norm, as it required a more flexible and responsive organizational structure, rather than a rigid, hierarchical one. It proved that even large, complex organizations like IBM could successfully adapt and change.

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Attempting to reorganize any company is a gigantic feat, but even more so in the case of IBM due to its complexity. Three areas of complexity were at play: customers, technology, and employees. Given IBM's offerings, it could serve any type of organization on the planet, from startups and corporations to non-governmental organizations and schools. There was no clear customer segmentation. Also, given the fact that it was a technology company in the early 1990s, it was operating in an industry that was constantly changing. As new technology popped up, new competitors and standards did too. And lastly, IBM was complex with regard to its employees. While most companies have a corporate headquarters that gives direction to distributed locations like franchises, retail stores, or factories, all of IBM's hundreds of thousands of employees were smart, opinionated, and highly educated professionals.

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How is Gerstner's transformation of IBM relevant to contemporary business issues and debates?

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Gerstner's transformation of IBM is relevant to contemporary business issues and debates in several ways. Firstly, it highlights the importance of strategic leadership in turning around a failing company. Gerstner's ability to restructure IBM according to customer and technology views, rather than geography, is a key lesson for businesses facing similar challenges. Secondly, it underscores the need for businesses to adapt to changing market conditions and customer needs. Lastly, it demonstrates the potential of a strong leader to drive change and overcome resistance within the organization.

How can the lessons from Gerstner's turnaround of IBM be applied in today's business environment?

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The lessons from Gerstner's turnaround of IBM can be applied in today's business environment in several ways. Firstly, it's important to reevaluate and restructure the organization if necessary, just like Gerstner did with IBM's geography-based structure. This could mean breaking down silos and encouraging a more global and customer-centric view. Secondly, strong leadership is crucial in driving change and overcoming resistance. Lastly, it's important to be adaptable and willing to change the company's direction based on customer needs and market trends.

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Nevertheless, if Gerstner's transformation was to take place, a dramatic reorganization was needed. IBM was currently structured according to geography, with each major geographic leader holding powerful sway over what went on in his or her territory. This fractured view meant that "IBM seemed to be incapable of taking a global customer view or a technology view driven by customer requirements." Instead, it was individual country leaders who had the say.

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What are potential obstacles companies might face when applying Gerstner's reorganization strategy, and how could they overcome them?

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Potential obstacles companies might face when applying Gerstner's reorganization strategy include resistance from the old guard who may refuse to relinquish control and direct their staff to do the same. This resistance can slow down the reorganization process and create conflicts within the company. To overcome these obstacles, companies can ensure clear communication about the benefits and necessity of the reorganization, provide adequate support and resources to the new global industry heads, and foster a culture of adaptability and openness to change. It's also important to be patient as such a reorganization can take several years to implement successfully.

Could you elaborate on the concept of "global industry teams" as used by Gerstner in his reorganization of IBM?

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The concept of "global industry teams" was a key part of Gerstner's reorganization of IBM. Instead of organizing the company geographically, Gerstner decided to organize it according to global industry teams. He segmented customers into thirteen industry groups and reallocated all current customer accounts away from geographic heads and to the global industry heads. This ensured that each group had an adequate budget and personnel. The transition was not smooth, with many of the "old guard" refusing to relinquish control. However, after about three years, the reorganization was successfully implemented.

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"I declared war on the geographic fiefdoms," says Gerstner.

Gerstner set out to organize IBM instead according to global industry teams. First, they segmented customers into thirteen industry groups. Then, Gerstner reallocated all current customer accounts away from geographic heads and to the global industry heads, ensuring each group had adequate budget and personnel. This did not go over with the "old guard" without a hitch. Many refused to relinquish control and directed their staff to do the same. In all, the geographic reorganization took about three years to implement successfully.

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How can a small business implement the winning strategy and culture behind IBM's successful turnaround?

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A small business can implement the winning strategy and culture behind IBM's successful turnaround by adopting a few key practices. First, it's important to challenge traditional values and practices that may be hindering progress. This could mean changing dress codes, benefits, or hierarchical structures that are outdated. Second, it's crucial to eliminate practices that allow for unnecessary roadblocks in decision-making processes. For example, IBM had a practice where almost anyone could veto a proposal, which often led to projects being stopped in their tracks. By eliminating such practices, a small business can ensure smoother operations and quicker decision-making. Lastly, it's important to foster a culture of change and adaptability, as this was a key factor in IBM's turnaround.

What strategies can a startup learn from IBM's turnaround to tackle outdated organizational structures?

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Startups can learn several strategies from IBM's turnaround to tackle outdated organizational structures. Firstly, they can adopt a culture of change and flexibility, as opposed to sticking to traditional values and practices. Secondly, they can implement a system where decisions are not hindered by unnecessary bureaucracy, as was the case with IBM where any proposal could be vetoed. Lastly, they can ensure that the path to upward mobility within the organization is based on merit and performance, rather than on serving as an administrative assistant to top executives.

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Culture change and communication

Gerstner inherited a culture of traditional values. Employees wore white shirts and dark ties and received generous benefits. Part of moving upwards at IBM required becoming an administrative assistant to top executives for a time, sitting at the back of meetings and taking notes while at the beck and call of your boss. Other odd practices were in place, too, like the fact that almost anyone could veto any proposal along its way to fruition. One simply had to state that they were "non-concurring," and a project would be stopped in its tracks.

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Can you elaborate on the importance of a CEO's role in communicating the existence of a crisis and how it would end, as practiced by Lou Gerstner at IBM?

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The CEO's role in communicating the existence of a crisis and its resolution is crucial. This was exemplified by Lou Gerstner at IBM. He believed that it was the CEO's job to communicate both the existence of a crisis and how it would end. This is important because it sets the tone for the entire organization and ensures everyone is on the same page. It also helps to alleviate fears and uncertainties within the organization. Gerstner practiced direct communication and set clear expectations. He conducted a world tour of IBM operations, meeting with leaders, staff, and customers, listening to their input and addressing their concerns. He also started a series of 'Dear Colleague' email communications where he laid out principles and values for doing business and working at IBM.

How can the lessons from Lou Gerstner's leadership be applied in today's business environment?

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The lessons from Lou Gerstner's leadership can be applied in today's business environment in several ways. Firstly, the importance of clear and direct communication. Gerstner conducted a world tour of IBM operations, meeting with leaders, staff, and customers, listening to their input and fielding their complaints. This approach can be adopted by leaders today to understand the ground realities of their businesses. Secondly, setting new expectations and principles for doing business and working at the organization. This can help in aligning the entire organization towards a common goal. Lastly, the belief that it is the CEO's job to communicate both the existence of a crisis and how it would end. This can help in building trust and confidence among the employees during challenging times.

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A phenomenon of working at a company that had enjoyed long-term market dominance for some time was that the culture had become inoculated from many of the pressures of competitors and surviving in a typical marketplace. Customer needs were easily ignored, employees were more focused on internal politics than in beating back competitors, and performance ratings and their implications were weak.

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Gerstner implemented clear practices to begin setting new expectations. Foremost, he took a policy of direct communication. In his early days, he conducted a world tour of IBM operations, meeting with leaders, staff, and customers, listening to their input and fielding their complaints. He began a series of "Dear Colleague" email communications where he laid out principles and values for doing business and working at IBM. Especially in the dark early days when IBM's future was tenuous, he stood by the belief that it was the CEO's job to communicate both the existence of a crisis and how it would end.

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How does Gerstner's approach to organizational change challenge existing paradigms in business leadership?

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Gerstner's approach to organizational change challenges existing paradigms in business leadership in several ways. Firstly, he emphasizes the importance of direct communication from the top. Instead of delegating messaging to heads of subsidiary businesses, Gerstner took it upon himself to ensure a consistent message across the board. This approach challenges the traditional hierarchical communication structure in many businesses. Secondly, Gerstner prioritized creating a high-performance culture. He understood that people are motivated in different ways and considered various angles and actions to incentivize employees and change organizational behavior. This approach challenges the one-size-fits-all motivation strategy often seen in traditional business leadership.

How can a startup use Gerstner's strategies to incentivize employees and change organizational behavior?

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A startup can use Gerstner's strategies to incentivize employees and change organizational behavior by adopting a few key principles. Firstly, clear and consistent communication from the top is crucial. This ensures that the entire organization is aligned with the vision and goals. Secondly, creating a high-performance culture should be a top priority. This can be achieved by understanding that people are motivated in different ways and tailoring incentives accordingly. Lastly, it's important to be open to new ways of incentivizing employees and changing organizational behavior. This could involve experimenting with different reward systems, providing opportunities for professional development, or fostering a culture of innovation and creativity.

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"No institutional transformation takes place, I believe, without a multi-year commitment by the CEO to put himself or herself constantly in front of employees and speak in plain, simple, compelling language that drives conviction and action throughout the organization."

It might be tempting to defer this sort of messaging to the heads of subsidiary businesses or the like, but Gerstner states that in some cases, this communication philosophy required him to "seize the microphone from the business unit heads." In a time of such tumultuous change, the only way to ensure a consistent message across the board was for it to come from one person. In addition, creating a high-performance culture was a top priority for Gerstner, and he understood that people are motivated in different ways. Working under this assumption, here is a list of the different angles and a preliminary list of actions one could consider when hoping to incentivize employees in new ways and change organizational behavior:

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• Money – Offer competitive pay, raises, bonuses, or stock options.
• Advancement – Offer promotions, titles, and special appointments.
• Recognition – Simply note a job well done, whether publicly or privately.
• Fear/Anger – Let your true colors show, to a degree.
• Learning – Establish in-house trainings, sponsor degrees, and create university partnerships.
• Impact – Assign employees to projects with outsize impact.
• Productivity – Highlight the specific output of a given project.
• Threat of Extinction – Communicate the implications of not succeeding, i.e., going out of business or being fired.
• Inspiration – Focus on the "light at the end of the tunnel," or the inspirational vision, as a means of motivation.

Gerstner's keen use of human psychology and his willingness to take on IBM's culture contributed to his success at IBM just as much as his unifying services strategy.