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The lessons from Gerstner's leadership at IBM can be applied in today's business environment in several ways. Firstly, focus on free cash flow as a crucial measure of business health. Secondly, prioritize customer needs and market trends over executive whims. Thirdly, be ready to make tough decisions to stabilize finances, including cost-cutting and asset sales. Lastly, pay attention to 'soft' aspects like morale, company culture, and values, and strive to create a culture free from internal politics.
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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. 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. 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. Gerstner's toughest challenges were "soft" problems like morale, company culture, and values. A culture without internal politics frees up employees to focus more on customers and competitors rather than their colleag...
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Learn from one of the best turnaround leaders of our time, Lou Gerstner of IBM. Take a page from Gerstner’s playbook on how to reinvigorate a quickly...
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