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IBM's turnaround under Lou Gerstner's leadership challenged existing paradigms in several ways. Firstly, it debunked the myth that large, established companies cannot pivot quickly. Gerstner led IBM through a significant shift in strategy, moving away from hardware to services, which was a radical change at the time. Secondly, it demonstrated that layoffs, while difficult, can be necessary for survival and future growth. IBM reduced its workforce by approximately 25% between 1992 and 1994. Lastly, it showed that non-core assets, like real estate and art, can be liquidated to ensure survival. These practices were not common in business restructuring and turnaround at the time, making IBM's turnaround a case study in innovative leadership.
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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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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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