Ibm Case Analysis

Credibility Attributed to The Wrong Man

When facing economic struggles, a company always has two choices. One, ride the downward trend and hope it corrects or two, restructure the company to fit societal norms. For IBM, the current technological market was rapidly evolving and the technology giant failed to adapt. Their neglect jeopardized their company’s image as a leader in the technological age and cornered their future success to be dependent on the internet, the then new service. IBM’s top-to-bottom reformation was idealized by CEO Lou Gerstner. Ironically, Gerstner’s responsibility in the company’s restructuring was confined to a general role envisioned by David Grossman and John Patrick

. This paper analyzes Gerstner’s limited role in IBM’s reformation and attributes IBM’s success to Grossman and Patrick due to Grossman’s managerial style, Patrick’s charismatic leadership and the goals implemented through their groundbreaking ideas. A leader is defined as someone who passionately motivates his superiors and partners to change; someone who influences the thoughts and actions of other people. IBM’s CEO, Lou Gerstner played a limited role in IBM’s adoption of the internet. He did not serve as visionary or institutor, so he is best labeled as a mediator. Gerstner’s position as IBM’s CEO during reconstruction has no definable link to the internet’s success.

At most, Gerstner can confidently be labeled as a tentative necessity. During reconstruction, Gerstner stated that “The last thing IBM needs right now is a vision.” Gerstner felt that a vision would place undue hardship on the reconstruction and instead focused on a general goal–“we will restructure IBM.” According to Zaleznik, author of the article, “Managers and Leaders: Are they different?” a leader needs to support his dependents while instituting innovative ideas. Gerstner’s proposal can hardly be classified as innovative, which mainly consisted of cutting expenses.

Also, Gerstner can’t be defined as IBM’s success story as he lacked significant knowledge as to how the internet worked. Returning to Zaleznik’s ideas, a leader is always one step ahead, and in the case of Gerstner, he was ignorant in his duties as CEO. Clearly lacking in the ability to delegate innovative goals, IBM would have continued to fumble without the assistance from Grossman and Patrick. It is possible to argue Grossman’s role as both a manager and a leader.

From one perspective, he demonstrated leadership through his actions displaying concern for his ideas in an intuitive and empathic way. He became more than a manager after informing IBM’s marketer, Abby Kohnstamm, of IBM’s “Olympic feed being ripped off”, demonstrating his potential for leadership. When no one gauged the underlying idea, he continued to seek out an appreciative audience. His goal was practical, get it in front of the right eyes and the idea will flourish. He could have easily said “adios” to IBM after their employee’s reluctance to listen and instead, approached another firm already involved with the internet.

Persistence is key to leadership and Grossman valued the idea of “try, try, and try again.” He had a great idea and was determined to see it flourish. It’s the same concept of a lifeguard; when performing CPR on a drowned victim, it takes several attempts to garner the slightest indication of consciousness. IBM was a drowning victim and Grossman, the lifeguard, was determined to dive in to resuscitate. He could have easily played the innocent bystander and watched as IBM gasped for air as economic tensions closed in around the company.

On another note, when Grossman gauged the attention of John Patrick he immediately renounced his role as leader and became manager of the team. A good leader knows when to act but an excellent leader knows when to stand down. We can even claim that Grossman was a servant leader because he knew he had to repay his debt to the company. He had a mission and he knew what it would contribute to the world. While Grossman stepped down, he displayed qualities of what Zaleznik characterizes as a manager, “someone who relates to people according to the role they play in a sequence of events or in a decision-making process.”

He was no longer the visionary but rather the problem solver. As a manager he saw the problem, IBM’s ignorance toward the digital age, and envisioned a solution; help IBM develop this technology to foster a new market. Without Gerstner, Grossman planted a seed of hope in IBM with a goal that was both reachable and attainable: create an internet world and market it to everyone! Charismatic leadership is risky and as Zaleznik states, “Leadership inevitably requires using power to influence the thoughts and actions of other people,” a role which Patrick clearly defines.

Patrick reformed IBM by first challenging Gerstner’s idea that IBM didn’t need a vision. It was in fact the opposite, IBM needed something to work toward and Patrick remolded IBM from top-to-bottom by synchronizing the corporate and business strategy to be the same.

Unconventional situations call for unconventional actions and a willingness to take personal risk. His charismatic leadership worked off the idea that when a business is in trouble, don’t kill it, re-invent it with an idea that will branch out to a new market. Similar to selling a car, not everyone is going to invest in the car because they don’t need it. Patrick’s idea was to market the internet to anyone who would listen and even more strongly to those who wouldn’t. His concept, it is necessary sometimes to market relevant to the style and little to the substance, people will begin to catch on.

Patrick displayed leadership qualities that restructured IBM by using charismatic leadership through group cohesion and task efficacy leading to the empowerment of implementing the internet. As a compelling leader he restructured the whole organization around a vision, rather than geography and stressed inter-departmental relations toward a goal rather than competition within the company. Some may confuse his empowerment with belligerence and independent success; however, Patrick was installing it into the context of a team. Alongside Grossman’s managerial skills, he used his leadership effectively to leverage the web to six main goals including, “Make top executives available to customers and investors on-line.”

Unlike Gerstner, he diverted from retaining the status-quo of the company and instead executed an idea. Patrick worked with the idea that here is what we have to work with, this is where we want to be, and this is how we are going to get there. His goal was reasonable and efficient; it would be fun and challenging for employees to heighten work attitudes while also generating marketplace recognition for IBM. Although being a charismatic leader is risky, Patrick broke through company-wide barriers to include everyone rather than being a mindless assertive leader like Gerstner. Gerstner invented to consume. In other words, he approached reforming IBM in the eyes of a novice leader by trying to do something clever and new.

Instead, Patrick marketed to an audience that would transform the business for profit and future stability. He helped IBM see a great product, idealized a future for it, and monopolized the market to its advantage. Gerstner, without his subordinates would not have been able to successfully reform IBM as a one man team. Instead, his participation was a link between the corporate world and the visionary ideas of Grossman and Patrick. Patrick and Grossman reformed IBM with ideas while Gerstner reformed IBM with Patrick and Grossman. It’s highly probable that if Grossman and Patrick had taken their project to another company, they could have easily been just as successful.

Even with Gerstner, IBM’s probability of creating a financial comeback was slim. It’s simple to conclude that without Grossman and Patrick, IBM lacked the knowledge to foster a new project task force to reform IBM from top-to-bottom; the potential was present, but the ignorance of the proper tools for leadership and goal setting clouded any probability for change.