From Mallomars To Mainframes: Is Experience Necessary?Peter Coy
Here's the argument in a nutshell: You don't need to be a techie to run a computer company. John Sculley used to sell Pepsi-Cola, but now he's a whiz running Apple Computer Inc. What counts in computers, as in other fields, is management ability. Louis V. Gerstner Jr., the cost-cutting, dealmaking master mechanic from RJR Nabisco Holdings Inc., has that in buckets.
Indeed, the argument runs, knowing little about computers may be an asset, because it means Gerstner brings few preconceived notions to the corner office in Armonk, N.Y. Says Control Data Systems CEO James E. Ousley: "We're 30 or 40 years into the industry's cycle. Not that technology's unimportant, but the real drivers are the merchandising and marketing and financial components of the business."
MINE FIELD. That, anyway, is the argument. But what's the experience? To date, the computer industry has been a kind of Vietnam for the best and brightest executives from other fields. There are success stories, to be sure, but generally they've been with computer companies that were on the way down and needed a financial whiz to keep costs falling more rapidly than revenues. If that's all IBM's directors want, Gerstner could do a fine job of cutting. But if the board's--and Gerstner's--ambitions are loftier, they face a long, uphill battle together. Refiring IBM's engines of growth is a daunting job for a seasoned industry veteran, let alone someone parachuting in without a map, a compass, or a trusted guide.
Consider a few cautionary tales from smaller computer makers: When Thomas A. Vanderslice came from GTE Corp. to run Apollo Computer Inc. in 1984, his lack of computer-industry experience blinded him to the growing importance of the operating-system software known as Unix. It took four years for Apollo to make Unix available on its workstations, and even then it was a kludgy version that customers rejected. By then, Apollo had lost its momentum: Vanderslice sold it in 1989 to Hewlett-Packard Co.
RCA Corp. veteran Richard W. Miller, brought in to rescue Wang Laboratories Inc. in 1989, struck a deal to move Wang's minicomputer customers over to IBM hardware, failing to realize that many of them had picked Wang precisely because, for one reason or another, they didn't want IBM. Miller failed to halt Wang's tailspin and left shortly after putting the company into Chapter 11 last year.
A few outsiders have done better. Ronald L. Skates, a veteran of Price Waterhouse, stabilized Data General Corp. But he had a technical genius at his side: Tom West, the computer designer immortalized in the best-selling book The Soul of a New Machine.
John Sculley is the best example of a nontechie who came, saw, and conquered. But even Sculley has had his share of flubs. And Gerstner won't start out with nearly the assets that the Pepsi man had. Sculley joined a company that was already on the right technological track, with the ground-breaking Macintosh computer. So Sculley didn't need to plot a new strategy--he succeeded through marketing innovations such as product segmentation and line extension. And Sculley had another advantage: Early on, he absorbed a vision of technology from Apple co-founder Steven P. Jobs. There's no such lone visionary at IBM for Gerstner to lean on.
BALANCING ACT. So the track record is not reassuring. Gerstner has a lot to prove to those skeptics who fear that the cigarette-selling financial whiz will slice and dice the company to the point where IBM's vaunted technology base will be gone with the Winstons. Can he disprove the critics? Certainly. But it will take some doing.
If Gerstner hopes to achieve more than slashing costs, goosing short-term profits, and reducing IBM to a bunch of orphaned Baby Blues, he'll have to take two critical steps. First, he'll have to assemble a cadre of trusted technology advisers. Then, with their help, he'll have to perfect a tough balancing act: He'll have to give bosses of IBM's business units the autonomy they need to keep up with rapid changes in technology and customers' requirements. That's something IBM Chairman John F. Akers has repeatedly vowed to do but hasn't, say company insiders.
But Gerstner can't simply decentralize. He'll have to develop a blueprint for how IBM computers, software, and networking gear work together. Customers absolutely require that, but it will be very hard as IBM's business units are getting freer rein. A clear vision of the future of technology is something IBM has long lacked. It would be ironic, but satisfying, if a eagle-eyed nontechie such as Gerstner finally managed to spell one out for the world's biggest computer company.