Q&A: Palmisano: From Backup Band to Front Man

Samuel J. Palmisano was named CEO of IBM on Jan. 29, replacing Louis V. Gerstner Jr. Although Palmisano has been at IBM for 28 years, he's not well-known in the computer industry. He revealed bits of his personal life and the challenges he faces at IBM in an interview with BusinessWeek editors Spencer E. Ante and Ira Sager.

Q: What was your childhood like?

A: I was from a typical middle-class family. I had a wonderful set of parents and siblings. And you were expected to work hard and do well in school and behave. There was a little more discipline in the household than perhaps there is in mine.

Q: Is it true you played the saxophone with the Temptations' backup band?

A: That is a true statement. In those days it was referred to as a studio musician. So when the Temptations would come to town, they hired union musicians to stand there and play. For a high school kid, I made $1,000 in five days. I went out and I bought a car.

Q: Was it your dream to become the CEO of IBM?

A: No, I mean, c'mon. Like anybody, you come to this place, you work your butt off, and you try to do your best. I didn't have a clue. Probably my first inclination was 18 months ago when I was named president. I was as shocked as anyone when I got called into Lou's office one day and he said, "I'm going to name you president." Believe me, it was a startling moment.

Q: Lou has done a remarkable job turning around the company. How do you follow that act?

A: Lou has been able to establish a strategy for the corporation that's really working well. The customers' desire for productivity and strategic gain through e-business is driving them to solutions. We'll stay focused and keep executing and see if we can gain as much share in 2002 as we did in 2001.

Q: What did Lou teach you?

A: There's one thing I think he ingrained in all of us at IBM (IBM ), which is the intense focus on the customer and the market. So when things come along like Linux, we don't say, "Well, jeez, we don't like that because of our business model." If it plays with our customers we embrace it.

Q: What challenges do you face?

A: There are some big initiatives that we are very excited about--building off the open-standards world, grid, autonomic computing--that will over the long term lead a dramatic shift in the computing model. We have protected those investments. We think those are going to be big plays. Whether every one is a home run you just don't know.

Q: How do you get growth going again?

A: We're going to assume that the industry doesn't have a huge rebound in 2002. If we keep taking share when there's an uptick in spending, it's a pretty safe assumption we're going to continue to do well.

Q: You've made past decisions to get out of commodity businesses like memory chips. Will you consider that for hard disk drives?

A: Our problem has been execution. We're No. 1 in mobile and No. 2 in server share. So we're in the spaces we want to be vs. the low-end consumer desktop space. We do have an issue that we haven't been able to execute some of the new technologies of a year ago. We have a new team that's making progress. But you know, there's more work to be done.

Q: Gerstner drove a cultural revolution through IBM to make it less bureaucratic. Yet critics say IBM still moves too slowly. Are you planning any changes to cut the red tape more?

A: None of us--Lou, myself, or anybody in IBM--enjoys bureaucracy. When we see things that don't help us run a disciplined business, we'll address it. The culture change in any large institution, when you're trying to drive a winning scenario, never stops. Whenever we see things that aren't helping, whether in sales or development, we'll address them.

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