When tech giants fall, they rarely get up again. Onetime titans such as Digital Equipment, Compaq, Lucent, and Palm went cold and then were ignominiously acquired. Xerox and Nokia have limped along for years. Kodak just filed for bankruptcy protection. Only two tech companies have bucked the trend: Steve Jobs’s Apple and Lou Gerstner’s IBM.
The lessons of those exceptions are legendary. When Jobs returned to Apple in 1997, he winnowed its product line, replaced most of the board, and expanded into new markets such as music players. After arriving at IBM in 1993, Gerstner slashed more than 100,000 jobs, killed its uncompetitive OS/2 PC operating system, and began a massive shift from hardware to consulting.