Louis Gerstner, credited with rescuing IBM, dies

Louis Gerstner, who took over International Business Machines Corp when it was on its deathbed and resuscitated it as a technology industry leader, died Saturday.

- PATRICK OSTER

Louis Gerstner speaks to the media after being named IBM's chairman and CEO in April 1993.

(REUTERS)

He was 83.IBM chairman and CEO Arvind Krishna announced Gerstner's death in an email sent Sunday to its employees but didn’t provide a cause of death.

Gerstner’s nine-year tenure as chairman and CEO of the company known as “Big Blue” is often used as a case study in corporate leadership.

On April Fool's Day, 1993, he became the first outsider to run IBM, which was facing a choice of bankruptcy or dismemberment after a period when it had been the undisputed leader in personal computers and mainframes. He pivoted the Armonk, New York-based company toward business services and away from hardware production, reversing a move to break up the company into a dozen or more semi-autonomous units — “Baby Blues” — in pursuit of greater profits.

Gerstner slashed costs and sold off unproductive assets, including real estate and IBM's collection of fine art. He fired 35,000 of the 300,000 employees, who had become accustomed to a culture of lifetime tenure based on principles established by former CEO Thomas Watson Sr in the early 20th century.

He stressed company-wide teamwork to replace the tradition of loyalty to various divisions, and he pegged compensation to corporate performance rather than individual results. To meet performance goals, he emphasised regular accountability rather than waiting for yearly performance reviews.

"People do what you inspect, not what you expect,” he said.