Great Advice From IBM’s Former CEO

I just ran across a post in Fortune’s Postcards blog about a speech that Lou Gerstner gave at the Yale CEO Summit in New York in last month. Here’s a summary of his advice for how to transform a Fortune 500 company:

  1. Distinguish between transformation and turnaround. A turnaround is about management execution, but a transformation is about a fundamental change to the business. Transformation is much harder.
  2. You can’t transform a dodo.  Gerstner quoted Warren Buffet’s rule: “When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.”
  3. It’s all about the culture. I love what he says on this topic: “You have to transform the culture, not just the strategy. Culture is what people do when no one is watching.”
  4. Integrate as a team. He notes a major inconsistency within IBM: there were “Team” signs all around, but people were paid based on individual performance.
  5. You have to understand what people do everyday — the processes, the values, the rewards. This requires a great deal of involvement by the CEO

My take: Gerstner is a great leader; his turnaround of IBM will be remembered as one of the greatest management accomplishments of our time. So I was thrilled to see that his advice matches a lot of the advice that I’ve written in my (mini) book “The 6 Laws Of Customer Experience.”

The bottom line: Get the business model right and focus on the people.

Written by 

I'm an experience (XM) management catalyst; helping organizations improve results by engaging the hearts and minds of their employees, customers, and partners. I enjoy researching and speaking about leading-edge XM topics. I lead the Qualtrics XM Institute, which is the world's best job. We're igniting a global community of XM Professionals who are inspired and empowered to radically improve the human experience. To achieve this goal, my team focuses on thought leadership, training, and community building. My work is driven by a set of fundamental beliefs: 1) Everything starts and ends with human beings, so you need to understand how people think, feel, and behave; 2) XM is a discipline that needs to be woven throughout an organization's entire operating fabric; and 3) Building the XM discipline requires a combination of culture, competency, and technology.

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