Leading through Crisis
I start with the view that the customer drives everything the enterprise does. A lot of people say, “We put
customers first,” but it’s a slogan for many companies. In my view, it is absolutely the thing you live by every
day in a successful enterprise.
Lou Gerstner13
After Gerstner took charge in April 1993, IBM’s senior executives, employees, and customers
quickly realized that “putting the customer first” was no mere slogan for Gerstner. The new CEO’s
involvement in a sales meeting in the spring of 1993 put executives on notice. In fact, IBM executives
almost failed to invite Gerstner to the meeting, not wanting to inconvenience him when he was busy
settling into his new position. When the invitation finally went out, it emphasized how little time
Gerstner would need to spend at the event. Etherington explained Gerstner’s reaction:
He asked, “Who’s there?” [We answered,] “About 300 CIOs in North America. Big banks,
General Motors, that kind of thing.” “Well,” he said, “shouldn’t I stay and have lunch with
them?” “No, execs don’t stay,” we said. He said, “I don’t understand. These are your best
customers.” So he said, and I remember this: “I’m going to the whole conference. I’ll be there
the first night. I’ll have dinner with them. I’ll have breakfast with them. I’ll have lunch with
them. And any IBM executive who wants to attend must stay for the whole two days.” We
were all erasing our calendars, saying, “I was always going to be there two days.” At the
meeting he opened a dialogue with the customers and he started to single IBM executives out.
“This executive will fix that and get back to you this afternoon.” It was unheard of—”The
CEO’s siding with the customers!” That was like a rocket through the company.14
During his first few months on the job, Gerstner logged thousands of miles visiting customers,
analysts, and industry experts. He summarized the message he heard from customers in this way:
“They said repeatedly, ‘We don’t need one more disk drive company, we don’t need one more
database company or one more PC company. The one thing that you guys do that no one else can do
is help us integrate and create solutions.’ They also saw the global nature of the company. . . . ‘I use
you guys all over the world.’”15
By late 1993, Gerstner realized that rather than break up the company, he could turn it around by
going to market as “one IBM.” To prevent customers from leaving in droves before he completed the
turnaround, Gerstner called on each senior executive to go out to a group of customers and “bearhug”
them. He made the executives personally responsible for their assigned customer accounts and
accountable for any problems that arose. At the same time, he asked each of the executives to write
two papers, one on the executive’s business and the other on key issues and recommendations for
solving problems and pursuing opportunities. These papers became the basis for day-long
discussions with Gerstner—without PowerPoint slides or support staff.