Gerstner’s Big Blue legacy

It was exactly one year ago Thursday that the crowds at the LinuxWorld Conference and Expo in New York got their first glimpse of life after Lou Gerstner.

When IBM’s Sam Palmisano took the stage to give the opening keynote, he came armed with evidence to attack what he called the “”four

myths”” of Linux. This included the notion that the open-source OS lacks scaleability, it has no place in mission-critical environments, the source code is a mess and it only fits in niche environments.

This was not long after IBM had pledged to spend US$1 billion on Linux, an effort which led most recently to the company’s first Linux-only mainframe. Though he was no doubt preaching to the converted, he struck a pose that contrasted with the common perceptions of a conservative Big Blue. “”Change — some are excited about it; some are really threatened about it,”” he said.

Palmisano doesn’t seem threatened. And why should he? The world has informally known since last May that he was the most likely candidate to replace Lou Gerstner. The announcement Tuesday did more than confirm his place in that succession plan: it sent out a message that IBM will not be deviating greatly from the e-business strategy it began in 1996.

Lou Gerstner was not a colourful leader. He eschews Apple CEO Steve Job’s blue jeans and turtleneck sweaters. He lacks Oracle chief executive Larry Ellison’s innate sense of superiority. But most significantly, he is one of the few high-tech honchos who never adopted the technologist’s persona. It would be very difficult to imagine Gerstner holding his own in a conversation about code with Microsoft’s Bill Gates, or with Linus Torvalds about Linux. He had more in common with the chief executives of major corporations that IBM counts as its biggest customers. “”I know that after the splash and the promises comes the harsh light of the morning,”” he said four years ago, sounding like a weary CIO who had finally completed an enterprise resource planning implementation. “”And often the customer is left standing alone, wondering what happened.”” IBM clients no doubt relished being around someone who understood them so well.

I only heard Gerstner speak once, at an IBM conference in New Orleans in 1998. He relied on TelePrompTers for the most part, but then, for a few minutes, his eyes sparkled. He talked about where IBM could do better, and he took the opportunity to publicly embarrass then-IBM Canada president John Whitmore about his lack of response to a reseller’s concerns — concerns Gerstner has listened to from the business partner himself. As the former head of R.J. Nabisco, he was pulled into the company at a time when it needed to reinvent itself, and his approach was more consultative than visionary. The word “”consultative”” is used here as a compliment. Unlike management consultants who often create a business process that is then turned into a template for any number of organizations, Gerstner matched his own bottom-line mentality with the innovative ideas of IBM’s best employees. He was in the same position that HP’s Carly Fiorina is in now, trying turn a product company into a services powerhouse specializing in Internet expertise. That he managed it without an unwieldy acquisition is a laudable achievement.

Palmisano, who has to be one of the only 49-year-olds I’ve ever heard of who’s been referred to by the media as a “”wunderkind,”” could probably do well just trying to maintain IBM’s lead over Compaq and HP on the services front. If he’s the loose cannon experts say he is, however, he may transform Big Blue all over again. The company’s recent decision to outsource its PC manufacturing suggests it wants to move further away from hardware, and its obvious envy over Dell’s direct sales approach means a strong alliance, if not an outright merger, is a distinct possibility. Having nearly recouped its Linux investment, it could also be interesting to see how IBM’s relationship with Microsoft changes in the next few years.

Whatever he does, though, Palmisano will be running IBM from the inside out. As a 28-year veteran of the firm, his success depends on how well his predecessor’s customer focus rubbed off. Gerstner’s reign may mark the last time IBM was run by an outsider, a user. Palmisano’s challenge will be to prove that he can see beyond the harsh light of morning too.

sschick@plesman.com

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