Lou Gerstner – Man who made Elephant Dance!

Werner Heisenberg stated a principle of uncertainty in physics which won him the Nobel in 1932, that is, you cannot simultaneously assess the location as well as the future movement of an atomic particle; to do so, you have to hit it with another atomic particle and that act changes both the position and momentum of the target particle. It is similar with leadership where it is difficult to simultaneously judge a person’s leadership attributes as well as future leadership behavior.

What was said of medicine at the turn of the last century by the father of modern medicine, Sir William Osler, could be said of leadership, “If only all patients were identical, medicine would be a science, not an art.” Leadership has too many uncertainties.

On the same lines of Leadership qualities, making an elephant dance is difficult as IBM’s Lou Gerstner found out while transforming the 112 year-old IBM into a service company during the mid-90s.

Recently, Lou Gerstner was awarded with Legend in Leadership award at the Yale CEO Summit in New York. At the podium, Gerstner, CEO of IBM from 1993 to 2002 and now chairman of private equity giant Carlyle Group, dished up some wise tips on the topic he knows best: how to transform a Fortune 500 company. Here’s an edited transcript of his advice:

1. It’s very important to distinguish between a transformation and a turnaround. A turnaround involves a company that has fallen off the rails and has executed poorly. It takes a driven executive, but it’s not that bad. A transformation is truly difficult. The company must fundamentally change its model. It’s very, very problematic.

2. If you’re trying to transform a dodo, you’re not going to make it. I agree with Warren Buffett’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 culture. 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. When I arrived at IBM, there were “Team” signs all around. I asked, “How do people get paid?” They told me, “We pay people based on individual performance.”

5. You have to understand what people do everyday — the processes, the values, the rewards. It requires immense involvement by the CEO. If you’re a CEO who tells employees, “That’s it. You know where we’re going,” you’ll find yourself with no followers.

Source: Fortune