Review of "Who Says Elephants Can't Dance?"

(Written in February 2004). See the ratings of other books and more reviews here.

"Who Says Elephants Can't Dance?" is a first-hand view of the turnaround of the fortunes of IBM from near-collapse back to market leadership. The author, Louis Gerstner was the CEO of IBM during the critical period from 1993 to 2002, when he steadied a tottering IT giant and created a remarkable success story.

While the book generally covers the events from Gerstner's recruitment into IBM to his retirement, it does not follow a strict chronological path and is not meant to be a summary of events. Moving easily between various time periods, Gerstner outlines the original rationale behind the old IBM culture, the failure of that style of working in the hyper-competitive late twentieth century and the decisions and strategies that took IBM back to the top.

Pulling no punches, Gerstner lays bare the conflicts and bureaucracy that he inherited and that afflicted IBM well into his watch. At times verging into preaching, he describes the principles that drove his decisions and the lessons that he learned. His leadership skills are in display as he talks about passion, nurturing the next generation and social responsibility.

The book is as much about the decisions and leadership of Gerstner as it is about the lessons he learnt that find applicability outside IBM. Primarily a record of his IBM days, the book does not hesitate to stop and reflect on the pros and cons of various approaches and the reaction of others to Gerstner's choices.

The book starts with an introduction to Gerstner's career leading to his acceptance of the CEO's post at IBM. There seems to have been an early attempt to write the book as a sequential chain of events, but this approach is dropped after a few chapters and Gerstner easily moves from one issue to another.

As Gerstner makes it plain, he was not very enthusiastic about taking up the IBM assignment and in fact believed that the odds weighed heavily against him. However, he took up the challenge. Gerstner came in as an outsider with a clear agenda and ideas that had successfully worked for him before. As his initial meeting demonstrates, he wasted no time declaring his expectations from the rest of the IBM team.

His initial decisions had mostly to do with stopping IBM's slide. There were some obvious choices such as the selling of unproductive assets, but there were also difficult ones (layoffs) and speculative gambles, such as the CMOS architecture. It makes interesting speculation as to what would have happened to IBM if some of the gambles did not pay off.

At the same time, Gerstner did not lose sight of what he planned to do once the crisis was over. He started with streamlining the decision making process and he steadily picked the team players he wanted to work with. This exercise even included changing the board of directors, and other key executive positions.

Gerstner also recognized the importance of compensation structures in driving the performance of the company. He instituted better performance-based pay and stock ownership for non-executives. Gerstner tied pay for division heads to the performance of not only their divisions, but also the entire IBM to ensure better cooperation between the divisions.

As IBM slowly gained momentum, Gerstner realized that to regain IBM's leadership position, IBM needed heavy restructuring from within. He quickly learnt IBM's culture and how it was shaped by the founder Thomas J Watson Sr. He saw how the original IBM Basic Beliefs had been distorted. For example, the Belief "Excellence in everything we do" led to delayed releases and loss of the market to competition.

An entire culture change was proposed and set into motion. While this met with some resistance, most IBM employees accepted the new cultural model. The new culture placed more emphasis on the marketplace, customer satisfaction, shareholder value and the vision of the company.

Contrary to the popular corporate thinking at the time, Gerstner started consolidating more operations within IBM and reversed the decentralization process that had set in. As part of this and to project a single voice, all advertising relationships were consolidated into a single agency which produced the highly praised "Solutions for a Small Planet" ads.

During the entire period, IBM executed several marketplace strategies that helped in its rise. This included the acquisition of Lotus, the expansion of IBM's services division and software group, increased commercialization of IBM research work and the e-business initiative. IBM continually sold assets even during the profitable period to concentrate on its areas of strength.

Gerstner devotes a considerable portion of the book launching a tirade against some of the irrational practices resulting from IBM's old culture. Most readers would recognize at least a few elements in their organization in the outburst. Every organization contains some elements of bureaucratic inefficiency and bad management.

Finally Gerstner mentions the lessons he learnt from his tenure at IBM. He emphasizes on organizational focus, good intelligence, detailed strategies, dedicated implementation, effective execution, inspections, high performance and competent leadership which has integrity, passion and discipline as the criteria for the success of an organization.

The book has certain limitations. The most significant problem with the narrative is that although it mentions the economy and the Internet boom, it is particularly reticent about impact of the state of the economy on IBM before and during Gerstner's period.

The 1990s began with a recession that gave way to the longest post-World War economic expansion and finally ended in the dotcom crash. IBM's revenue chart shows a similar trend, with a reversal of declining revenues in 1993 to a peak in 2000 and then lowered revenues in 2001. So did the timing contribute to Gerstner's success? Would IBM have recovered anyway? The book does not bother to provide any insight.

The book also studiously avoids details about IBM's relationships with other major companies during this period, particularly with Microsoft, Sun and Oracle. Other companies are usually mentioned as "competition" and even when a specific example such as the OS/2 debacle is mentioned, the viewpoint is highly IBM-centric.

Gerstner puts forward some ideas, which sound great until he starts citing exceptions and muddles his message. Some of his generalizations, such as the one about acquisitions, don't carry much weight when the reader remembers the Lotus merger. The book provides perspective into where problems could lie in an organization. The same cannot be said for solutions.

After finishing the book, I was reminded of those movies which leave people happy as they comes out of the theatre, but have them asking questions after a good night's sleep. The book is good, but has several holes.

Given the fact that Gerstner single-handedly changed a decades-old culture in a huge organization, it is not surprising that he manages to hold the reader's attention throughout a very absorbing book. But this is exactly the weakness of the book. It glosses over many details and leaves several questions unanswered. A monumental turnaround of a large organization requires a much larger book, with more details about the competition, the marketplace and the organization.

Gerstner clearly outlines the weaknesses in the old IBM organization and how it affected employees, shareholders and customers alike. While Gerstner takes the lessons he learnt from his IBM experience and show how other companies could benefit from it, he does not aspire to provide a panacea for other struggling companies. What he does clearly is show where problems could lie, and his important insights belong here.

This aspect of the book supersedes my other reservations regarding it and I strongly recommend the reader of this article to obtain a copy of the book and read a very meaningful narrative.