Lou Gerstner, former CEO and chairman of IBM who was widely credited for financially rescuing the venerable IT industry progenitor, passed away on Saturday at the age of 83.
During his nine-year tenure from 1993 to 2002, IBM dramatically expanded its consulting and service portfolio to augment revenues that previously were overly dependent on upgrades to mainframe systems that IBM originally developed in the 1960s.
Prior to joining IBM, Gerstner had been chairman and CEO of RJR Nabisco, a major food and tobacco conglomerate, but had earlier held senior positions at American Express. His initial exposure to the role IT could play in transforming organizations came earlier in his career when he served as a consultant at McKinsey & Co.
Following the resignation of John Akers, a longtime IBM insider, that experience as an outsider helped drive a massive change in IBM’s culture that resulted in a lot more focus on the needs of customers rather than primarily focusing on advancing the state of computer science.
“Lou Gerstner was a legend at IBM, architecting one of the major reinventions of IBM’s business in its long and storied history,” said Dan O’Brien, president and COO of the Futurum Group. “Generations of IBMers who joined the company after his tenure as CEO would hear him spoken of with reverence, for his client-centric approach, his intellect and passion, and the lasting relationships he built.”
Gerstner succeeded because he was not as wedded to legacy products and services, added JP Morgenthal, CEO of NexAgent Solutions.
“He succeeded at IBM because he was willing to do what no other leader was willing to, kill unsuccessful products and respond to customer demand for help,” said Morgenthal. “It looked remarkable, but really just demonstrates good executive leadership—a model for leaders even today.”
IBM, for example, began investing more aggressively in open source technologies and projects under Gerstner’s watch, culminating in the acquisition of Red Hat that occurred during the tenure of former IBM CEO Ginni Rometty, a longtime protege of Gerstner who rose through the ranks of the IBM services business. Rometty replaced Sam Palmisano, another long-time IBM insider, who succeeded Gerstner as CEO of IBM in 2012.
Since then IBM has once again gone on to reinvent itself as a software company under the tutelage of current IBM CEO Arvind Krishna, which led to the spinning off of Kyndryl as a separate company focused on IT services while IBM retained control of its more profitable consulting arm.
While IBM continues to evolve, the one thing that has remained constant is the steady stream of revenue it continues to drive via its mainframe and services business units, the latter of which benefits from opportunities stemming from mainframes and, now increasingly, open source platforms curated by Red Hat.
Precisely how IBM will evolve in the age of generative artificial intelligence (AI) remains to be seen. An early Watson initiative seemed to presage a technology renaissance that has since been overshadowed by advances led by comparative upstarts such as OpenAI and Anthropic. However, if there is any one legacy that Gerstner has bestowed on IBM it’s a capacity for change that often eluded many rivals that have long since been consigned to the scrap heap of IT history.
