Lou Gerstner facts for kids
Quick facts for kids
Lou Gerstner
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Gerstner c. 1995
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Louis Vincent Gerstner Jr.
March 1, 1942 Mineola, New York, U.S.
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| Education | Dartmouth College (BA) Harvard University (MBA) |
| Occupation | Former Chairman and CEO, RJR Nabisco (1989-1993) Former Chairman and CEO, IBM (1993-2002) Former Chairman, The Carlyle Group (2003-2008) |
| Known for | Leading IBM's historic corporate turnaround in the 1990s |
| Board member of | Chairman, The Broad Institute of MIT and Harvard (2013-2021) Chairman, Gerstner Sloan Kettering Graduate School of Biomedical Sciences (2014-present) |
| Spouse(s) | Robin Gerstner |
| Children | 2 |
Louis Vincent Gerstner Jr. (born March 1, 1942) is an American businessman. He is most famous for being the chairman and chief executive officer (CEO) of IBM from 1993 to 2002. Many people say he saved IBM and helped it become successful again.
Before IBM, Gerstner was the CEO of RJR Nabisco. He also held important jobs at American Express and McKinsey & Company. He went to Chaminade High School, Dartmouth College, and earned his MBA from Harvard Business School.
Gerstner has also led important groups like the Broad Institute of MIT and Harvard. He is currently the chairman emeritus of the Gerstner Sloan Kettering Graduate School of Biomedical Sciences.
He wrote a book called Who Says Elephants Can't Dance? about how he changed IBM. He also co-wrote Reinventing Education: Entrepreneurship in America's Public Schools.
Contents
Leading American Express
Gerstner joined American Express in 1978. He led the part of the company that handled travel and credit cards. Under his leadership, the company grew a lot by 1985. He found new ways for people to use the American Express card. For example, he encouraged college students, doctors, and women to use it. He also convinced businesses to use the card to track their expenses.
He also created special versions of the card for important customers. These included the Gold Card and the Platinum Card. As sales and profits went up, Gerstner became chairman and CEO of the Travel Related Services division in 1982. He became president of the main company in 1985.
Even though he got this big job at 43, Gerstner said he was not a "workaholic." He explained that he took four weeks of vacation every year. As the leader of the Travel Related Services division, Gerstner started the famous "membership has its privileges" advertising campaign. This part of the company was always the most profitable. It also led the entire financial services industry.
Gerstner left American Express in 1989. He became the chairman and CEO of RJR Nabisco. He had helped American Express grow its membership from 8.6 million to 30.7 million during his 11 years there.
Turning Around IBM
Gerstner became the chairman and CEO of IBM in April 1993. IBM was having a tough time, and its previous CEO had to leave. The company first looked for a new leader from inside the computer industry. But people like John Sculley from Apple and Bill Gates from Microsoft were not interested. So, IBM chose Gerstner, who was an outsider. He was the first IBM CEO hired from outside the company.
When Gerstner arrived at IBM, he said, "the last thing IBM needs right now is a vision." Instead, he focused on getting things done. He wanted to make the company simpler and faster. Many people thought he would fire a lot of people. But at first, he only changed a few top leaders.
In his book, Who Says Elephants Can't Dance?, Gerstner wrote about his first days at IBM. At that time, there was a plan to break up the company into smaller parts. Many believed that IBM's main business, making large mainframe computers, was becoming old-fashioned. IBM's own leaders were letting different parts of the company become separate.
Gerstner changed this plan. He realized that big companies in 1993 needed help connecting all their different computer technologies. He saw that IBM's special strength was its ability to offer complete technology solutions to customers. He learned this by listening to many people within IBM. His decision to keep the company together was very important. It allowed IBM to offer full IT solutions to its customers. They could sell services along with computers. Even if hardware wasn't very profitable, it opened the door to more profitable deals.
IBM and the Rise of E-business
One of Gerstner's big ideas for IBM in 1993 was to make "e-business" its main focus. He believed that businesses would use the internet more and more. He wanted the internet to be used for more than just looking at web pages. He thought that a network-focused approach would move work from personal computers to larger business systems. This would allow the internet to be part of all business operations.
IBM's early ideas for e-business included online shopping and creating huge online libraries of movies, books, and music. Soon after, Gerstner announced e-business as IBM's main growth plan. He created the IBM Internet Division. In 1996, IBM's marketing team created the term "e-business." This term described any business or commercial activity done over the internet. Under Gerstner, e-business changed IBM. Within six years, IBM became the top company for providing products and services to help businesses become "e-businesses."
Changes in the PC Market
IBM was known for making the personal computer (PC) popular. However, the company could no longer control the PC market. Many cheaper "IBM-compatible" PCs were being made. These used the same Intel chips and Microsoft software. They sold for less money and took away IBM's market share.
Gerstner, as an outsider, did not have strong feelings for older IBM products. He wrote that even though IBM's OS/2 software was technically better than Microsoft Windows 3.0, his colleagues could not accept that it was a "big defeat." OS/2 was costing millions of dollars and taking up a lot of management time. By the end of 1994, IBM stopped developing new OS/2 software.
IBM eventually left the retail desktop PC market because it was no longer making money. Three years after Gerstner retired in 2002, IBM sold its PC division to Lenovo.
Rebuilding IBM's Culture
Gerstner described the turnaround as very difficult for IBM. The company's culture had become very closed off. After he arrived, over 100,000 employees were laid off. Before this, IBM had a tradition of lifetime employment. Many employees had become relaxed because they thought their jobs were secure no matter what. Top-performing employees were very unhappy about this.
To create one clear brand message for all IBM products, Gerstner's team combined many advertising agencies into just one, Ogilvy & Mather. Layoffs and other tough management actions continued for the first two years of his time there. But the company was saved, and its business has grown steadily since then.
From 1993 to Gerstner's retirement in 2002, IBM's market value grew from $29 billion to $168 billion. Even with this success, IBM lost some of its top position compared to newer companies. Microsoft grew beyond just PC software. Companies like Apple and Dell gained more market share. New companies like Google also appeared and created new computer-based businesses.
Gerstner Philanthropies
Gerstner started the Gerstner Family Foundation in 1989. He is the chairman of this foundation. The Gerstner Family Foundation and other related charities (together called "Gerstner Philanthropies") help non-profit organizations. They focus on four main areas:
- Biomedical research (medical science)
- Education
- Environment
- Helping Hands (giving emergency money to people in need)
Sometimes, the organization also focuses on other areas. Recently, they have helped emergency food programs. This is because more Americans, including children, are struggling to get enough food. Gerstner Philanthropies has given over $300 million in grants.
Supporting Biomedical Research
Gerstner Philanthropies has invested over $180 million in biomedical research. This money supports cancer and genomic research. It also provides fellowships for new researchers. These researchers work to make medical advances that can help patients. Over 200 researchers have been named Gerstner Scholars.
Environmental Efforts
Grants for environmental research aim to help with climate change. They work on reducing methane emissions from livestock. They also develop ways to reduce plastic pollution.
Education Initiatives
In education, the foundation has directly helped over 1,600 students. They provide scholarship grants. By funding groups that help with college access, new school models, and emergency cash aid, they have helped thousands more students.
The Helping Hands Program
The Helping Hands program has helped over 22,000 families and individuals. It provides one-time financial help for emergencies. By giving these grants, Helping Hands helps prevent families from losing their homes. Most of the grants are for preventing eviction. Partner organizations, who focus on helping people in poverty, manage these grants.
In June 2023, Gerstner wrote an article in The Wall Street Journal. He talked about how the Helping Hands program helps prevent homelessness.
Boards and Other Roles
Throughout his career, Gerstner has been active in both business and non-profit leadership.
In January 2003, Gerstner became chairman of The Carlyle Group. This is a global private equity firm. He was chairman until October 2008. After that, he continued as a senior advisor until September 2016. Gerstner also served on the boards of major companies. These included American Express, AT&T, Bristol-Meyers Squibb, Caterpillar, and the New York Times.
He also held important roles in non-profit organizations. He was a board member of the Council on Foreign Relations (1995-2005). He was a Citizen Regent for the Smithsonian Board of Regents (1996-1999). He chaired the board of the Memorial Sloan Kettering Institute for Cancer Research (2000-2012). He was a Trustee for the American Museum of Natural History (2003-2020). He also chaired the board of the Broad Institute of MIT and Harvard (2013-2021).
Awards and Recognition
In June 2001, Queen Elizabeth II gave Gerstner the title of honorary Knight Commander of the British Empire. This was to recognize his work for public education and his business achievements.
Gerstner was chosen for the National Academy of Engineering in 1999. This was for his leadership in making U.S. industry more competitive. He is also a fellow of the American Academy of Arts and Sciences. In 2008, he received the Legend in Leadership Award from the Yale School of Management. The Simon School of Business at the University of Rochester gave him their Executive of the Year Award in 2013.
He has received many honorary doctorates. These include Doctor of Laws from Wake Forest, Brown University, and Notre Dame. He also received honorary Doctor of Science from the American Museum of Natural History and the Gerstner Graduate School of Biomedical Science. Dartmouth College also gave him an honorary Doctor of Humane Letters.
Gerstner has received many awards for his work in education. These include the Cleveland E. Dodge Medal from Teachers College, Columbia University. He also received the Distinguished Service to Science and Education award from the American Museum of Natural History.
