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 a famous American business leader. He is best known for being the chairman and CEO of IBM from 1993 to 2002. During his time, he helped turn the company around and made it 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 a business degree from Harvard Business School.
Today, Gerstner leads Gerstner Philanthropies, a family foundation. This foundation has given over $300 million to support important causes like medical research, education, protecting the environment, and helping people in need.
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Leading at American Express
Lou Gerstner joined American Express in 1978. He took charge of the part of the company that handled travel services, like credit cards. By 1985, under his leadership, American Express became much more popular.
He found new ways for people to use the American Express card. For example, he encouraged college students, doctors, and women to get cards. He also convinced businesses to use the card to keep track of their expenses. Gerstner even created special cards, like the Gold Card and Platinum Card, for customers who spent more money.
Because sales and profits grew, Gerstner was promoted to chairman and CEO of the Travel Related Services division in 1982. He became president of the main company in 1985. He helped create the famous "membership has its privileges" advertising campaign. This part of the company was always very profitable.
Gerstner left American Express in 1989. He had helped increase card membership from 8.6 million to 30.7 million during his 11 years there. He then became the chairman and CEO of RJR Nabisco after a very large company takeover.
Turning Around IBM
In April 1993, Lou Gerstner was hired as the chairman and CEO of IBM. At the time, IBM was struggling, and its previous leader had to leave. The company first looked for a new leader from inside the computer industry. However, big names like John Sculley from Apple and Bill Gates from Microsoft were not interested. So, IBM turned to Gerstner, who was an outsider to the computer world but had a history of success. He was the first IBM CEO ever hired from outside the company.
When Gerstner arrived, many people thought IBM should be broken up into smaller, separate companies. They believed IBM's main business, making large mainframe computers, was becoming old-fashioned. Even IBM's own leaders were planning to let different parts of the company manage themselves.
But Gerstner had a different idea. He realized that the biggest challenge for large companies in 1993 was connecting all the different computer technologies that were appearing. He saw that IBM's special strength was its ability to offer complete technology solutions to customers. Instead of selling just parts, IBM could provide everything a company needed. This decision to keep IBM together was key to his success. It allowed IBM to offer full IT solutions, where services could be added to computers, and hardware could open doors to more profitable deals.
Gerstner also had a vision for IBM to focus on "e-business." He believed that the internet could be used for more than just browsing websites. He wanted to use the internet to help businesses operate better. IBM's early ideas for e-business included online ordering, virtual stores, and digital libraries of movies and music. In 1996, IBM's marketing team even created the term "e-business." Under Gerstner, IBM became a leader in helping businesses use the internet for their operations.
IBM had helped make the personal computer (PC) popular. However, many cheaper computers that used the same parts and software started to appear. This made it hard for IBM to compete. Gerstner realized that some of IBM's older products, like the OS/2 software, were losing money and hurting the company's image. By the end of 1994, IBM stopped developing OS/2. Later, IBM even left the retail PC market because it was no longer profitable. Three years after Gerstner retired, IBM sold its PC division to another company called Lenovo.
Gerstner wrote in his book, Who Says Elephants Can't Dance?, that turning IBM around was very hard. The company culture had become too comfortable. Over 100,000 employees were laid off, even though IBM used to offer lifetime employment. This was tough, but it helped save the company. IBM also brought all its advertising under one agency to create a single brand message.
From 1993 to 2002, IBM's value grew a lot. Gerstner's leadership helped IBM become strong again.
Gerstner Philanthropies
In 1989, Gerstner started the Gerstner Family Foundation. He serves as its chairman. This foundation mainly supports important areas like:
- Medical research
- Education
- Protecting the environment
- Helping people who are going through a difficult time and need a "helping hand" to get back on their feet.
Gerstner Philanthropies, which includes all of Gerstner's charitable giving, has given over $300 million in grants so far. In 2023, they gave over $29 million to various programs. Gerstner has also written about how the foundation's "Helping Hands" program works to prevent homelessness.
After IBM
In January 2003, Gerstner became the chairman of The Carlyle Group. This is a large global investment firm based in Washington, D.C. He was chairman until October 2008 and continued as a senior advisor until September 2016.
He also served as chairman of the Broad Institute of MIT and Harvard from January 2013 to May 2021.
Awards and Honors
Lou Gerstner has received many awards for his work.
- In 1991, he received the Golden Plate Award from the American Academy of Achievement.
- In 1999, he was elected a member of the National Academy of Engineering for his leadership in making U.S. industry more competitive.
- In June 2001, Queen Elizabeth II made him an honorary Knight Commander of the British Empire. This was to recognize his work in public education and his business achievements.
- He has also received awards for his work in education, including the Cleveland E. Dodge Medal from Teachers College, Columbia University.
- In 2008, he received the Legend in Leadership Award from the Yale School of Management.
