Creating New Corporate Memories to Reinvent IBM

Abstract

The dominating role of corporate memory/corporate culture in instituting/impeding dramatic changes is highlighted in the first‐person narrative of Louis V. Gerstner, Jr. of his tenure as IBM CEO (1993‐2002). Gerstner, who had never worked in the computer business, was brought in to rescue IBM which had lost $16 billion in three years, and half its share value in eight years in which 175,000 employees lost their jobs. “I came to see in my time at IBM that culture is not just one aspect of the game‐it is the game... [When the original environment institutionalized in the corporate culture] shifts, it becomes an enormous impediment to the institution’s ability to adapt.” To overcome the impediment, Gerstner had to employ Draconian Measures to replace/rebuild the institutional memory: [1] organizationally by ripping power out of the entrenched bureaucracy, and giving it to 12 newly‐constituted customer‐centered industries, [2] operationally by tying Pay and Promotion to IBM stock performance (instead of individual units), [3] motivationally by rewarding individuals on their accomplishment of their plans to implement the Gerstner triad: “Win, Execute, Team,” and [4] strategically by making big bets on unproven technologies of CMOS and Net work‐centered e‐business. Our Memory Management Disequilibria Dimensions (MD)2 Pro ‐ to colanalyzes the Gerstner narrative accurately.

Citation

Chacko, G.K. (2005), "Creating New Corporate Memories to Reinvent IBM", Management Research News, Vol. 28 No. 8, pp. 1-26. https://doi.org/10.1108/01409170510784922