The Man Who Revived IBM

 

“Starting a business is hard, but harder still is reviving a once-great company that has fallen from its glory days. You have to change the culture in addition to finding a new business mission. That was the great achievement of Louis V. Gerstner Jr., who revived IBM in the 1990s and died Saturday at age 83.

 

Lou Gerstner was the first outsider to take the helm at IBM, the storied firm that once looked so dominant in computer mainframes that the Justice Department spent foolish years trying to break it up.

 

 But like many former giants, IBM lost its leadership to upstarts as the personal computer and software eras surpassed mainframes.

 

Taking over at IBM in 1993 after stints at RJR Nabisco and American Express, Gerstner pivoted the company from hardware to focus on business services. He stopped trying to compete with Microsoft's Windows operating system and instead offered customers expertise in how to integrate corporate data and networks. He laid off some 10% of the company's employees, which was a shock to the IBM tradition of lifetime tenure but underscored the necessity of change for company survival.

 

The strategic shift worked, and IBM revenues boomed. During his nine years as CEO, IBM's market value rose from about $13 to $80 or so a share. The turnaround saved tens of thousands of jobs and provided comfortable livelihoods and retirements for countless families.

 

Gerstner worked in private equity after he left IBM, serving as chairman of the Carlyle Group from 2003-2008. He was a notable philanthropist with a special passion for education, as he showed in op-eds promoting reform in our pages over the years. Gerstner Philanthropies has invested more than $300 million in biomedical research, education and humanitarian causes.

 

Business management has fallen out of media and popular favor as entrepreneurs became the glory boys of American capitalism. But CEOs with vision and courage are crucial to making companies succeed. This is the reason that shareholders and boards are willing to pay good managers well.

 

Lou Gerstner was one of the best, to the great benefit of hundreds of thousands of Americans.” [1]

 

1. The Man Who Revived IBM. Wall Street Journal, Eastern edition; New York, N.Y.. 30 Dec 2025: A16.