Posting a $5 billion loss in 1992, IBM seemed to be crumbling. The tech giant had become a collection of insular departments or “fiefdoms” that competed with one another rather than collaborating to serve its customers. In April 1993, Louis V. Gerstner, who had held senior positions at American Express and RJR Nabisco, took over as CEO with a mandate to turn the company around. He succeeded.

What did Gerstner do? Among his major decisions, Gerstner chose to keep IBM together despite plans underway to break it into separate entities. The problem, as Gerstner saw it, was a rigid corporate culture that he described as “inbred and ingrown,” focused on internal politics and out of touch with a changing technological landscape.¹ “I came to see at my time at IBM, that culture isn’t just one aspect of the game, it is the game.”²

Gerstner’s insight is shared by prominent figures like Steve Kerr, Head Coach for the Golden State Warriors. Kerr speaks to the advice he received from Pete Carroll, who’d learned to build culture from coach Bill Walsh. “If you come in here with genuine, real values and then you make them come alive, that’s when the culture starts to form.”³  Andreesen Horowitz,^, founder of a16z, agrees. The author of “What You Do Is Who You Are” argues that culture reflects how people behave, “particularly…when you’re not looking.”⁴  Corporate culture takes shape around daily behavior, decisions, and habits.

To build a coherent culture at IBM, Gerstner began rewarding teamwork and tied compensation to performance and getting things done at all levels. IBM’s lumbering bureaucracy and internal conflicts had to give way to a flatter hierarchy and personal accountability. As Gerstner writes in Who Says Elephants Can’t Dance? “Well, my kind of executives dig into the details, work the problems day-to-day, and lead by example, not title. They take personal ownership of and responsibility for the end result. They see themselves as drivers rather than as a box high on the organization chart.”⁵

Gerstner describes a complex, often painful, turnaround process. Over 100,000 people were laid off thanks in part to a lifetime employment practice that allowed employees to grow lax, including managers who passively “presided” over the action. Moving forward required “changing the culture…the mindset and instincts of hundreds of thousands of people who had grown up in an undeniably successful company…. The challenge was making that workforce live, compete, and win in the real world. It was like taking a lion raised for all of its life in captivity and suddenly teaching it to survive in the jungle.”⁶

By changing its culture, its living values, IBM overcame lethargy and learned to “dance” in the emerging tech marketplace. What foundational values in your company culture need to be shed?

1. forbes.com/2002/11/11/cx_ld_1112gerstner
2. Gerstner, Louis V., “Who says Elephants Can’t Dance?” Harper Business, November 12, 2003
3. coachajkings/status/1952126832762871876
4. mikemcg0/status/1693609935639089655
5. Gerstner, Louis V., “Who says Elephants Can’t Dance?”
6. Gerstner, Louis V., “Who says Elephants Can’t Dance?”