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Effective Leadership to Lead Organizational Change

IBM was in unfathomable trouble when Lou Gerstner came on board as CEO in 1993. Once a leader in its field, IBM with 300,000 employees was quickly losing billions. With 100 days of cash left, and a group of employees who were quickly demoralizing, change needed to happen and fast. A lack of cohesiveness in corporate strategy was also hindering the company’s success. Regardless if IBM had a struggling team and good technology, Gerstner, said that IBM was suffering from a “success syndrome.” IBM was once the biggest commercial institution through the past several decades. Instead of continuing its bequest it began to turn narrow and look inward instead of out. None of the departments were communicating and Gerstner new that he had to lead a transformational change, which would change IBM on the inside and focus around the customer on the outside.
After only 30 days on the job, Grestner introduced his strategy – Team IBM. This new plan reorganized and recharged employees and the entire enterprise.
"Transformation of an enterprise begins with a sense of crisis or urgency . . . No institution will go through fundamental change unless it believes it is in deep trouble and needs to do something different to survive." (Lagace, 2002).
To continue renew the organization, Gerstner wanted to offer entire solutions to customers. By doing that he had to reorganize every business method carried out by IBM. It required the revamp of management and a layoff of employees when necessary. Using IBM’s technological success to provide solutions for customers was also part of this strategy.
The long and painful transformation proved successful. In 2001, eight years after Gerstner joined the team, IBM was reporting a net income of $7.7 billion, and its share price had increased nearly eight-fold.
While Gerstner is credited with this legendary turnaround, he is quick to...