The appointment of Louis Gerstner as IBM Corp’s new chairman and chief executive is a very courageous decision, Mr Burke, as that archetypal civil servant Sir Humphrey would tell his minister whenever the hapless Hacker suggested he might follow a particular course of action. Courageous is of course civil service shorthand for describing any policy decision that is certain to generate a storming and long-lasting row and is unlikely to do anything to advance the minister’s career. Courageous decisions are nevertheless sometimes called for, so is this the right time to appoint a computer industry outsider to te top job at IBM? The omens are not propitious. It takes a diligent computer journalist with a technical education two years of intense effort just to begin to feel confident of expressing an opinion on anything material about the industry, and thereafter the next four or five years will be dogged by mistakes that are intensely embarrassing to recall.
Explosive
Apple Computer Inc chief John Sculley reckons it is essential for the head of a computer company to have a clear grasp of technological directions and acknowleged that it took him several years before he felt confident to take strategic decisions. Moreover on a single decision – do we license this environment to the rest of the industry or do we keep it to ourselves – can depend the entire future of a computer company, with the wrong decision spelling oblivion. A dozen years ago, Zilog Corp with the Z80, Micropro International Corp with WordStar, Digital Research Inc with CP/M, Software Arts Inc with VisiCalc, Wang Laboratories Inc with its office systems, ruled the low end of the industry – the end that was poised for explosive growth over the next decade: where are they now? The daunting difficulty is underlined again by one of our front pages of last week: there were people from IBM’s labs discussing this holographic polymer they had developed, which promised unimaginably high capacity and low cost data storage: right, well if that’s coming along, there’s not much point in putting much more investment into rotating magnetic memory systems disks to you and me, DASD to IBMers – is there: better put AdStar onto a care-and-maintenance basis, perhaps even sell it. But what about the story immediately above the IBM polymer story? There’s Sony Corp saying that by simply engraving a spiral groove on the surface of the platter, it reckons it can store 1.5Gb in a 2.5 disk drive. Long experience suggests that magnetic disks have seen off a long series of challenges over the past 15 years – but a review of the survival and thriving of the technology gives a very partial and inadequate view. Apart from IBM itself, what were the big names in disk drives 10 years ago? Control Data Corp, Memorex Corp, Storage Technology Corp, and those thrusting newcomers Seagate Technology Inc and Tandon Corp, which had seen off such old-timers as Shugart Corp and Pertec Computer Corp. Today only Seagate is still up there among the leaders, IBM is still striving to build a serious OEM business, and the big names alongside Seagate are Conner Peripherals Inc, Quantum Corp and Maxtor Corp, with Hewlett-Packard Co becoming a bigger presence.
Elusive
In the meantime, we have seen the rise and fall of Computer Memories Inc, MiniScribe Corp, Priam Corp, PrairieTek Corp and Rodime Plc, each a hot property at one stage in its career. And while it is easy enough for an experienced journalist to write that synopsis from memory (checking for the elusive name of Software Arts and making sure that it really was PrairieTek that vanished last year), it would take a deal of research and above all deep thought to put together a dissertation on why things panned out the way they did, the fatal mistakes, the good decisions that each company made to achieve triumph or disaster, or both in quick succession. Can a manager feel happy making strategic decisions simply on the basis of what his lieutentants tell him, without satisfying himself that they are not simply spouting the IBM conventional wisdom th
at has got the company into the mess it is in today? Even blindingly obvious and crucial insights don’t usually come instantly – it took us 24 hours to realise that the part-concealed agenda behind IBM’s December closures was that the company was signalling the death of the mainframe, a couple of months to realise that the executive search committee of IBM non-executive directors hadn’t a clue what it should be looking for in a new chief executive for IBM – because they themselves didn’t have the computer industry background they needed to recognise how vital such a background would be to the person assuming the post. Instead, it was just one of 11 qualifications they sought, with the ability to listen to and act on what customers were saying one of the ones highlighted. But to what extent to customers really tell a computer company all it needs to know? One of the most striking features of IBM’s lamentable personal computer business is that there is not a single reason embedded in the hardware why IBM mainframe and AS/400 users should buy their personal computers from IBM rather than from its army of tormentors led by Compaq Computer Corp: presumably few customers have actually asked IBM for 3270 and 5250 emulation in ROM on the motherboard at no extra charge in its PS/2s – or perhaps IBM thought that would kill off its dumb tube business and resisted until it was too late – now it makes no money on personal computers and sells few dumb tubes. The most daunting problem facing Louis Gerstner is that as yet he has absolutely no idea just how much he doesn’t know – and he will be Superman if in six months he has more than scratched the surface on that problem.
Burdensome
Gerstner is praised for his achievement in cutting debt in half at RJR Nabisco Corp, a collection of mature low and medium technology businesses – but cutting the debt of the burdensomely leveraged company was the job of whoever became chief executive at RJR Nabisco: it’s much harder to define exactly what the job is at IBM. The one indication that Gerstner recognises the problem will be his approach to the top jobs at each of IBM’s most important businesses. His first act needs to be to get the corporate search people straight back into action looking for outsiders to run the AS/400 business – someone from Hewlett-Packard perhaps, the disk business, the chip business, the software and services business. That too might be characterised as a courageous move – but nothing like as courageous as that of James Burke and his cohorts in deciding that the right man to dig IBM out of its hole was outsider Louis V Gerstner Jr.
