Lou Gerstner IBM’s iconic former CEO passed away last weekend at 83 years of age. He will be remembered for generations for rescuing IBM from near demise when its value and viability tanked in the very early 1990s. Before Gerstner took the helm of IBM, many predicted bankruptcy or splitting the company into smaller units and selling them off, but Gerstner not only rescued the company, which almost couldn’t make payroll in early 1993, but he kept Big Blue intact and restored it to the top of the heap by the time he retired in 2002.
In his book about his IBM tenure, “Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround,” Gerstner chronicles how he engineered the company’s re-emergence and references some of the work he did with regard to the company’s leadership in social responsibility and philanthropy, but actually that story is far more extensive and important and hasn’t been told enough.
And yet, in the current environment where far too many business leaders are staying silent on critical societal issues, it needs to be given much more attention. Lou Gerstner believed strongly in the importance of corporate social responsibility and the essential role of education to our nation. When he hired me to join his IBM team and serve as president of the IBM Foundation and lead its efforts in social responsibility, he made clear that his commitment was steadfast.
Prior to assuming the post of CEO, when IBM was the technology leader globally, it was also very generous philanthropically with significant financial contributions to universities, hospitals and nonprofit organizations globally. But when Gerstner took over the CEO position at IBM he felt strongly that writing checks and contributing cash was not enough. He was looking for something more transformative.
When he recruited me to head the IBM International Foundation and serve as VP for corporate social responsibility, under Lou’s leadership we developed a new strategy. Instead of checkbook philanthropy the company would switch to donations of its most innovative technology along with its most important asset, the talent of IBMers contributed in a pro bono and focused way to collaborate with partners in government and civil society to actually solve critical societal problems.
In one example, IBM created an innovative children-focused technology solution called KidSmart and donated tens of thousands of specially designed technology cabinets globally allowing two to three students in the early grades an opportunity within classrooms to work together and make an impact on their early learning. KidSmart was contributed across school districts and internationally and was so successful it was highlighted by the European Union for its effectiveness.
In another example, after a host of natural disasters ravaged the U.S. and geographies around the world, IBM shifted from cash donations to sending technologists and their hardware and software to help organize disaster response. After 9/11, an IBM team worked to develop a technology solution that helped those impacted to easily obtain access to a range of key services.
Rosabeth Moss Kanter at Harvard Business School referred to the Gerstner-led IBM societal programming as going from “spare change to real change.” And there were a host of other examples, innovative language translation software specifically designed for English language learners, a software platform to assist mentors to help veterans and their spouses find work, an integrated solution called Reinventing Education that helped school districts embrace change, and much more. And there were efforts to go beyond legal requirements to embrace environmental reform extending compliance efforts to improve the environment beyond just IBM, but throughout the company supply chain and across the industry. Lou was a real leader.
But Gerstner did more than have the company design and contribute a range of innovative solutions. He also got personally involved as a business leader and spokesperson and inspired others to join with him in affecting large scale societal issues. In 1995, he requested an opportunity to deliver the keynote speech to the National Governors Association. Education was his passion and he wanted to inspire the nation’s governors to work with him to raise the bar on educational standards.
His speech challenged the nation’s governors to join him at a National Education Summit which he agreed to organize and host at IBM’s conference center in Palisades, N.Y., something that had never before been done. He served as co-chair with then-Gov. Tommy Thompson of Wisconsin and constructed a planning committee of six governors from both parties and a half dozen prominent CEOs. The Summit was a success.
In total, 47 of 50 governors attended a 24-hour event and each brought a key CEO from their state, joined by President Bill Clinton and key education leaders. Going into the Summit only ten of 50 states had educational standards of any kind and only a year after the Summit the number rose to 46 states. He led two follow up Summits and helped create a nonprofit called Achieve to help states embrace reform.
The three Summits and the engagement of key business leaders made a difference and while some advised Gerstner to back off he wouldn’t and never did. It wasn’t in his DNA. Even after retirement, the Gerstner Foundation, on whose board I sat, provided significant assistance on a host of critical issues including making millions of dollars available in cash grants to people living on the edge address affordability.
America has a history of key business leaders playing a very negative role on a host of societal issues. In the 19th century the robber barons exhibited bad labor practices and engaged in many illegal activities to the detriment of employees and society.
But bad practices are not only in America’s history. There are more recent examples of bad business practices. Enron went out of business after exhibiting fraudulent practices and Bernie Madoff was a clear example of outright theft. And it doesn’t end with history or more recent actions. However at the same time there were examples of the opposite, true business leadership.
In the 1870s, American Express established the first corporate pension plan and in the same decade shortly after the Civil War, Macy’s offered free health care to its employees. In the first decade of the 20th century, before the First World War, close to 500 U.S. companies offered a week of paid vacation, and in the 1950s a decade before the U.S. enacted the Civil Rights Act, Tom Watson another IBM CEO, opened the first racially integrated manufacturing plant below the Mason-Dixon line in Lexington, Ky., which integrated the schools there as well.
Gerstner’s approach to leadership in his role as IBM CEO followed in the steps of those kinds of leaders, and took it to the next level. This is particularly important now because many business leaders who have personal problems with a host of activities taking place at the federal level that have a serious and negative impact on both schools and colleges, as well as other institutions vitally important to society, have chosen to remain silent.
Too many have refused to engage in efforts that might be deemed critical of practices like steep cuts to scientific research or student supports, things that are counter to the wishes of their employees, shareholders or the communities where they operate. Hopefully, Lou Gerstner’s significant leadership, highlighted at the time of his passing, will provide an opportunity to turn things around and meld the interests of business and society, in the best interests of both. Lou Gerstner would be proud and pleased if that took place.
Litow, a professor at Columbia University’s School of International and Public Affairs, is a SUNY Trustee and former president of the IBM Foundation and former NYC deputy schools chancellor.
