I think that private-equity activity tends to come at the end of the corporate cycle, when a company is already in trouble, has been mismanaged, or is an orphan in need of new leadership. So private equity is another outside agent that comes in when management has failed to do what it needs to do.
Content: Quotation | Author: Louis V. Gerstner | Source: McKinsey Quarterly | Subjects: Business Rules, Corporate Governance, Management, Strategy
If the practices and processes inside a company don’t drive the execution of values, then people don’t get it. The question is, do you create a culture of behavior and action that really demonstrates those values and a reward system for those who adhere to them?
Content: Quotation | Author: Louis V. Gerstner | Source: McKinsey Quarterly | Subjects: Management, Organizational Behavior, Values
Strategic decisions should be the ultimate output of a strategic-planning program. That is, the strategic plan should clearly set forth the critical issues currently facing a company or division in terms of alternative courses of current action. If there are more than five or six issues, they are probably the wrong ones. If the decisions do not involve major risks or investments and/or changes in … [ Read more ]
Content: Quotation | Author: Louis V. Gerstner | Source: McKinsey Quarterly | Subject: Strategy
Too often a company’s executive motivation system flies in the face of strategic decision making. This occurs for two reasons. First, good managers tend to be promoted so fast that they never have to live with the medium- to long-run outcome of their plans. Second, incentive compensation is often tied either to short-term earnings performance or to stock-price movements, neither of which has anything to … [ Read more ]
Content: Quotation | Author: Louis V. Gerstner | Source: McKinsey Quarterly | Subjects: Compensation, Corporate Governance, Incentives, Management
One simple but powerful approach some multibusiness managers are using today is to sort their individual businesses into three broad portfolio categories: sources of growth (future earnings); sources of current and intermediate earnings; and sources of immediate cash flow. One of my colleagues has suggested that these categories relate directly to the so-called product lifecycle curve which can also, for these purposes, be termed a … [ Read more ]
Content: Quotation | Author: Louis V. Gerstner | Source: McKinsey Quarterly | Subjects: Finance, Management
In 1993, when IBM was in trouble and Lou Gerstner stepped in to steer the company, he famously said, “The last thing IBM needs right now is a vision.” Twenty years earlier, in a 1973 McKinsey Quarterly article, Gerstner brought this same pragmatic insight to the topic of strategic planning, urging executives to avoid the false comfort of vague forecasts and instead execute well-grounded strategic … [ Read more ]
Content: Article | Author: Louis V. Gerstner | Source: McKinsey Quarterly | Subjects: Management, Strategy
Gerstner quarterbacked one of history’s most dramatic corporate turnarounds. For those who follow business stories like football games, his tale of the rise, fall and rise of IBM might be the ultimate slow-motion replay. He became IBM’s CEO in 1993, when the gargantuan company was near collapse. The book’s opening section snappily reports Gerstner’s decisions in his first 18 months on the job-the critical “sprint” … [ Read more ]
Content: Book | Author: Louis V. Gerstner | Subjects: Case Related, People