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A View from Beneath the Dancing Elephant: Rediscovering IBM's Corporate Constitution Paperback – June 2, 2014
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Peter E. Greulich
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Print length186 pages
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LanguageEnglish
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Publication dateJune 2, 2014
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Dimensions5.5 x 0.42 x 8.5 inches
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ISBN-100983373469
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ISBN-13978-0983373469
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Product details
- Publisher : MBI Concepts Corporation (June 2, 2014)
- Language : English
- Paperback : 186 pages
- ISBN-10 : 0983373469
- ISBN-13 : 978-0983373469
- Item Weight : 7.8 ounces
- Dimensions : 5.5 x 0.42 x 8.5 inches
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Best Sellers Rank:
#3,202,530 in Books (See Top 100 in Books)
- #5,118 in Company Business Profiles (Books)
- #8,228 in Business Professional's Biographies
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About the author

Peter E. Greulich spent thirty years serving IBM customers in a variety of roles: administrator, systems engineer, worldwide sales instructor, salesman, and as worldwide brand, product and market managers. Pete achieved a wide variety of perspectives over his time at IBM. He has enhanced his thirty years of "hands on" experience with more than a decade of in-depth study of the corporation and its early American peers.
In 2011, he published his first work about IBM's founder, Thomas J. Watson Sr.: The World's Greatest Salesman. In 2014, he published his second work, a rebuttal to Louis V. Gerstner's self-evaluation "Who Says Elephants Can't Dance?:" A View from Beneath the Dancing Elephant. In 2017, his third work took an exhaustive look at IBM's century of great, good, and bad leadership: THINK Again!: IBM CAN Maximize Shareholder Value. In November 2020, Pete released a refresh--a second edition--of THINK Again!: The Rometty Edition. This new edition covers all of IBM's Chief Executive Officers--extending from Thomas J. Watson Sr. to now include an evaluation of and information through Virginia M. (Ginni) Rometty's performance from 2012 to 2019.
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Many years ago, IBM was known for its extraordinary corporate culture: good performers could count on having their jobs forever, the firm showed loyalty to its employees in acts both small and large, and employees were proud to refer to themselves as "IBMers." Employees returned this gift of loyalty with un-coerced dedication.
Mr. Greulich paints the original "basic beliefs" of the firm, its moral and ethical compass, as its "constitution" -- the framework for the firm's behavior toward its employees, and for its employees towards each other.
As Mr. Greulich points out, things have changed so much that you'd be hard pressed to find an recent IBM hire who can relate to those times past. Today, instead of a relationship based culture, there's more a transactional culture: expect no loyalty from the firm, work for the paycheck, assume you'll leave eventually, at your choice or IBM's. Instead of trusting in management, one is by default skeptical of them, partly because of the annual lay offs (euphemistically called "resource actions"). In today's world, the constitution of basic beliefs, and the way that IBM implemented them, seem hopelessly old fashioned.
Great, I enjoyed the read. And then I asked myself, "so what?" Where does one go with this background information? I would like to imagine that there's more value in Mr. Greulich's work than just the catharsis. So let me imagine Mr. Greulich is writing a follow-on book, one suitable for a university course on business organizational models, or ethics and responsibility toward employees. Or, a book for a business leader who wants to imagine a considerate, ethical and effective cultural framework for her company and is looking for ideas. Yes, I understand, Mr. Greulich might not have been aiming for that broad business readership demographic for his book. He might have written it primarily for IBM employees past. But, what if he were to extend his analysis to consider the broader business context? He might consider writing about the extensibility of his experience:
(1) Mr. Greulich portrays the basic beliefs -oriented culture as wonderful -- and surely they were for most employees. But were they an effective business approach in terms of any meaningful metrics beyond employee attitude and loyalty? For example: if the culture was so great, why were there so many layers of management, and so much bureaucracy, leading to such a high general and administrative expense?
How is it that the firm made so many errors that it found itself at the brink of bankruptcy (just prior to Lou Gerstner's turn as CEO in 1993)? Why is it that one of the first action items that Mr. Gerstner identified for IBM's recovery was to refocus the entire firm on client success? This even though the compass had explicitly identified service to the customer as a basic belief.
From an outside observer's point of view, those basic beliefs didn't do much to prevent disaster at IBM in the early 1990s. Given the customer focus issue, one might imagine that -- at least one of --the basic beliefs were completely ineffective. How did "respect for the individual" align with the legions of checkers upon checkers in the bureaucracy? It doesn't seem difficult to imagine why someone like Mr. Gerstner would think it is time to eliminate this ineffective constitution.
(2) Mr. Greulich suggests that Mr. Gerstner might have found ways to incorporate the basic beliefs into his restructure of IBM from 1993 to 2002. But given their abject failure to positively influence the firm's financials, what would have been Mr. Gerstner's motivation? To spend considerable funds "just" to assure workforce loyalty and delight may have seemed irrelevant to him. He was brought in explicitly to fix the business, so the key question is, how does a "historical IBM basic beliefs approach to the workforce" facilitate the combination of margin improvement, revenue generation, and new product investment required to succeed? This would be a very interesting research topic.
(3) In the post-Gerstner leadership era at IBM, Mr. Palmisano (and then Ms. Rometty) took over as CEO. Unlike Mr. Gerstner, they were long time IBM employees; they could remember the basic beliefs that Mr. Greulich describes as IBM's constitution. So: why didn't they find ways to bring those beliefs back into play, to eliminate annual layoffs (which anyone, even without management training or an MBA could figure out would be extraordinarily demoralizing and disruptive in the long term), and repair the old -style pension system?
Mr. Palmisano choose to restructure those basic beliefs using input from his "values jam" to rebuild them. Presumably he thought that approach would resonate with his employee base. The net was: dedication to every client's success, innovation that matters, and trust and personal responsibility in all relationships. Notably though, Mr. Palmisano's list was all about how the employees should act, and not about how the firm should behave towards those employees. Is this the key turning point in how IBM (and perhaps most US firms) think about their workforce?
I wonder if Mr. Palmisano's updated values list would have justified breaking through race, color and creed barriers back in 1953 as IBM did then, 11 years prior to the Civil Rights Act. Still the question: why not return to "old IBM beliefs?" Is it because he didn't see them working effectively at the goals that matter to him (revenue and earnings growth)? Why might this be the case? What adaptations might enable a highly loyal employee base and not unreasonably add to costs? What is acceptable EPS growth (compared to maximum EPS growth)? The key difference between these questions and the ones in (2) above are that here the lead executives were quite familiar with the old culture, as opposed to Mr. Gerstner who had no prior IBM employment experience.
(4) As much as IBM had been an anomaly in its corporate culture prior to the early 1990s, in the 21st century today's IBM appears to act with the norm. Most (if not all) US firms eliminated their defined benefit pension plans over the past 20 years. Recent college graduates are told they should expect to change jobs frequently and not stick with the same firm for decades (as their parents might have). Is this propaganda to reflect the discontinuation of benefit models that would encourage a long-term workforce, or is it a reflection of the changing values of American companies (i.e., towards a contractor -like, transactional and short term relationship with employees)? Is this portable employment model better for employees or worse?
Are there US -based firms today that reflect the "old IBM culture" - and if so, how are they doing on any metrics? Does Google fit the model? How about Costco? If so, is their retention rate a consequence, and a meaningful benefit? How about firms in the rest of the world?
In summary, Mr. Greulich's book is very well written and one I greatly enjoyed. The target audience appears to be long-term or former IBM employees who can find catharsis in the read. I was, however, hoping for a text that I could recommend to others, say as a guide to how to organize a 21st century firm, or as an analysis of the tradeoffs between employee relationship and business results.
Another few points on the culture. IBM was very buttoned up when I arrived in 1966 but overall I liked it as the culture was defined and adhered to. The 'always wear white shirts' was somewhat extreme but bearable. Reading and completing the "Code of Conduct" each year (and if you were late, they would find you) was a good way to push out what you wanted to have happen as a company (and I had seen at least one person fired for violating the code). The sales organization in the early days was amazing, executive contacts at most customers, integrated with the customer on their facilities where it made sense etc. It really felt that you had a mission and that was to help make that customer successful, this lesson was never forgotten by me. I did like the attitude surveys and the 'opportunity' for a manager to cover his/her results with their subordinates, it was eye opening no matter what position you were in. The 'don't talk about your salary with anyone' was very punitive and certainly not the norm today, at least outside of IBM. I personally learned a tremendous amount of valuable skills and knowledge while working for IBM and helped launch my career both inside and outside IBM. Most of my skills and knowledge were learned at IBM and expanded after leaving in 1983.
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I'm not sure what non-IBM readers would make of it - some of it is an analysis of how the company has changed and the implications for its success but a lot of it is really a personal reminiscence of the author's experiences working for IBM - the good and the bad. Anyone who worked for IBM in the old-days (60s, 70s or 80s) will probably enjoy it for nostalgic reasons. For others, it offers an insight into how a long-term commitment to a few clear, basic beliefs can be so effective in ensuring a company's long-term success.
I resigned in 1987 - partly because I could see the writing on the wall - the impending Financialisation of MY company!
When I read your book, tears came to my eyes as I read your very well written account about how my 1987 predictions had played out in the following years.
Your book provides solid evidence to show how Financialisation in the boardroom wrecks companies and public institutions.
The clarity of your description of IBM's history provides a unique case study of how a great business can be created and how easily it can be wrecked by executives who only care about money.
Thanks for all your efforts in creating this masterpiece.
The New York Times wrote 26 March 1993 "Mr. Gerstner, 51, who is chairman of RJR Nabisco Holdings Corporation, would be the sixth chief executive in the 79-year history of the International Business Machines Corporation, and the first picked from outside the company ranks." (Ref.: Emerson Pugh: Building IBM, Chapter 2, Footnote 23, Page 336, published 1996).
In 2011 I got surprised by the IBM centennial, celebrating a "legal based" 100th anniversary - the foundation of the predecessor company C.T.R. in June 1911!
With wonderful and positive experiences and memories about my time and life at IBM, the knowledge of all books published about and around IBM, of major books about the IT-History and some important IBM competitors as well as despite the fact that I have continued as a business management consultant to follow IBM's way of doing business after my retirement from IBM in 1999 until now, I was even more and deeply surprised about this book and a second book about IBM appearing in June 2014.
For me the year 2014 is the true IBM centennial and it is the year of Watson Jr.'s 100th birthday.
I would have rather expected the real IBM Centennial with the quality of Emerson Pugh's books; a book from which contemporary and future IBMers could learn.
Elephants are wonderful animals deserving our admiration and our protection from abuse.
Elephants dance naturally or when tamed. Taming an elephant should be done with great care.
Elephants never forget if they are hurt.
IBM survived the danger of disappearance by a split into more than 10 Baby Blues or by sliding fast into chapter 11 and bankruptcies of subsidiaries in 1993.
Lou Gerstner was the hero saving IBM from this fate and implicitly he saved the pensions of hundreds of thousands IBMers across the globe. I am grateful for this and keep Lou Gerstner for many reasons in high regard.
Gerstner summarized his CEO term in his excellent book "Who says that Elephants can't dance?" Of course, his version of an Elephant was a tamed Elephant!
When Gerstner started on April 1st, 1993, he had no time to dig into corporate culture details and start with cultural issues when IBM was struggling in a survival mode. However, being a very fast learner, he quickly understood the importance of IBM's cultural strengths as well as its weak spots which developed over time since the codification of IBM's Basic Beliefs in 1963.
Over time, with his focus on survival and return to leadership, when IBM was again in a safe harbor, he forgot that he and his team achieved this with the help of ALL loyal and performing IBMers used to work days and nights when it was necessary to win back the hearts and minds of IBM customers.
Many of these IBMers across the globe have been baptized with the spirit of the Watsons' IBM Basic Beliefs, respect for the individual ranking first and not last. Over time much has changed within the Elephant IBM who was made to dance again by Lou, his team and all IBMers below.
Later, instead of rewarding loyal IBMers for the return to leadership, the admirable Lou Gerstner and his HR henchman Tom Bouchard - without any roots in IBM's culture very valuable if led and managed appropriately - as well as the very successful Sam Palmisano and the next HR henchman - a similar character as Tom Bouchard with the name Randall MacDonald - started to turn against their own employees by significantly and unfairly deteriorating promises and provisions in the pension and health plans.
Sam Palmisano, with an excellent track record as IBM CEO, with his executives started a lopsided shareholder focus - Road Map 2010, Road Mao 2015 - axing jobs in USA and Europe, outsourcing jobs to other, "cheap" geographies instead of growing the business to exploit the strengths of both worlds to the benefit of all stakeholders - employees, customers, society.
IBM's old corporate culture has been replaced by New IBM Core Values - replacing the 100 years old IBM Basic Beliefs: "Leading Change when business is good".
All this has been executed bluntly under the leadership of the new remarkable IBM CEO Virginia Rometty who is struggling since 9 quarters with decreasing sales revenues blaming its own salesforce for failures.
The lopsided focus on Shareholder Value as a strategic IBM goal in the Roadmap 2015 (Jack Welch considers it a "dumb idea. Shareholder value is an outcome--not a strategy") has one significant flaw in the equation: excellent and highly motivated employees across the globe cannot be developed with Resource Action Days, unrewarded workload pressure and unpaid overtime work, reducing IBM employee compensation and benefits, pension and health plans etc. to the benefit of Earnings per Share. .
How could IBM employees engage in satisfying customers in such an environment? Dissatisfied employees cannot create satisfied customers. Once upon a time the dancing Elephant relates back to his memories and starts to develop heavy cramps, getting out of control and hurting all inside and outside, to no-one's benefit. Is this the right roadmap and strategy, what are the goals beyond 2015?
Pete Greulich, an IBM veteran explains in more details what happened. As a highly motivated IBM veteran, member of the IBM Quarter Century Club, 17 Hundred Percent Clubs and with 4 Golden Circle memberships as an IBM Salesman, IBM Marketing manager, IBM Branch Office Manager and then as an IBM Director of ISS Austria for Managed Operations Systems & Global Network retiring from IBM in 1999 I did not know specific details about IBM USA as explained in this excellently researched and very carefully written book.
I do hope that this book will be studied by IBM Executives to reflect and change IBM's actual way of treating employees as described in this book.
Leading Change is always very important to improve and stay competitive, thus I understood and fully supported Gerstner's changes. I am sorry about what I have learned through this book.
Leading change when the business is less good, considering the IBM roots - Watson Sr. and Watson Jr., - could be a good exercise to the benefit of IBM including again its employees and IBM customers; with their satisfaction IBM shareholders will get better returns long-term instead of maximizing short-term benefits risking IBM's existence as it happened under John F. Akers!
A Deja-Vu has to be avoided.
I wish that IBM executives with all IBM employees would return to growth, because a market share of 3% of the IT market (Gartner: 3.700 B$) and a declining IBM revenue since nine subsequent quarters is not a success, despite increasing EPS which appear like squeezing a lemon.
I wish IBM executives would return to basic beliefs developed by Watson Sr. und Watson Jr. in the best interests of the IBM Corporation, IBM Customers, and of IBM Employees who are the source for what is most important overall: IBM customer loyalty and satisfaction.
The best products and services cannot be developed, sold and serviced by demotivated employees. Demotivated employees will neither win nor keep satisfied customers.
However, we also must take into account that IBM has not anymore a major market share in major market segments, we live in a totally different, globalized competitive environment than IBM in the Watsons decades.
IBM is well served with wakeup calls from inside as well as from the outside if it is done in a constructive way as Pete Greulich has done it with an intense engagement into the subject.