Who says the elephant can’t dance?

As an investment professional at a private equity firm, I often hear of the book. According to my friends who are close to him, Louis Gerstner, former chairman and current senior advisor of Caryle, knows every aspect of business.

The book “Who says the elephant can’t dance?” is about what Gerstner has done and learned in reviving IBM which was on the verge of extinction when he took the seat as a CEO of the computer giant.

Turnaround manager is the hard job. With the (often) limited resources, you have to make some measurable results. You work under high pressure of shareholders who relentlessly asks the performance improvements. People naturally don’t like alien who seems to be eager to cut costs. Even if the achievement that turnaround managers make in raising the sun again is great, the contribution tends to be undervalued. The fact that Gerstner kept the firm alive under the circumstances should be success, but some who don’t pay attention to the macro environment denounce him by pointing out that the revenue growth under Gerstner is the lowest. The same story can be seen in Japan.


There are three points I learned the most from the book.

The first is about the organization as a complex organic system. Many say IBM should undergo divestiture, but Gerstner didn’t. I think it is not only because IBM as a total has the huge scale and thus the unique competitive advantage, but also because he knew the organization is complex system and splitting the company could bring about unexpected negative impacts.

Second is about the corporate culture. If you want to make the excellent company with sustainable growth, you have to embed the management system in your company’s culture. He says:

“I came to see, in my time at IBM, that culture isn’t just one aspect of the
game – it is the game. In the end, an organization is nothing more than the
collective capacity of its people to create value.
Vision, strategy,　marketing, financial management – any management system, in fact – can set you　on the right path and can carry you for a while. But no enterprise – whether in　business, government, education, health care, or any area of human endeavor –　will succeed over the long haul if those elements aren’t part of its DNA.”

Third, the most crucial to me, is that there is no silver bullet in corporate turnaround management. Gerstner says “I’ve never been certain that I can abstract from my experience a handful of lessons that others can apply to their own situation”. Great company with well-specified business field is superb at execution driven by leaders all over the firm. The point is how you can make that company.

Unique strategy tends to be risky. Therefore, people fight with the same weapon and look at the same KSF unique to the industry. Thus execution matters. To be excellent at competition, you have to make the company superb at every aspect.

“So, execution is really the critical part of a successful starategy.　Getting it done, getting it done right, getting it done better than the next　person is far more important than dreaming up new visions of the future.　

…

Execution is the tough, difficult, daily grind of making sure the machine　moves forward meter by meter, kilometer by kilometer, milestone by milestone.　Accountability must be demanded, and when it is not met, changes must be made quickly. Managers must be asked to report on their performance and explain their successes and failures. Most important, no credit can be given for predicting rain – only for building arks.”

Great companies have world-class process and leaders in every position to undergo the execution. Turnaround managers design the process and let the people accountable for the result and be the leaders at achieving the change.

Reasons of the revolution

What drove the revolution in Egypt and Tunisia? Here are the four factors which may collectively constitute the reason of the movement:

1. Poverty and inequality

No one can be the patriot if she is hungry. In many revoluions, there has been the anger on their living standards, which let people to fight for the better life. In Egypt, 40% of the population is living a day with under 2 dollars. However, although the gini coefficient of Islamic countries looks high, the overall level is lower than some countries which have lower risk of the upheaval (see the map). The inequality and poverty cannot be solely the reason of the revolution.

Source: Economist & UN

2. Lack of democratic process

If you have the proper voting process you can choose the better government through election. But if that is not the case, people have to rely on the violent movement. Still, there are many other countries which don’t have democracy.

3. Illegitimacy of the government

Some people say the revolution is nothing but the anti-American movement. In fact, the potential targets of the next revolution are said to be Yemen and Sudan; Yemen has pro-US government and Southern Sudan’s pro-American rebels just won the independence.

With that said, to treat the movements just as the anti-US movement seems to be too simple. I think, more essentially, the revolution was the action against the illegitimate government. The intervention by US and the other countries would have brought about the issue of legitimacy.

Still, we cannot let the legitimacy alone be the reason of the revolution. There are many other countries which have issues in due process in establishing their government.

4. Proliferation of internet

Some point out the impact of information brought about by wikileaks. Actually the start of Tunisian revolution was wikileaks. Today’s rebels are utilizing SNS which has accelerated speed of people’s action. The rebels mobilize their movement through twitter, Facebook, and the other SNS.

Internet could be the reason of the revolution, but it also cannot fully explain the situation. As some newspapers broadcast, Tunisian knew the corruption of president’s family long before the wikileaks. Also, there are other countries which seem to be suppressed by government and have more access to internet (see the table). The question “why Tunisia, why Egypt?” remains.

Source:

Main table: Economist

Additional column: http://www.internetworldstats.com/stats.htm

Leadership

All the above explain occurrence of the revolution to the certain extent. The poverty, social inequality, lack of democratic process, illegitimacy of the government and proliferation of internet could collectively increase the probability of the revolution. Personally speaking, however, the occurrence and the success of the revolution are ultimately determined by those who lead the rebels. As with new enterprises, what determines the success is the leaders.