During the 1980s and early 1990s, IBM was thrown into turmoil by back-to-back revolutions. The PC revolution placed computers directly in the hands of millions of people. And then, the client/server...

During the 1980s and early 1990s, IBM was thrown into turmoil by back-to-back revolutions. The PC revolution placed computers directly in the hands of millions of people. And then, the client/server revolution sought to link all of those PCs (the clients) with larger computers that laboured in the background (the servers that served data and applications to client machines). Both revolutions transformed the way customers viewed, used and bought technology. And both fundamentally rocked IBM. Businesses’ purchasing decisions were put in the hands of individuals and departments – not the places where IBM had long-standing customer relationships. Piece-part technologies took precedence over integrated solutions. The focus was on the desktop and personal productivity, not on business applications across the enterprise. By 1993, the company’s annual net losses reached a record $8 billion. Cost management and streamlining became a chief concern, and IBM considered splitting its divisions into separate business independent businesses. Louis V. Gerstner Jr. arrived as IBM’s chairman and CEO on 1 April 1993. For the first time in the company’s history, IBM had found a leader from outside its ranks. Gerstner had been chairman and CEO of RJR Nabisco for four years, and had previously spent 11 years as a top executive at American Express. Gerstner brought with him a customer-orientated sensibility and expertise in strategic thinking that he had honed through years as a management consultant at McKinsey and Co. Soon after he arrived, he took dramatic action to stabilise the company. These steps included re-building IBM’s product line, continuing to shrink the workforce and making significant cost reductions. Despite mounting pressure to split IBM into separate, independent companies, Gerstner decided to keep the company together. He recognised that one of IBM’s enduring strengths was its ability to provide integrated solutions for customers – someone to represent more than piece parts or components. Splitting the company would have destroyed a unique IBM advantage.