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Palmisano May Modify Style, Not Strategy

January 30, 2002|KAREN KAPLAN and JOSEPH MENN | TIMES STAFF WRITERS

When Sam Palmisano succeeds Louis Gerstner as chief executive of IBM Corp. on March 1, the substance of the company's strategy isn't expected to change much. But Big Blue's style is likely to get a make-over.

A baby boomer who joined IBM's sales team after earning a history degree at Johns Hopkins University in 1973, Palmisano has risen steadily through the ranks without embracing the button-down formality that once characterized the company.

Widely described as personable and down to earth, Palmisano declined when the company offered him an executive assistant, according to "IBM Redux," a book by former IBM speech writer Doug Garr.

"He didn't need someone to pack his underwear for a business trip," Garr wrote. "He was a quintessential regular guy."

He snaps pencils when meetings drone on. He shuns posh retreats meant to serve as corporate pep rallies, believing them to be a waste of money.

Instead, the 6-foot-2 Palmisano prefers to approach sales meetings the way he did when he served as captain of the Johns Hopkins football team.

In a speech urging IBM storage sales executives to outsell former colleagues who were now at rival EMC Corp., Palmisano barked: "I'm tired of seeing us get sand kicked in our face by ex-IBMers."

The son of an auto repairman in Baltimore, Palmisano, 50, has a history of bringing fresh ideas to the company at which he has worked for 29 years.

When he ran IBM's PC division, he spearheaded the move to sell computers over the Internet.

He is one of the company's strongest advocates of Linux, the free computer operating system that is making inroads against proprietary systems such as Microsoft Corp.'s Windows.

Yet Palmisano is a consummate insider. He has run many of IBM's most important divisions, including the personal computer group and the server group.

Palmisano jump-started the company's highly profitable services arm, boosting an outsourcing subsidiary called Integrated Systems Solutions and turning its money-losing consulting and systems integration business into a profitable venture.

The two divisions later became IBM's Global Services group, which is now a $32.2-billion-a-year business.

"He's an exceptional leader, passionate about our business, committed to our principles and values and steeped in the disciplines that are critical to our success," Gerstner wrote to employees Tuesday. "Beyond those critical qualities, Sam bleeds Blue."

"He has been involved for at least the last nine to 12 months in most of the major business decisions, and he's been involved in every major business unit with the exception of software," said analyst John Jones of Salomon Smith Barney.

If Gerstner was the jolt from outside that IBM badly needed in the early 1990s, associates say Palmisano is a steady, experienced hand more appropriate for Big Blue today.

The biggest task facing Palmisano is revving IBM's slowing sales growth.

Needing more work are IBM's big hardware divisions, which make servers for running computer networks and gear for storing data. But he will have to do so without trying to fix what isn't broken.

"He has to make sure that he doesn't overly influence the healthy segments and spends his energy on where the real challenges are," Jones said.

"Services are in good shape, software is in good shape, and semiconductors are in good shape."

Some people who have worked with Palmisano say he might have been better suited for the chief executive position if he had spent some time running another company.

But he has other strengths that Gerstner lacks, including an easier style with people.

"People actually like Sam. He's a great salesman, and he's got a great Rolodex," Garr, the former IBM speech writer, said.

"He can walk into any CEO's office and say, 'I want you to revisit your [information technology] budget,' and it will happen."

*

Kaplan reported from Los Angeles and Menn reported from San Francisco. Times wire services were used in compiling this report.

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