Strategic Management from an Islamic Perspective: Text and Cases

Chapter 10

Case 1: IBM and Lou Gerstner

Introduction

Aishah binti Hamza was getting upset. She had read Strategic Management from an Islamic Perspective and she did not quite buy some of the ideas. Sure, she understood the Islamic perspective and she didn’t have a problem with that. But the discussion in several chapters about complexity, defensive routines, the need for operational excellence, and so forth seemed off the mark. This was a book about strategic management, after all. Shouldn’t the strategic component be more important? Aishah noted that several times in the text, the authors quoted Lou Gerstner. Browsing in the university’s library, she found three books on Gerstner: Accidental Empires (Cringely, 1996), Saving Big Blue (Slater, 1999), and Who Says Elephants Can’t Dance? (Gerstner, 2002). As she read, she made the following notes.

The Beginning

International Business Machines (IBM) was founded by Thomas Watson in the 1920s. Initially focused on simple calculators, the company moved to mainframe computers in the 1950s. The technology and marketing power of IBM was so great that throughout the 1950s, 1960s, and 1970s, IBM dominated the computer industry. In the 1980s, the company seemed to continue to dominate the computer landscape. IBM made a total of $51 billion profit after tax between 1980 and 1989. As IBM was beating all the records in terms of sales and profits, IBM executives became supremely arrogant. Yet, IBM’s success was built largely on mainframe computers—generally ...