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Lou Gerstner was born Louis Vincent 'Lou' Gerstner Jr. on March 1, 1942, and is a renowned businessman from America.
He is known for his roles as board's chairman and CEO at IBM from 1993-2002. Lou Gerstner has a keen business mind that has rescued several large corporations from financial ruin.
In addition to his roles as vice-president, executive vice-president, president, vice chairman, chairman, and CEO, he’s also a keen proponent of education. He has established organizations that make education more accessible through scholarships and other support methods.
Lou’s net worth is estimated to be around $630 million.
There is no information on his annual income.
The height of Lou Gerstner is not known.
Lou was born on March 1, 1942, which makes him 80 years old as of 2022.
Lou was born Louis Vincent Gerstner Jr., in Mineola, Long Island, New York. He has three brothers. His father, named Louis Sr., worked night shifts at a brewery and his mother worked in real estate. His parents didn’t have a college education, but they wanted better for their boys.
Lou certainly fulfilled that wish and after he graduated from Chaminade (Catholic) High School in 1959, he went on to earn a bachelor’s degree in engineering from Dartmouth College in 1963 and did post-graduate work at Harvard Business School where Lou got a master’s degree in business administration (MBA) in 1965.
His MBA from Harvard Business School would provide the foundation for the massive success he achieved in his career.
Lou is married to Robin Gerstner (Elizabeth Robins Link). They were married in 1968, which means they’ve been married for 54 years.
They have two children, Louis III and Elizabeth. Louis III, unfortunately, died in August 2013. He was just 41 years old.
Lou Gerstner is best known for pulling American Express and IBM out of the doldrums and setting them back on the path to success.
Let’s look at it chronologically and start with American Express.
Gerstner had already proven his business acumen in 1978, which is when he was appointed executive president of American Express’s Charge Card Division. He was promoted to chairman and CEO of American Express and then in 1985, he was appointed president of the company. He was only 43 years old.
American Express was foundering when Gerstner came on board. Card membership languished down at 8.6 million people but under Gerstner’s leadership, it increased by 22.1 million to a very respectable 30.7 million. Part of his strategy was to offer incentives to encourage people to join American Express. He introduced the gold and platinum cards for premium membership. At the time, gold cards provided members with $2000 in credit for $65 per year. Platinum cardholders got $10,000 check-cashing for $250 per year.
Gerstner introduced targeted marketing campaigns aimed at very specific demographics, including college students, physicians, and women. The resultant increasing numbers practically forced more department stores to accept American Express cards. In five years, retail and airline ticket sales rocketed to become the two highest earners for the company.
Gerstner continued to climb the corporate ladder and during his four years as president of the company, he increased net income by 66%.
Gerstner’s climb stopped just shy of the chief executive position, which was held by James D. Robinson III and who showed no signs of stepping down.
And so Gerstner joined RJR Nabisco Inc. as Chairman and CEO. In a takeover by Kohlberg Kravis Roberts & Co., RJR Nabisco found itself up to its eyeballs in new debt. This was not the only challenge facing Gerstner when he joined the company. Tobacco sales were on the way down as more information about the risks of smoking came to light, and the market share for cigarette companies was also on the decrease.
Gerstner rolled up his metaphorical sleeves and set about changing the company’s culture to trim excess bureaucracy and reduce superfluous spending. He also aimed to boost teamwork and instill a sense of urgency to improve quality output while minimizing running costs. Efficiency was his watchword.
He had a no-nonsense policy. If managers balked at his approach to integrating and streamlining operations, they were replaced by people who could get fully on board with his ideas.
The bottom line is that his ideas worked. It took only two years for RJR Nabisco stock to go up by 50% and for operating profit to increase by 31%.
And so Lou Gerstner moved to IBM.
Gerstner was not IBM’s first choice as chairman and CEO. The board would have preferred John Sculley from Apple and Bill Gates, amongst others. However, they ended up with Gerstner, the first hire outside of the company, and even though the start was a bit rocky, the success of IBM's transformation ensured the company didn’t regret it.
Gerstner upset expectations when he didn’t waltz in with a brand new plan to revamp IBM from the ground up. Instead, as with American Express, he set about improving the quality of output, and refining processes to optimize output and boost teamwork. Instead of the major staff cuts anticipated, Gerstner kept IBM losses to five chief positions.
As with American Express, Gerstner focused on integration, especially when it came to integrating the different departments and sub-departments to provide a holistic package of processes (solutions) to customers.
It became about the whole being greater than its parts, as the various areas of specialization came together to deliver complete IT solutions and to offer software add-ons to customers who had already purchased existing IBM software and technical solutions.
Gerstner proved that he did have the ability to predict future business patterns and opportunities when, in 1993, he chose to make e-business integral to IBM’s operations. He saw a future that included online banking, online retail, online media collections and resources (movies, music, book), and e-commerce at every level of personal and business operations.
Gerstner established the IBM Internet Division, which he placed in the safe hands of Irving Wladawsky-Berger. In fewer than six years, IBM captured the e-commerce market and set their customers on the road to e-business success. IBM technology abandoned retail personal computers and OS/2 software in favor of new e-commerce-related processes.
Gerstner’s success came at a price. Over 100,000 people were retrenched and focused aimed at improving employee performance, and creating one overarching brand that oversaw all departments and services. Various aspects of company functions were refined and streamlined, for example, advertising, which was carved down to a single agency, Ogilvy & Mather.
Success was hard won. While the company lost place in various facets of business, including IT innovation and entry into new online business empires, Gerstner turned $29 billion in capitalization into $168 billion. What’s more, it took him only two years to boost revenues to over $78 billion, not to mention the quadrupling of the company’s stock price.
To many his earnings, which amounted to hundreds of millions of dollars, seemed excessive, but given the turnaround he achieved, it was a drop in the ocean.
And so ended his position at IBM.
Gerstner has been very busy since he left IBM, with a large collection of high-ranking positions at several companies, businesses, and organizations.
For instance, he joined The Carlyle Group as chairman. The group’s a global private equity firm based in Washington, D.C. He held the position at the Carlyle Group until 2008, following that, Lou remained as a senior advisor until the end of September 2016.
Concurrently, he was chairman of the Board of Institute of MIT and chairman of the Board of Institute of Harvard, both ending in 2021.
Throughout all of his work at American Express, RJR Nabisco, and IBM he was the Chairman of the Gerstner Family Foundation. The main motive of the foundation is to provide grants to Biomedical Research, Education, and Helping Hands.
Lou is been a member of the Board of Overseers of Brown University’s Annenberg Institute for School Reforms.
Lou's broad range of interests, which spread much further than business and technology have allowed Lou to be inducted into the American Academy of Arts and Sciences.
He was the Chairman of the Board of Advisors for the Columbia Medical Center Department of Ophthalmology.
Gerstner was a member of the Board of the Council on Foreign Relations. He was also on the Board of Directors of the National Committee on US-China Relations.
He’s served as Director on numerous company boards, including Bristol-Myers Squibb, The New York Times, AT&T, and Caterpillar Inc.
He established Gerstner Philanthropies, which includes all his charity projects, programs, and initiatives, and has donated over $180 million in grants between 1989 and 2021. In 2021 alone, all programs aimed at improving public education at various levels received a share of $48 million.
Gerstner was the co-chair of Achieve for six years, until 2002. Achieve was created by US Governors and business leaders to promote and reward academic excellence in public schools in the US.
While at IBM, he established Reinventing Education, a $35 million grant program. The program integrated IBM technology into schools to improve student performance and eliminate barriers to school reform.
He’s a board member of the Memorial Sloan-Kettering Cancer Center.
Gerstner’s the Board Chairman of the Gerstner Kettering Graduate School of Biomedical Sciences.
Gerstner established The Teaching Commission to make recommendations on the policy level to improve US teachers’ standing, performance, and accountability
Gerstner has won numerous awards, including the American Academy of Achievement bestowed the Golden Plate Award and the National Academy of Engineering offered him membership based on his technical leadership in enhancing the competitiveness of the US industry.
He was awarded an extra special honor when Queen Elizabeth II named him an Honorary Knight Commander of the Order of the British Empire in June 2001.
He was awarded the Cleveland E. Dodge Medal for Distinguished Service to Education, by the Teachers College, Columbia University, and earned the Distinguished Service to Science and Education Award from the American Museum of Natural History.
He earned the Legend in Leadership Award from the Yale School of Management in 2008.
Boston Colleges awarded him an Honorary Doctorate of Business Administration and he was awarded an Honorary Doctorate of Laws from Wake Forest University.
Lou was also awarded an Honorary Doctorate of Laws from Brown University.
Lou enjoys gardening and golf.
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