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5/11/2004
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More Lessons In Leadership At World Business Forum

Former IBM chairman Lou Gerstner and consultant Michael Porter focused on strategy and execution and how business leaders must link the two.

The second day of the World Business Forum in New York focused on strategy and execution and how business leaders are able to link the two.

Former IBM chairman Lou Gerstner began the day by using his 10-year tenure at the company as a case study of how the right approach to leadership can lead to positive business change. He said there are three fundamentals to ensuring effective change management--focus, execution, and leadership--and they were the three principles he relied on to bring IBM back from a then-record $8.1 billion loss prior to his arrival in 1993.

On the issue of focus, Gerstner said it's important for business leaders to be selective and committed in the businesses they pursue, and one of the most common causes of mediocrity occurs when companies don't focus. "Many companies try to decide their future in another business," Gerstner told the crowd of approximately 4,500 business executives at Radio City Music Hall. "They don't want the tough battle of resurrecting their base businesses" when trouble hits.

Regarding execution, he said, all good companies have at least one thing in common, so they must learn to learn to out-execute the competition.

Gerstner called the third point, leadership, "the most underrated practice of institutional transformation," adding that "the best leaders create high-performance cultures, become change agents, and are all about visibility."

Gerstner acknowledged that focus, execution, and leadership aren't new. But he said the difference lies in how the business leader communicates those concepts and follows through on them.

Consultant Michael Porter then took the stage to discuss strategy, which he said "has lost its meaning" among many business and tech leaders. Too many companies confuse strategy with goals or operational excellence, he said, and instead of focusing on being the best at something, companies should focus instead on being unique and creating a strategy around that.

"If you just implement business practices, you're always chasing," he said. "The more companies try to out-implement each other on best practices, the more of a chance over time that it will force companies to merge and look more alike."

Porter provided five tests of a sound business strategy: a unique value proposition compared with the competition; a different-tailored value change; a clear trade-off in choosing what not to do; activities that fit together and reinforce each other; and continuity.

On the fifth point, Gerstner and Porter appeared to disagree: While Gerstner recommended reinvention, Porter said he believes that reinvention and constant shifts "are costly."

In a lunchtime panel, Unisys Corp. chief operating officer Joe McGrath said that for companies to bring Gerstner's and Porter's comments together, they need to link strategy and IT execution. Said McGrath, "The IT department has to move as fast as the information changes."

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