Samuel Palmisano is IBM’s new chief

Daniel Sorid

NEW YORK: Outbound IBM chief executive Louis Gerstner, the outsider who shook

up the staid company and helped guide it into the Internet age, has turned over

the reins to replacement Samuel Palmisano, a consummate insider.

Palmisano, 50, joined the formidable sales force of International Business

Machines Corp. 29 years ago and rose over the years to become a senior manager

of Japan operations and head of IBM's personal computer business.

He already was a rising star by 1998, when he got the call to replace the

head of IBM's global computer services business who departed for health reasons.

His formidable task was to lead a staff of 135,000 in one of IBM's fastest

growing operations.

In July of 2000, he became IBM president and chief operating officer, charged

with the day-to-day operations of the technology giant -- very much in the

tradition of how succession was done for many years at IBM before Gerstner.

With his promotion to chief operating officer, it became clear that Palmisano

was being groomed as a possible successor to Gerstner. Palmisano, well regarded

in the computer industry, was seen as the heir apparent for years before it

became official.

"This appointment reinforces the IBM culture that Gerstner parachuted

into, the internal development of successors, and incumbents leaving at age

60," said Jeffery Sonnenfeld, associate dean at Yale School of Management.

"He comes in from the old core business of the culture. He comes from the

core of the big-box business," referring to IBM's class mainframes.

Cisco Systems Inc. chief executive John Chambers, a former IBMer, told

Reuters that Palmisano is "very direct, very open in his communication

style. He listens to others and then moves." In a separate interview

Motorola Inc. chairman and chief executive Christopher Galvin said he saw

Palmisano as a proven leader.

In fact, Palmisano was hand-picked as long ago as the 1980s, by chief

executive John Akers, as his executive assistant, a classic road to the top in

the IBM career ladder. He is seen as a bridge between the old and the new IBM.

"About the only thing that Akers and Gerstner agreed on was Sam

Palmisano," said Sam Albert, a former IBM marketing executive who is now

president of consultancy Sam Albert Associates.

Gerstner came to IBM in 1993 as an experienced corporate executive with a

noticeable lack of experience at IBM. He had been chairman and chief executive

of food and tobacco company RJR Nabisco and spent 11 years at American Express

Co.

On the other hand, Palmisano has worked for IBM for most of his adult life.

"Sam bleeds blue," Gerstner wrote in a letter to employees about the

change of leadership.

Gerstner's appointment of Palmisano restores the traditional succession plan

at IBM -- a top salesman becomes the golden boy who is then put in place to move

into the top slot, said Art Langer, professor of information technology at

Columbia University.

A Baltimore native, Palmisano graduated from Johns Hopkins University in 1973

with a bachelor's degree in social and behavioral sciences. He was a member of

the Beta Theta Pi fraternity, and played on the school's varsity football team,

a university spokesman said.

He was elected a trustee of the university in 1999. Palmisano also serves on

the board of directors of newspaper publisher Gannett Co. Inc.

Palmisano takes the helm in the wake of sweeping changes at IBM. While

Gerstner helped transform IBM into a global technical services powerhouse from

an increasingly marginalized maker of mainframe computers, Palmisano is expected

to focus the company's diverse operations and lift what have been sluggish

revenues.

Frank Dzubeck, president of consulting group Communications Network

Architects, said Palmisano had the skills and instincts of a confident salesman.

"He's a deal closer," Dzubeck said. He can walk into a sales meeting,

Dzubeck said, and "walk out with a deal."

(C) Reuters Limited.