The first paragraph of every obituary on Louis V. Gerstner Jr. will reduce his life to “the man who saved IBM.”
Gerstner, one of the most accomplished chief executives of his time, knows this.
“That’s what I’m going to be known for no matter what else I do,” the 71-year-old said.
What he’d really like people to remember are his decades-long efforts to save U.S. education, to dramatically accelerate the understanding and treatment of disease and to solidify Memorial Sloan-Kettering Cancer Center as one of the world’s pre-eminent hospitals.
Gerstner was born on Long Island, received a bachelor’s degree in engineering from Dartmouth College in 1963 and an MBA from Harvard Business School in 1965.
He spent the next 37 years in the C-suites of iconic American brands, starting at management consultancy McKinsey & Co., then credit card purveyor American Express, cookie maker RJR Nabisco and finishing at computer giant IBM.
He stepped off the corporate carousel in 2003. Then 61, Gerstner picked a successor and was out the door. He bristles at the notion he retired.
“I don’t use that word,” he said. He prefers “portfolio life.”
“The Holy Terror,” as Fortune once called him on its cover, occupies a 43rd-floor corner office at Carlyle
Group’s New York office, which is located in an imposing Madison Avenue high-rise. In addition to a killer view of Central Park, the accouterments from three decades in corporate life abound. A framed 1996 Businessweek hailing him as a Top Manager hangs on the wall. There is a crystal glass from the Emir of Abu Dhabi near the window, photos with former secretaries of state Colin Powell and George Shultz, and one of him and former China president Jiang Zemin, a friend.
Another picture says: “Four Kinds Of People: Those who make things happen; Those to whom things happen; Those who watch things happen; Those who don’t even know things are happening.”
He wears a blue Oxford shirt that has the initials “LVG” on the breast pocket and a yellow print tie. He greets his guest with a hard, steady gaze and a firm handshake before launching into a rare interview on his “portfolio life.”
This conversation was edited for length and clarity:
Why did you retire at 61? It seems like a waste of talent to remove yourself from the private sector at such a relatively young age.
That’s an interesting view, that I’m wasting my time now. What I’m doing is more important to me than anything I’ve done in my life.
Retirement is not a word that ever applied to what I’m doing. I’m in another phase of my life. I never thought about ‘retiring.’ You know, people who work for one company all their lives, and after 40 years I guess they have to do something else, I guess that’s retirement. But I’ve led an episodic life.
Had you planned for life after IBM?
Absolutely. If you wait to think about what you’re going to do until you retire, I don’t think you’ve got a chance.
There were two or three things that I really cared a lot about that were part of my life for many decades, that I wanted to do more. One was fixing public education in America. I started working on that when I was 26.
I’ve been deeply involved in biomedical research for a long time. I was appointed to the National Cancer Institute board under Reagan. I’ve been on the Sloan-Kettering board since the mid-’70s. I was on the Bristol-Myers Squibb board.
I had this full-time, 70-hour-a-week, 24-hour-a-day job, for almost 15 years between IBM and RJR Nabisco. That was enough. I wanted to do something different. I had these things in my life. I needed to spend more time on them.
There were some new things I wanted to do. I wanted to go back to school. I wanted to go back and read Chinese history. I wanted to go back and read archaeology.
What form did the planning take?
It’s sort of like you got a mainstream thing that you’re doing, but you’re bringing these other things alongside. IBM, CEO of a huge company. You get off that train. You’ve got to invest some of yourself in preparation for retirement and in carrying it out when you finish.
This has got to be in place before you retire. It’s not mechanical. You can’t just retire and say, “Okay, I’ll go on some boards” or “I’ll go do something else.” That’s empty. You’ve got to care about certain needs, whether that’s education, your university.
You go become the chairman of the board of the university. Or you care about a hospital and become chairman.
If you basically are a person that is driven almost entirely by power or wealth, you’re not going to have a post-CEO life. You’re going to stay as a CEO. You’re going to go out with your boots on.
So your advice is?
That you need to think about this early in your career: “About 10 years from now, what do I want to spend my time on?”
Did you seek advice yourself before you retired about what to do in retirement?
I spent a very important 11 years at McKinsey. I got to see a lot of CEOs. I’ve seen others since then. I have watched how many of them have failed retirement.
My wife would say I’ve failed retirement because I’m still working so hard. I don’t think I’ve retired. I don’t use that word.
Why do CEOs fail at it?
They don’t plan for it. It’s hard to plan for it. You’re working very hard as a CEO and all of a sudden you hit the stop mark (claps his hand), and it’s over.
If the answer is, “I want to stay in my job until I’m 90,” which is what some CEOs want, that’s fine. If you’re thinking that you want to stop and change and do something else, you’ve got to work at it early on. Otherwise, you’re going to spend your life trying to get your golf game better. It’s a game that doesn’t get better with age, and you’re going to wind up looking at the world through the bottom of a glass.
It’s really sad to see very talented people retire. They don’t have anything to do.
What happened at 61 that you decided to move on?
I had been a CEO for almost 15 years. I didn’t want to keep being a CEO.
Second, part of your job as a CEO, maybe one of the most important jobs, is to build and support and nominate a successor. I don’t think any CEO’s legacy can be written until you see whether he or she passed the baton on to somebody as good or better. I had a successor ready to go. And it was time for me to pass it on to Sam [Palmisano].
I wanted to get on and do these other things, to get into this phase of my life. This “portfolio life” that took an astrophysicist to define.
What portfolio life?
I am in Cambridge, being interviewed to become a professor at Jesus College. And I am introduced to Martin Rees. Martin Rees is one of the foremost astrophysicists in the world. I’m walking around Cambridge on a rainy day and he said, “What are you doing?” And I explain what I’m doing, and he says, “Oh, you have a portfolio life.”
Did you have other job offers after you left IBM?
I was never offered the job, but I was asked if I would consider two very significant turnaround situations. My answer was ‘no.’
What is the most difficult part of the transition after leaving as CEO of a major public company?
Not having all the people and the support. It would be nice to have more people to help on these nonprofit things.
It’s the cadence. The cadence of the business world is ever strong. Move forward. Every day you go in the office, maybe you only moved an inch. But everyone’s driving, driving, driving to get things done. There’s a huge focus on productivity, on measurement, on success, however short term it’s measured.
[Voice softens to a whisper.] You get into the nonprofit world, and the cadence is slow. It’s nonlinear. You get a little frustrated.
And the pluses?
The hours drop, 70 to 35. Most importantly, the stress has gone from 100 to 10.
How did you end up at Carlyle?
I get a call from David Rubenstein: “Would you be interested in becoming part of a private equity firm?”
I had never thought about going into private equity. I didn’t know who David Rubenstein was. I had never heard of Carlyle, other than a hotel.
I took a step off the path I was on. I said, “You know what? These are fascinating people. They are doing interesting work. It keeps my hands in the business world.”
It keeps me in that cadence.
I was in Washington for my final sort of decision on whether I was going to go to work for Carlyle or one of the other firms or not work in private equity at all. I started asking a whole bunch of questions that CEOs ask, like, “Tell me about your expenses? What are you doing about this? Why do you have these offices.”
I’ll never forget. [Carlyle co-founder] Bill Conway turned to me and he said, “Lou, we’re not looking for a boss.”
It brought home to me that I . . . am . . . now . . . an . . . ad-vi-ser.
Here I was the CEO of 350,000 employees in 170 countries, and there was little doubt who was the boss.
I arrive at Carlyle the next day, and they got like 600 employees, and three guys own the place. Now I have to change my management capacity.
What skills have you found most transferrable to your current life?
What effective CEOs can bring to the nonprofit world is the sense of organizational discipline, the sense of very thoughtful priority setting, focusing on execution. You know, “Now let’s figure out how we’re going to do this. Let’s get this done.”
Communications skills. How to reach out to constituencies and raise the level of awareness and support that comes from these institutions. Look here. [Picks up a pamphlet titled U.S. Education Reform and National Security.] If we don’t fix the teaching profession in America, our country is going to fail.
It doesn’t mean we don’t have great teachers. We have some great teachers. But we do not have enough great teachers. And they don’t get paid enough. There’s no accountability for results.
I had to bring some organizational skills. I had to go hire somebody to run this thing. I had to go find the people to be on the board. I had to raise the money. I had to meet with the woman we hired to be the executive director.
I had to call the head of NYU and say give me some office space, for free.
You have to self-actuate. You have to make these things happen. For me, that’s a lot of fun. But it’s also something that I cared about for a long time so it was easy to segue into it.
What do you miss most about being a CEO?
I don’t miss a lot.
How do you allocate your time?
The first thing I do is I block out every Tuesday morning, because every Tuesday morning I go fishing. So, if Carlyle calls a meeting on Tuesday mornings, I’m not on the call.
What do you fish for?
Anything. But mostly, light-tackle fish. I have a boat. I fish in Florida and I fish in Nantucket. Saltwater fishing. I also do other kinds of fishing. Salmon fishing. And bone fishing.
Then board meetings fill out my calendar. There are Sloan-Kettering board meetings. The Broad [Institute of MIT and Harvard] meetings, which are multi-day. I’m the vice chairman of the Museum of Natural History. I teach in the IBM schools.
And then, I fill it out with reading.
What do you read for enjoyment?
I love biographies. I just finished this wonderful biography on Thomas Jefferson. I just finished an old, old book called “Common Ground.” I have books piled all over my houses, they are on the floor, on the desk, and somehow “Common Ground” was in this pile.
Last night, I started [David] Baldacci’s “The Hit.” The fun-to-do ratio is higher now than it is being a CEO.
Describe your typical day.
There is no “day.” I wake up at 6 o’clock every morning. I’m in the office at 7, 7:15.
I have an office at IBM, like all ex-CEOs. Up in Armonk, N.Y. Then I have this office [at Carlyle, in Manhattan]. Then I have an office in my home in Florida. And I have an office in my home in Nantucket. And more often than not, those are the offices I’m in.
I get online, I read the Wall Street Journal. I read the New York Times. I read The [Washington] Post. I will get on the phone with a Carlyle meeting. Or I’ll get on the phone with a Sloan-Kettering meeting.
I play golf, probably once a week. I just fit it in.
I don’t go out a lot at night. I go out socially, with friends. I live in Florida, six to seven months a year. I live in Nantucket, three months a year. And I’m traveling or in [New York] the rest of the time.
I probably spend between a half to one day a week at Carlyle.
But the cadence is slower now?
When you leave a high-pressure job like CEO of IBM, and you go and do other things, it’s like you’re driving 80 miles an hour on the highway, and you get off the exit at 35. You feel like you’re stopped.
The same is true in a career. I used to work 70 hours a week. I probably now work 40.
I have time to see my grandchildren. I have time to travel. I took a trip around the world last year. We went to Jordan, Syria, the Maldives, Burma, Cambodia, Vietnam. This year we took a trip to Zimbabwe and Botswana. I’m planning a trip to Bhutan.
Are your friends in retirement the same as your friends before retirement?
My true friends, yes. My best friend is a guy I went to school with at Harvard Business School. He’s the guy that we take these trips with. He and his wife. Can you think of a lot of people you’d want to travel with for 17 days in a row?
My problem is I’ve allowed the portfolio to grow a little bit. That’s portfolio creep.
But you are keeping it at 35 hours, right?
Well, the Broad thing is adding more time. That’s fine. It’s extraordinary.
I don’t look back. I look forward. What am I going to do next?
I enjoy the travel, the incredible amount of reading I’m doing, the time I spend with my family, working in the garden. What I have to do now is to make sure this creep doesn’t continue to grow.
You are very active in the field of medical science. Where does that interest come from?
I’ve just had this interest in biomedical activities. The thing I’m doing that is probably the most consumptive of my time and the most interesting is I am now chairman of the Broad Institute at Harvard and MIT. And this is just an evolutionary path of Sloan-Kettering, Bristol-Myers, National Cancer Institute.
What is the most important thing happening at the Broad Institute?
It’s discovering the underlying genetic causes of disease. We have an opportunity to understand the genetic and molecular pathways that go on in our body that cause certain diseases.
Why didn’t you carry out your plan to study Chinese and archaeology at Cambridge after going to the trouble of being accepted?
I discovered that I probably had to be at Cambridge for as much as six months at a time. They don’t have summer programs. I still may do it. I’m still an assistant professor and an associate professor at Jesus College.
Are you just curious about archaeology and learning Chinese history?
Yes. Just curiosity.
China has been a big part of my life. [Grabs a framed photo of him and another person.] This is Jiang Zemin, who is a past president of China, and he’s a friend of mine. And about four years ago, many years after he retired, I went to Shanghai, where he has his home now, and I sent him a letter and said could I see you? I would love to pay respects personally.
And he saw me. I’m the only foreigner who’s been to his home in Shanghai.
Where does the passion for fixing education come from?
I was a young McKinsey associate, and an extraordinary person named Marvin Bower, who basically built McKinsey, came up to me one day and said, “What are you doing to give back?” I said I am trying to pay off my loan from school, so I’m giving that back.
He said, “No. I mean do something important. Are you interested in education?” I said yeah. Public education was important to me in my life. He took me to a meeting that afternoon. The Joint Council on Economic Education. I stayed with it. I eventually became chairman of it. It went from there. Eight or nine, 10 organizations that I’m involved in. I wrote a book on fixing public education.
But what is driving you to do it?
If we don’t fix public education in America, this country is going to fail. We have 3 million kids graduate every year. About 1 to 1.2 million of them are basically doomed to failure.
How do you remain hopeful about it after 40 years of failure?
People say to me, “Why are you banging yourself against a wall with that? You’re not going to do anything?”
And I say to them, “Okay. You want to give up?”
What things have to happen in education reform for it to start working?
Three things that we have to do right now: We’ve got to have high academic standards for what children are going to learn, all children are going to learn in this country.
Secondly, better trained, better compensated teachers.
Number three is, we have got to have more accountability and measurement. I mean, how can you get better if you can’t measure what you’re doing?
Have people you met and the connections you forged during the time you were a CEO aided you in your nonprofit work?
When I started the Teaching Commission, there’s some important people here that I got on this board. I knew Phil Condit, who is the former CEO of Boeing. I knew [American Federation of Teachers president] Sandra Feldman. I knew [former Brown University president] Vartan Gregorian.
I had to get this whole group together. I had to raise the money for it. Now that I’m involved with the fundraising at Sloan-Kettering, knowing certain people and being able to call up the phone and get somebody to give you $100 million for a building, it’s nice that they know who you are when you call.
Did [real estate and media mogul] Mort Zuckerman give you the money for the building?
Any other passions?
I have a personal foundation. I spend a fair amount of time on that. We give to kids to escape the horrors of the inner city schools.
We give to very talented medical students who want to stay in medical research at a time when it’s unbelievably opportunistic for us to exploit the new biology.
The third area is what we call “helping hands.” Through agencies, we help somebody who has a credible, urgent need. They lose their car. Their house burned down. They have a medical problem. They can’t pay their rent and will be thrown out onto the street.
What hasn’t worked out in retirement the way you had hoped?
Cambridge. Seriously. I was so excited about going back and becoming a student again. They warned me at Jesus College that I really didn’t want to be a student because then I would have to eat in the student mess halls. They made me an unpaid faculty member so I could eat at the “high table.”
By retiring at 61, did you peak too early?
No. Because you are implicitly defining the CEO job as the peak. And the topography of my life is much flatter than that.
A lot of people would look at me and say, “Oh, he’s the old chairman of IBM. You know, he’s a has-been. Or he’s gone.”
I’m doing things that are really important to me that I’m having fun doing.