No American company has reversed its fortunes as sharply as International Business Machines Corp. It followed a loss of $16 billion in the first third of this decade with $25 billion in earnings during the next five years. Its shares skyrocketed. That much is known. Less known is the role advertising played in its Lazarus-like revival.
I use the word Lazarus intentionally for, as recounted in Doug Garr's fascinating new book, "IBM Redux: Lou Gerstner and the Business Turnaround of the Decade," Shelly Lazarus and her writers, strategists and producers at Ogilvy & Mather Worldwide were as central to Big Blue's restoration as IBM's own bankers, engineers and sales force. More than just an ad supplier, Ogilvy, says Garr, was IBM's "facilitator."
"IBM's worst crisis was the brain drain that began when it started hitting the skids," Garr told me. "Within two years, its advertising campaign helped turn that around and transform the company into the kind of place where the best kids coming out of engineering schools -- who, before, were heading to places like Netscape and Oracle -- were willing to give IBM another look."
"IBM Redux" has won plaudits from the critics. Barron's called the book a "rewarding read, full of things that fill in the cracks between media stories." There's quite a lot of juice for ad junkies, notably the news that a straitened IBM was able to extract an agreement from Ogilvy that offered compensation equivalent to only 5% to 7% of media billings.
But gossip pales in importance next to the lessons in advertising management the book contains. Foremost is trust, a word Garr said he heard continually from the advertising people he interviewed, but one whose meaning, at first, was vague.
"In talking to ad people, the thing that leapt out at me was this constant refrain: that you get a client and, from the beginning, they don't trust you," Garr said. "I asked what that meant, and they would say, 'You try to come up with something different, something edgy, something that will communicate; but they don't trust your reasons for suggesting it, and they start directing you into things you know will fail.' "
Ogilvy and IBM were able to circumvent such mistrust because the relationships at the top dated back more than a decade to when Shelly Lazarus, Lou Gerstner and IBM marketing chief Abby Kohnstamm worked together on the fabled "Do You Know Me?" campaign for American Express Co. It enabled Lazarus to recommend IBM abandon its "silo-ed" approach to advertising -- which saw it divide its account among as many as 60 agencies around the world -- and concentrate its $500 million account with Ogilvy. "They knew Shelly would have advised them to do that," Garr told me, "even if she didn't end up with the account."
Equally important was Ogilvy's management of the process after winning the business. Its main strategic insight -- that the IBM brand, damaged by a perception of arrogance, would benefit from a dose of humility -- was basic enough. But to leap from notion to execution, Ogilvy at first employed a top-down approach, going to creative heavyweights around the world. When it failed to produce breakthrough ideas, agency President Lazarus, creative chief Bill Hamilton and CEO Charlotte Beers abandoned organizational formality and allowed what Garr calls "controlled chaos" to reign. From two junior creatives in Los Angeles came the answer: the delicious "Solutions for a Small Planet" campaign, which employed something heretical -- humor -- to brand IBM as accessible, even to Czech nuns.
Garr, 50, understood firsthand how powerfully transformative that advertising was. In 1996, he went for a job as an IBM speechwriter. When the executive interviewing him saw he'd previously written an admiring book about Apple Computer's co-founder Steve Wozniak, he asked Garr whether he'd feel comfortable working for Big Blue's stuffed-shirts. "I told him I saw the ad with the nuns, and realized IBM had changed," Garr said.
"That's a major lesson, and a byproduct of great advertising," Garr said. "This campaign was a morale booster to insiders, a recruitment vehicle for outsiders. And IBM didn't have to pay extra to Ogilvy for those services."