Lesson Learned From Lou Gerstner’s Recovery Of The IBM Brand Could Be Used To Eventually Recover Tesla’s Brand

Tesla is in deep trouble, people are abandoning the brand and sales are cratering, however this has happened to both IBM and Apple and the methods past CEOs of those companies used could be used to recover Tesla. But I doubt this will be done.

Things aren’t going well at Tesla this month. Sales are dropping like a rock. Germany did a survey, and well over 90% of the respondents said they wouldn’t buy one. People in the US are firebombing dealerships and Tesla chargers (sometimes not going well), people are attacking Teslas (particularly Cybertrucks), and even the President of the United States has been trying to get people to buy the cars with little to no success.

This happens when a brand goes negative, and IBM had this problem in the early 90s after IBM customers felt betrayed by IBM practices at the time. The most trusted company in the world became the least trusted tech company very quickly, and IBM did something they’d never done before: it fired its CEO and laid off many employees (I was there at the time).

But they brought in a marketing expert, Louis Gerstner, out of Nabisco, as CEO and Jerry York, an expert in large company turnarounds, as CFO. While they never fully restored IBM to what it once was, they did save it from going under.

Let’s discuss how you might recover Tesla this week (granted, something must be left to recover).

The Deadly Nature Of A Negative Brand

If people are aggressively avoiding your brand, this means your brand has negative equity. Your products would sell better if they were unbranded, which is problematic for a big company like IBM and now Tesla because you typically can’t compete on price with unbranded products. This is likely one of the many reasons BYD out of China seems to be wiping Tesla off the map.

This is, as Louis Gerstner demonstrated, primarily a marketing problem. While IBM’s brand degradation was primarily due to practices that the then CEO, John Akers, didn’t even know about, Tesla’s issues appear to be primarily the result of Elon Musk’s behavior. This would make the first step in Tesla’s recovery fairly obvious, get rid of Musk, and you should be able to begin to recover the brand immediately. However, Musk isn’t going to exit Tesla voluntarily and removing him through board action, mainly when the US President backs him is problematic. So, while the initial fix for Tesla seems more straightforward, it will likely be far more complex.

I don’t think anyone can recover Tesla as long as Musk runs the company regardless of skill set. Musk would have to drop out of the public eye and have his brand recovered before you could make much progress on Tesla’s.

Should Tesla Be Saved?

Both IBM and Apple had similar problems, though Apple’s began when they fired Steve Jobs, and he successfully recovered the brand once he matured and returned. What was different about Apple is that Steve inherited a bunch of really bad products, and Gerstner at IBM inherited some really bad practices. Both CEOs turned to marketing as their main vehicle for recovering their companies.

Even though the products still sucked at the time, Jobs marketed their advantages allowing for some sales recovery and time to fix the products and eliminate licensing practices which worked great for Microsoft but not so well with Apple. Both men had to change how people viewed their company and both funded and enabled marketing to influence people to trust their brands again.

Tesla cars have several issues, but some major ones are directly tied to Musk’s decisions. The design of the Cybertruck was poor and went against what the Tesla design team thought the market wanted (something that looked more like an F-150 of the future). So, Tesla would need to make some product changes, but generally, the cars, at least, are competitive. However, they are less and less unique and seem to be falling behind the Chinese EV makers rapidly at the moment.

Tesla is generally blessed, in most every country other than China, with competitors who see EVs as a small part of their business and lack the focus that Tesla has. This does provide an opportunity for Tesla to recover by again becoming the EV champion company that all others have to chase.

Tesla should champion the fight against Climate Change because those who believe there is a problem are far more likely to buy electric vehicles than those who don’t. Tesla needs a halo product to draw people back to the brand. Apple had the iPod, IBM had, and still has, the Mainframe. Tesla should prioritize completing its new sports car to increase store draw (getting people to visit the Tesla stores to check out the cars there).

Wrapping Up: Can Tesla Be Saved?

I think it can, but it would require Elon Musk to separate himself from the company or fix his brand issues before attempting to recover Tesla’s brand. Then, whoever is CEO, would need to fully fund marketing at Apple’s or Louis Gerstner’s level while he was running IBM. And, finally, Tesla would need to adopt the most popular car features demonstrated by companies like BYD of China (360 radius turns, amphibious short-term capabilities, a safer/better self-driving technology, and more innovative designs which show well against their Chinese counterparts.

The last question is, do we need Tesla in the market? We needed IBM saved because most of our financial and government systems ran on IBM technology at the time. We needed Apple because it was the company that breathed life into the early PC segment. But do we need Tesla, which, while the only pure-play EV company at scale in the US, doesn’t seem to build the best EVs at the moment.

I mention this because it might be better for the country if Tesla failed. After all, that would remove competitive pressure from the big three US automakers and also remove the cost tied to competing with Tesla. So, while I think Tesla can be recovered, though a ton of work and cost, I wonder if that money and effort wouldn’t be better spent on something with a more immediate long-term benefit. Granted, Tesla is working on robots that could become strategic to the company and the U S, but robots can fill significant critical needs if they work. But if people don’t trust the brand, they will likely avoid related products regardless of how focused or updated they are.

So, while Tesla can be recovered, I have doubts whether it will be.

Rob Enderle is a technology analyst at Torque News who covers automotive technology and battery developments. You can learn more about Rob on Wikipedia and follow his articles on Forbes, X, and LinkedIn.

Image source: Gemini.