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Lou Gerstner was always going to be a hard act to follow. Business history books had lauded him as 'the man who saved IBM' after the success of his 1990s turnaround at the world's largest computer company. But while Gerstner handed over a relatively healthy IBM to Sam Palmisano in October 2002, the challenge facing the new CEO was almost as daunting - to sustain that good health as the IT industry weathered its deepest and longest recession ever.

How he has achieved that - and in the process established a profile as a highly effective, if low-key, leader - has less to do with mimicking Gerstner and more related to his own corporate DNA.

Unlike his pugnacious predecessor, Palmisano is an IBM lifer - in career and character. Over almost thirty years, he has proved himself in numerous roles: in marketing and sales; as head of the PC division; running the Japanese subsidiary; and leading first the service operation, then the enterprise systems group. That steady rise also included a stint as executive assistant to former CEO John Akers - a position generally reserved for rising stars. At each stage Palmisano impressed.

One highlight came in the late 1980s with the roll out of the AS/400. At the time IBM had been losing ground in the minicomputer market to Digital Equipment, largely because of the volume of third-party applications and value-added resellers that Digital had built around its Vax machines. Recognising the AS/400's success depended on replicating that, Palmisano developed a programme to persuade hundreds of applications vendors to port their software to the new machine in the build-up to its roll-out. The AS/400 became one of the most successful products in IBM's history - and one that played its part in the demise of Digital.

But Palmisano really set his course - and arguably IBM's - in 1992, when he took over Integrated Systems Solutions Corp (ISSC), the vast IBM data processing unit that, over a decade, provided the nucleus for IBM Global Services, now the world's largest IT services operation. That early understanding of the pivotal role of services in the new IT economy certainly impressed Gerstner, says Bob Djurdjevic, long-time IBM commentator and president of Annex Research.

Charm offensive

But it is his charm as well as his foresight that has fuelled his rise. "He really is a very likeable person and that is his biggest asset in getting people to do things for him," says Djurdjevic. "Unlike Gerstner, who always carried a metaphorical bat around to club people with, Palmisano can get things done with smiles and relationship skills."

That has been a longstanding trait. As a student at the elite Johns Hopkins University, Palmisano was "popular, charming, and charismatic; he had a smile for everyone and an ability to make people feel at ease, an instant friend," says former classmate, Karl Kop, now a successful lawyer in California.

A graduate of social and behavioral sciences, Palmisano quickly displayed the diplomacy that has since served him well: "Although he had no involvement in the student politics of the early 1970s, Sam did, however, show a certain political aptitude in 'frat house' politics," Kop says.

And as the CEO of an industry giant, his masterstroke has been to make allies of the very companies that could be deemed competitors of IBM. Witness the decision to pass hard disk manufacturing to enterprise storage rival Hitachi, its wild enthusiasm for Linux and its willingness to provide 'solutions' even when they include rival's products (this flows from his days moulding IBM Global Services).

"He has begun to open up the products and operating systems, and embrace and endorse other people's products, [bringing them] into the IBM product line," says Djurdjevic. "As a result, IBM has gained market share and succeeded in areas where it was not strong before."

So do 'nice guys' make good CEOs? In this case the answer appears to be a resounding yes. "He stabilised the ship and begun a process of cultural restoration following Gerstner's departure," says Djurdjevic. "IBM is beginning to regain some of its lost lustre and respect. And Palmisano instills both." If, as analysts predict, IBM marks 2005 by becoming the first technology company to cross the $100 billion annual revenue mark, then Palmisano will be as feted as Gerstner.