Leadership in the e-conomy - Selected Comments

March 21, 2000

Below are selected comments from our 2000 Leadership Forum, titled "Leadership in the e-conomy". Four distinguished panelists, listed below, were asked to offer their views on a variety of issues related to leadership in today's high-tech marketplace. An audience of over 100 invited guests attended the event.

Panelists:

Chuck Johnson, Partner, Noro-Moseley Partners

Sean Feeney, Executive Vice President, CheckFree

Robert Cross, Chairman, Talus Solutions

Estelle Conover, Vice President, BellSouth Business Systems

Questions:

1. How do you build the culture you want when your company is rapidly expanding and bringing in people with different backgrounds, their own agendas, etc.?

2. As a large company, how do you compete effectively with the dot-com's for talent?

3.One of the more difficult adjustments to make as a company grows and matures is leadership. That is, developing and or changing senior leadership teams in terms of competencies, styles, etc. What has your experience been with that?

4.Does the knowledge based economy change the way people lead?

First Question: How do you build the culture you want when your company is rapidly expanding and bringing in people with different backgrounds, their own agendas, etc.?

Responding Panelist: Chuck Johnson, Partner, Noro-Moseley Partners

Previously co-founder and CEO of Sales Technologies, Inc., a start-up software company which was the most successful investment made by Noro-Moseley. During his tenure, Sales Technologies' software and service revenues grew from no revenue as a start-up in 1983 to $50 million in 1991. Prior to founding Sales Technologies, Mr. Johnson was a management consultant with McKinsey & Company. He joined NMP in 1993 and is chairman of the 2000 Georgia Technology Forum.

The changing workforce – retirement at 45?

I think this will be an interesting seminar because things are changing so dramatically in terms of the way businesses are structured, the people the have, etc. in this new internet world.And the truth is I don't think very many companies, large or small, are doing a real good job thinking it through.I was with a group called the Technology Association of Georgia - they're in the process of doing a study in which they're talking with people age 20-29, and what they've found so far is that people in this age range on average expect to spend 1-2 years in their current job.They expect to spend 3-4 years with their current company.68% of them expect to own their own business someday.And the vast majority of them expect to retire between the ages of 45 and 50.That is a very different kind of mindset for the people you're trying to bring into your company.And it's not only the white collar workers.In the fast food industry, the turnover in metro Atlanta is 12 days.One of the major overnight companies based in Atlanta says if they can keep someone working in the warehouse for 60 days they're lucky.But that just gives you a sense of the mindset today.

Get your leadership right first

With that as background, how do you try to think about building a culture where you can bring in lots of young people with these kinds of aspirations I just talked about and build a company.There are maybe two or three things I can offer.One, I'd have a tendency to hire the senior people first.And by senior I don't necessarily mean old chronologically.In the venture capital business we deal with an awful lot of people age 24-28.But figure out who's going to be the senior person in a functional area and bring him in early and let them try figure out the job, what's going to be required of them, have them write it down and then try to determine the kind of staff they're going to need to put in place.So hire the senior people first.If you don't do that, you have a tendency of hiring people that are becoming first time managers, and then to complicate it they are managing brand new people in the organization.And that's usually a prescription for disaster.So try to hire senior people first.

Communicate continually

The second thing in terms of building culture would be communication.Most of the people who are joining these companies are joining because they want to be part of the entire business building process, and that says initially that the CEO needs to communicate with the senior staff.And then the CEO needs to communicate with the entire organization, particularly when it's a relatively small company or a division of a larger company.The next transition is for the CEO to communicate with the senior staff, and the senior staff to communicate on a regular basis with the rest of the organization.In my experience where it falls apart is when the senior management staff gets busy, stop allocating the time to meet with their department, etc., so the CEO has to occasionally kind of inspect and make sure you participate in the communications.So hire senior people, and communicate, communicate, communicate, and where possible use outside people, as we used the Turknetts, to facilitate that communication.

Second Question: As a large company, how do you compete effectively with the dot-com's for talent?

Responding Panelist: Estelle Conover, Vice President, BellSouth Business Systems

Estelle Conover is Vice President & GM, Distribution, for BellSouth Small Business Services. She has a highly successful background in sales, operations, and organizational leadership. Ms. Conover's expertise includes that of indirect channel distribution which encompasses program strategy, design, and management. She has been effective in motivating, leading and retaining talent at a large Fortune 500 company in the midst of the .com phenomenon.

Get the right message out corporately

Well certainly it's a challenge more so in a large company than perhaps a smaller one.What I'd like to do is break it down and address it from two perspectives.As a large company, we have a lot of overhead, HR, etc. that's taking care of some of the basic needs in that regard.And the second piece of it is that we have our business units.And our business units are really small businesses.They're not the large company, and we too have to address the needs of our potential employees the same way.

So from a corporate focus, there are three primary areas that they kind of bring to the party for us in attracting talent in this marketplace.First of all, we have put a stake in the ground and publicly and internally declared the aspirations for BellSouth.The aspirations have three components.There's a focus on increasing shareholder value, so that gets at the financial revenue piece of the business.There is a piece that focuses on customer loyalty.But more importantly the third piece, which is what's really exciting to me, is focusing on the employee.And our goal is by the year 2002 to become a Top 100 company nationwide.And we use that as a consistent communication message with our employees.So I think just putting the stake in the ground as a large company that our employees are a major, major area of focus is a significant step.

Pay competitively

Secondly, you just have to offer a competitive package - the salary, the benefits, etc.Certainly one of our challenges is from a salary perspective is that we're not always out there with the top salary or the best offer.Most of the time we're probably middle of the road.Our benefits package, however, is extremely robust.It's not only very attractive but also low risk.Whereas with a dot-com company the benefits include lots of stock options, etc. that are more high risk vs. BellSouth which is a lot more of a low risk decision from a benefits perspective.We're not putting the best offers out there, but I think it's a very balanced package.

Become a dot com within a Fortune 100 body

The third area of focus is the one that's probably the most exciting to me and that every large company has to be thinking about.That is how do you present yourself and how do you evolve to become a dot com company?And BellSouth is a dot com company.If you've noticed any of our new advertising recently it's projecting that new image, which is "connect and create something".We really have to convince the marketplace, the potential employees, that we're a dot com company.We're a big dot com company, but we are a dot com company.And there's a major initiative underway internally to "e-tize" our employees, which means giving them the tools, the training, and the knowledge to be able to become technically proficient in this e-world.

Here’s an example.Once a year our CEO Duane Ackerman has a senior manager's conference - a three day event to try to understand his strategies, visions, what's going on and what's changing.When we were wrapping up the meeting, he gave everyone at the conference a gift, and the gift was an MP3 player.How many of you know what an MP3 player is?How many of you have operated an MP3 player?Duane challenged us to try to figure out how to operate that MP3 player before we got home.But the point is, we as leaders have to be "e-tized" as well, and we have to demonstrate that we embrace that technology.So the three points from a corporate focus are one putting a stake in the ground that employees are a major area of focus and investment, have a good competitive package, and thirdly demonstrate or become a dot com company.

Run your organization like a small business

Now I'd like to talk about the business unit, and what we've done from a business unit perspective.I work in a small business services organization.We're about a little over 3 billion dollar organization, but my particular business unit is a small business.I'm going to drive about 250 million in revenue this year, with about 90 employees.So that's a pretty aggressive small business venture.And what works in the business units is what I control as a leader there.We have kind of a mixed bag - we have leaders who are creating an environment of leadership, and we have those who are just now kind of turning the corner.Let me share a couple of things we've done in my unit that I think are really drivers for success and enabling us to attract some of the very best people into our business unit.

Remember that people work for people, not for companies

First of all, I think people come to work for people.They don't come to work for a company.So when people come to work in my business unit, they come to work for the key leaders in my organization.They come to work for the distribution organization, they don't come to work for BellSouth.And by the way, I own it, so if they leave, they left me.They didn't leave BellSouth.They leave the manager, they leave the supervisor.I don't blame BellSouth for not creating the right environment, I blame myself if someone leaves.In the last 3 months, I have had zero turnover in my organization.For the past year, it has been less than 5%, and those people that have left have left because we wanted them to.From two perspectives - you want them to go when they're not performing, but secondly and more importantly we get them out because we're grooming them for other opportunities, promotional opportunities.So it's important that your people see that that's the way turnover is happening - either through promotions and growth or that you're cutting out something that's just not working.

Focus on employee development

The new generation of employees that we're attracting want to know what's in it for them.They're here for 18 months, 2 years, and then they're on to the next mission.Their time frames are different than what some of us older folks are used to.But we've got to create an environment that employees can see is focused on employee growth and development - whether your a two employee or a ninety employee business, take the time to ensure that every employee has a real career plan.And it's not really a complicated thing to do.

Give people room to create

Create an environment of high energy and excitement.I use the word excitement a lot when I'm with my organization because I'm excited, I'm energized - they do that for me, and I need to that for them as well.Flexibility, creativity, and innovation - give them loads of room to create, and allow them to make mistakes and learn from them.Let them be decision makers and drive the process so that they then have ownership in that process.

Promote quickly

This next one is a major change ,and that is promoting people sooner rather than later.At BellSouth, our typical culture had been that you had to prove yourself three times over, walk on water to be promoted, and that's not the culture anymore.We'd now rather promote you earlier than wait till it's too late, because if I wait till it's too late then they'll be off to work for someone else.

Understand the personal needs of your employees.People want to be able to balance career and personal life, and being able to offer them an environment where they can balance both is critically important.Understand what their needs are, and be flexible enough to work with them to the degree that you can.

Have fun

Probably most important is to have fun.Create an environment of fun.Don't take yourself or your organization too seriously.You can lighten up, you can interject humor and fun and all of a sudden it's an environment that's just highly energized.So, my point here is create an environment that is focused on these new types of employees that are coming in with different sets of expectations, help them with their career, promote them sooner than later, and create an atmosphere of fun for them.

Q:What systems are in place to identify the personal needs of your employees?

A:It's a people system that we've developed.We have a template that we use within my particular business unit.We sit down with each employee within a month after they join our organization and have a 15-minute career discussion that includes not only career goals but outside interests as well.And then we touch base with them every 6 months to see how things are going.It's just real basic human communication.

Third Question: One of the more difficult adjustments to make as a company grows and matures is leadership. That is, developing and or changing senior leadership teams in terms of competencies, styles, etc. What has your experience been with that?

Responding Panelist: Sean Feeney, Executive Vice President, CheckFree

Sean Feeney is Executive Vice President of Biller Field Operations for CheckFree Corporation, the recognized leader in electronic bill presentment and payment. Mr. Feeney is responsible for all aspects of CheckFree's relationships with Fortune 500 companies such as AT&T, MCI Worldcom, Intuit and Yahoo!. Previously, he held a dual role as President of the CheckFree Software Division. In that role, he made acquisitions and divestitures resulting in the Software Division consistently being the most profitable.

Hire for scale

When you look at companies today, a lot of the discussion is about building for scale and is your company scalable.So I think it's important when you're hiring people that you hire for scale.When you look at someone today they may be perfect for the job you're hiring them for, but can they handle the next job, and so forth.In my career I've been lucky enough to work for a lot of companies that started small and grew rapidly and I saw time and time again early in my career someone who was a great leader for 10-15 people but when the organization grew to 100 or so they did not possess the skills or the leadership ability to do that.And I think that does a disservice to the company and to that individual.

Deal with poor performance

I think the key there is being in contact with your people - knowing what they want to do and what they're capable of doing and then helping put them in the right position to do that.You have to work with them and understand what they want to do and how they best fit into the company and then when you move them if they're not productive get rid of them.I think that too often we hang onto the people that are cancers in the organization and work with them.When I was running a sales organization for Chuck, I had a guy that I inherited that was a super person but couldn't sell anything.So I worked and worked with him and finally got rid of him.My three top sales guys come into my office and say "boy Sean we're really losing confidence in you because you let this guy hang around so long and he was killing us".That was the last time I did that.

Know what’s going on in your organization

The team knows who's not producing, and I think it's important when you're trying to assess who's getting it done is to talk to your peers.I'm huge on skip interviews - one to identify who the succession people are, two to understand what they want to do, and three to understand what's really going on in that organization.The other thing that I do a lot is talk to the receptionists and the secretaries, because they know who has leadership talent and who doesn't.They're often a really good indicator of who's getting it done in the organization and who's not.The people who are treating them poorly are not the ones you want in your organization.

Trust is still important

Today's people aren't any different than they were twenty years ago.I know that's a contrarian point of view, but it's not.Everyone wants to get rich, and your job is to help them realize where the best place to get rich is.But people have to trust you, and have to believe that you have their best interest in mind.One of the things I do when someone gets a great offer from one of the dot com companies I just don't blindly try to convince them to stay, we sit down and discuss the opportunity and whether the position is right for them, etc.So then they know you have their best interests in mind if you try to convince them to stay.

Give direct feedback

So one important point is that people have to trust you so that they know what you're telling them is what's best for them and the corporation.Secondly, do you hold them accountable?Today everybody's afraid to discipline or yell at people.I'm not a big yeller but people do know where they stand with me.So many of us are afraid to tell someone they're not doing something correctly or not getting it done to a standard, and that's what people want.Maybe that's what I learned in the Army.You train the guys to death, but you make sure that they're paid, fed, and have a place to sleep and they'll go through the wall for you.So make sure they know you're going to hold them accountable for what they do.

Care about people personally

Lastly, do you care about me?Today that is more than caring about the individual, it's caring about the family as well.I try to have dinner once a year with every one of my direct reports and their wives.And I also invite them to bring the kids, and I pay for the babysitter if they don't want to bring the kids.What comes out when you have the husband and wife together is a lot different from what you get from just talking to one of them.I think that makes the family know that you care about them, not just the individual.

If you do those three things, then it becomes much easier to lead.

Question Four: Does the knowledge based economy change the way people lead?

Responding Panelist: Robert Cross, Chairman, Talus Solutions

Robert Cross founded Aeronomics Inc. in 1984 and served as its chairman and CEO until it merged with Decision Focus Inc. (DFI) to form Talus Solutions, which he now serves as Chairman. Mr. Cross is recognized as an internationally recognized expert in the essential business practice of revenue management. He is the author of the New York Times best-seller, Revenue Management: Hardcore Tactics for Market Domination, and he is a widely respected and sought after speaker.

A Post-Capitalist Economy

Absolutely.Let me start first of all by talking about the knowledge based economy because this is something that's very personal to me.There's so much said about the knowledge based economy that it's often trivialized.My thinking became revolutionized by a book by Peter Drucker, the "Post-Capitalist Economy".I was very intrigued when I came across it in the bookstore, because I grew up in a time where there was the big battle between the two economic systems of capitalism and communism.And we thought that capitalism won and that we were the victors.But Peter Drucker is here saying we're living in a post capitalist economy, which means that it's no longer a capitalist economy.So what is it?It's a knowledge based economy.If we really understand what that means then it really make us re-think how we approach business and even how we approach life.

Assets are in people’s heads

What Drucker says in his book is that the things that drove the economy for the last 150 years since the industrial revolution were things like the acquisition of capital, the production of capital goods, the means to produce capital goods.It was a capital based economy.It was GM, the railroads, the steel mills that drove the economy.That is not what's driving the economy today.Some would say that what drives the economy today is technology, but what's making that technology valuable is the knowledge component.Technology is being used as a knowledge enabler, and that's whatis driving the economy.The best example of this is that people are coming to venture capitalists with business plans that are nothing more than an idea.They have not a days worth of operation, yet they're getting market valuations of tens of millions of dollars.So what's valuable?It's knowledge, ideas, creative instincts that's really valuable.Capital and capital assets are not valuable.At the GM plant in Doraville, what's really valuable is the knowledge that's in the heads of the workers that keeps that production line going.Because if it stops, it costs GM ten thousand dollars a minute.

People are the valuable assets

So what's really valuable is knowledge, and knowledge resides in the heads of people.All of us in business are trying to getknowledge into systems, into processes, into software, but ultimately it comes down to people, and what's valuable in any company is the people.What is it you have that your competitors can't create?It's your people.It's their knowledge, their understanding of what their markets are and what they can doin their marketplace, how they can create a competitive advantage.It's creating enthusiasm within the people that makes your company more valuable.

Retention - keeping the knowledge - becomes critical

That being said, how does life change now that we're in a knowledge based economy?First of all, it makes retention incredibly important.Every employee from the receptionist to senior management has valuable knowledge that you want to retain.We were recently on a family vacation and right before we were going to leave, my wife found out her father was having some emergency surgery, so she would have to fly to see him instead of flying home with us.I had arranged the ticket through Travelocity.com, but to change the ticket I had to call the airline and talk to a person.I was on the phone an hour getting this very simple thing taken care of.The reason it took so long, I'm convinced, was because that person was brand new.Every step of the way she was going to check with her supervisor, and I'll bet the supervisor was probably new and had to go talk to his or her supervisor.So the lack of knowledge there due to a high level of turnover results in a lot of time wasted, frustration on the part of the customer, etc.Ten years ago the average reservations agent had five years experience, and now it's down to less than a years experience.

Loyalty is dead

So retention is very important, but it's also very difficult because loyalty is a thing of the past.Loyalty is dead and gone forever.I don't think we can create loyalty.I think we need to try to create it, but I just don't think we can do it in today's environment.You used to be able to earn loyalty by having great benefits, a great environment, etc.Then, more recently, you couldn't earn it but you could buy it with bonuses, stock options, etc.Now I don't even believe you can buy loyalty.I like to use my nephew, who's is in his mid-twenties, and five years ago when he was just out of college I asked him what he was looking for in a job.He said what he was really looking for was a good base salary, big bonus potential, and good opportunity for advancement.Two years ago I talked to him when he was changing jobs and he said what he was really looking for then were stock options.This past Christmas, I was talking to him again as he was changing jobs, and this time he said this time he was looking for something that would look great on his resume the next time he looked for a job.That was it.Now that's a frightening proposition for those of us trying to hire and retain people.But to reiterate what has been said earlier, people are taking a job with the plan to leave a job, which is not comprehensible to me.The day they are starting a job, they are also planning their exit.So how do we combat that?How do we make our place so great and attractive that, despite the fact that they're planning on leaving, they just can't go.

People work to make a contribution

First of all, what I feel is the most important reason people want to stay is that they feel like they're doing something valuable - that they are not only getting a paycheck but are also doing something valuable to the world.That doesn't necessarily mean world peace or saving the rain forest, but just something valuable.In our company, we retain a lot of people because we use technology to help generate top line revenues to make companies more profitable.We don't use technology to enhance productivity, cost cut, displace employees, etc.We use it to generate more revenues from the marketplace, and that's exciting to our people.They like the idea that we get productivity increases by using technologies to get more revenues from the marketplace so that companies can then hire more people.That makes them feel good.

People want to be appreciated

The second thing I think people want is to be appreciated.They want to know that what they're doing is appreciated.First of all, you show appreciation by how much you pay them.That's a very visible way.Another way is just spending time with them, talking with them.Just saying thank you is a huge thing.One of the things I personally do is stay late, even if I don't have work to be done, and just walk around say to everyone just to let the people who are still there know I know they're there.I will do the same thing if I'm coming by on the weekend or if I'm just stopping by to pick up something.It only takes a minute, but it lets them know I know they're working hard, and it lets them know they're appreciated for it.I think that means a lot to people.

Values are still important

We've talked about what had changed in the knowledge based economy, now let's talk about what hasn't changed.And that is the need for value.People need to go to a company that has values, but values that are consistent with their values.A lot of companies aren't real good about articulating what the company stands for.To borrow from John Mellencamp, "If you don't stand for something, you'll fall for anything".At Talus, we have five values we stand for:success, excellence, respect, integrity, and fun.Success meaning we have to make our clients successful so that we will then be successful.Excellence is our standard.Respect for one another is a very important concept and is something we've worked a lot with Turknett Leadership Group on - and that is respecting tremendously diverse opinions and to understand other people's point of view before you try to articulate yours.Really listening to and caring about a person's point of view is the essence of respect.Integrity is our next value - it doesn't matter how great the rest of your company is if you can't be trusted.There's no recovery from a lack of trust from your employees or your clients.And lastly, everyone has to have fun and enjoy what you do.