|Home - CEO Spotlight - Dec 05 Issue
CEO Spotlight: John McNulty, Secure Computing
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
Angel Mehta: So many CEOs tell me that they learned their most important business lessons from their fathers. What was the most important thing your dad ever taught you?
John McNulty: Well first, you're right… my dad was my hero, a tremendous influence in shaping my life. He was a very perceptive guy. When I got my first general manager job at Intel, I took him through the complex (I was responsible for a couple of very large buildings down in Arizona). I asked him if he had any suggestions for me, and he said just one "hire people smarter than you are." always remember that.
Angel Mehta: Intel is known to be a world-class company… tell me what business or leadership practices you took from Intel that you've tried to bring to the other companies you've led.
John McNulty: Intel was my second job but let me tell you something…I spent 13 years, 9 months with the Honeywell Information Systems. In my first year at Intel, I learned more than I learned in the whole 13 years, 9 months at Honeywell. It was a very, very different experience, and I embraced the Intel culture to the point where I think it forms probably 95% of what I do everyday in running a business. I joined Intel in '79 and became a General Manager in '80 and ever since that time it is still the Intel culture that shapes what I do.
Angel Mehta: Give me a couple of examples. Why was Intel so different from Honeywell?
John McNulty: Things that you and I take for granted. Objectives and key goals were set quarterly and driven throughout the organization. Everything had to be measurable. They held people accountable, literally measuring everything aspect of the programs and projects. They had a philosophy of whatever it is we're doing, we're going to get better at it every month, every quarter. The only way to do that was to have a quantitative measurement processes. You had to continually seek ways to do it better, faster, cheaper, be a better supplier to your customer, whoever that customer might be, and that really made a lot of sense to me. It was very much a meritocracy. People were managed in a fashion such that they knew what was expected of them and they knew how they were going to be measured. Basic principles of the kind you find in 'One Minute Manager'.
Angel Mehta: That one is a great book - every manager at our company has to read it.
John McNulty: For sure. You take away so many different things every time you read it; I read it every few years. The basic philosophy is, 'If you don't know where you're going, you're not going to get anywhere." Questions of what the grand design is, what the vision is, what are we going to accomplish this year and how… those are fundamental things that so many companies don't do. Testing on a continual basis, getting feedback, having one-on-one's with your team, making sure at all employee meetings that everybody is pulling in the same direction and knows why they're doing it, how their individual activities fit into the whole - Intel just had a great communication process.
Angel Mehta: Looking at your leadership roles with Intel, Genesys and now Secure, which of the three you've enjoyed the most?
John McNulty: This will sound very politically correct, but seriously, my most rewarding experience has been Secure Computing. Of course, I wouldn't have been able to do what we've done at Secure Computing if I didn't have that Intel experience. But the reason I say Secure Computing is because it was something that I understood when I looked at it from the outside in. I spent a week as a consultant to the Board of Directors to try and understand what the place had. It was losing $0.50 on the dollar in sales back in '99, and frankly it was a basket case. The easy solution would have been to literally file bankruptcy and sell the assets. I felt it had an absolutely superior technology team in the security area, but the company was not focused in the right direction; it was far too fragmented in its approach. The Board said I could come in; and tell them in 90 days whether we go for a long-term or a short-term solution. The short-term solution would be to stop the bleeding, get it to a positive cash flow, hopefully to profitability and sell it.
The long-term solution, of course, would be to build something of lasting value and significance in the industry. If you look at the numbers over the last six years, they're all going the right way; we're among the best in the business; return on assets, return on equity. We went from losing $0.50 on the dollar of sales to making 20% operating margins last quarter and it's been a continual progression as we've grown the earnings, refined our strategy, developed our channel programs and refined our products; the company has gotten stronger and stronger. What makes it so rewarding is the knowledge that we didn't just kill it off… we uncovered great assets and built something amazing that otherwise would have faded into obscurity.
Angel Mehta: Secure is advancing on a number of fronts within enterprise security right now, but pick the most exciting opportunity in front of you and tell me about it.
John McNulty: That's not fair, Angel. It's like picking which one of your kids you like the best; it's really difficult to do. We have three principle products and each one has the opportunity to make a breakthrough in the coming year or two.
But I will tell you that Unified Threat Management product line, which is based around our Sidewinder G2 firewall product, represents about half our revenue has tremendous upside. We have nine different versions of an appliance from $1,500 to a $70,000 base price. You can add on and get the $70,000 product well over a $100,000 with the add-on features, so it's a pretty extensive lineup. The appliance is really a shipping box for software that's our value add. We're using X86 hardware to deliver the technology that I believe is the absolute gold standard of security in the marketplace today. Sidewinder has never been compromised, never had a CERT advisory issued against it so you have a bulletproof firewall. The features set around it is very robust more robust than anything else in the marketplace. That is a market that IDC is predicting is growing over 40% a year.