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CEO Spotlight: Bob Dutkowsky, JD Edwards
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
Angel Mehta: Give me a sense for what it was like to grow up in an IBM family.
Bob Dutkowsky: I grew up in a small town in upstate New York called Endicott…which I guess as you know, was famous for being the home of IBM. It’s this little town of about 20,000 and probably 75% of the people worked at IBM. My father worked for IBM for 44 years…he went to work everyday in a white shirt and tie and I thought everyone did the same because that’s just how the town was.
Angel Mehta: So what kind of values did that upbringing develop in you as it applied to the kind of CEO you became later in life?
Bob Dutkowsky: Well, I will tell you that my father had a TREMENDOUS work ethic. I remember there was one summer where he worked seven days a week and the only time I would see him is at Church. My mother would bring a new suitcase to church, and he’d show up to meet us there, take the suitcase and change clothes, and then he’d go back to work for the week. This was around the time that the big IBM mainframe came out. So early on in my life I got this impression that you did what you needed to do at work and provided you took care of work, work would take care of your family.
What are some of the key talents that you think you’ve brought then consistently to JD Edwards or Teradyne to EMC? What’s the most important thing you do as CEO of JD Edwards?
Bob Dutkowsky: I think probably the thing that I respect the most in business people and, therefore, have always tried to make it part of what I add to an organization, is the value of focus and the strength of execution. ‘Focus and execution’ is what business is all about. You pick out spots where you believe your company or your team has the capability to gain leadership and then you build the plan and execute against that plan. I was lucky because I learned those skills from a couple of really great mentors; Lou Gerstner at IBM and Mike Ruettgers from EMC – these were world class CEO’s. Both of those executives lived and breathed focus and execution so I grew up understanding it…I got to see it early from a CEO’s perspective….so focus and execution I think are the things that I’ve always tried to bring to whatever team I was part of.
Angel Mehta: Your background doesn’t include running any significant business within the ERP software space so I’m curious about how the challenge at JD Edwards was presented to you. You say your strengths have been ‘focus and execution’….so was it presented to you as a company primarily with execution problems?
Bob Dutkowsky: Well first of all, I’ve known JD Edwards for 20 years. When I was an IBM sales rep back in the 80’s, I sold JD Edwards products to my IBM customers so it wasn’t like it was completely unknown. But honestly, I lost track of the company in the ensuing years. When the headhunter called me, the first they said was, ‘Don’t say no’ [Laughing]. They admitted that it wasn’t necessarily the perfect match and I agreed to not say ‘No’ without looking at it first. Then they told me it was JD Edwards and I remember saying, ‘Well that’s a great company!’…It was one of the leaders in the software space…great products…tremendous install base of customers. The only problem is that it was in Denver, and I was living in Boston at the time. I had committed to my family that the kids would be able to graduate from high school in Boston. In my 20 years at IBM, I moved my family 13 times.
Angel Mehta: Did you end up moving them to Denver for JD Edwards?
Bob Dutkowsky: No. I commuted from Boston to Denver for the last couple of years.
I kept my promise. My last child graduated from high school last month and goes off to college next month. Moving my wife and the kids so many times was tough…it’s traumatic to move that much, but it’s also a great developmental opportunity for kids. As I said, I grew up in a static environment…my parents still live in the same house that I grew up in. They never moved. My kids have lived all over the world – Boston to Tokyo. They’ve seen the world from a much different perspective than I did.
Angel Mehta: What kind of impact does that have on character?
Bob Dutkowsky: My kids are so much more adaptive and flexible then I am. I never went on an airplane until I was in college. My kids have flown all over the world….they’ve seen Korea, Vietnam….places that you and I see as specs on the map. They have a far different appreciation for how small the world is but also how different it is ….so they’re adaptive, flexible, and very accepting of different people and cultures because they’ve been with so many people and they’ve had to adapt and adjust.
But then on the other hand, my wife and I began to feel like they had no ROOTS. We wanted them to understand the virtue of long-term friendships and commitments and so when we moved to Boston the last time we just said, “We’re not leaving this place until the kids graduate from high school”.
Angel Mehta: So let’s go back to when you were evaluating the JD Edwards opportunity. Your background doesn’t appear to be overtly concentrated on applications software. Have you found it to be a disadvantage at all?
Bob Dutkowsky: Look, my skill set after 25 years in the technology industry is ‘customers’. Given the choice, customers don’t want to buy hardware and software and networking systems and other complimentary technology. They don’t want to buy any of that. All they want is to make their business better. They want to get more competitive. The guys in the IT industry are all enamored with these technology ‘things’ but customers view all them as tools that make their company stronger. That’s all there is to it. It just so happens that software is one of those tools. So if you can talk about the virtues of tools (technologies) that make companies stronger, it doesn’t matter whether it comes from the hardware perspective or the software perspective. Now, to say that I don’t know software is not fair either. As I said, 20 years ago, I sold software to my customers when I was with IBM. I understand software, I understand how to market it, how to sell it, how to position, how to make it more competitive, how to hire good people who know how to deal with software. I just don’t know how to WRITE code…big deal!
Angel Mehta: Would you say that a deeply technical background is a liability, then? Do search firms like Sterling-Hoffman make too much of a big deal about wanting deep expertise in this area when searching for CEO’s?
Bob Dutkowsky: I would paint the picture that if you already have a competitive set of products, the last thing you want is somebody who thinks they know a lot about software because they’re going to come in and try to re-architect the software to their vision. If you have competitive products like JD Edwards had, there’s no need for that. JD Edwards didn’t need another software architect. They needed a business person.
Angel Mehta: But if you have a weak set of products…
Bob Dutkowsky: In that case, you hire the best business person you can find, but that person won’t be able to improve the product vision. But at JD Edwards, we have a 1,000 people who know how to develop great products and use our architectures and our technologies to build out world class solutions for customers. You know, one of the things did when we arrived is challenge the company to delivery more software in a 2-year period then we did in any 2-year period in our history. Remember, we’re 25 years old so that’s a lot of 2-year periods.
Angel Mehta: Right….so how did they respond?
Bob Dutkowsky: How did they respond? They delivered more software then we did in any 2-year period in one year.
Angel Mehta: Did you not find any pushback from inside the organization?
Bob Dutkowsky: No. People wanted to know why we weren’t selling more of these great products. Particularly the guys who were working 7 days a week, 24 hours a day to build them. So where the linkage was broke was not in our ability to build the product, but it was in picking the right markets – it was about the focus. In the last six quarters the company beat Wall Street’s expectations six quarters in a row … we were the only software company that GREW our revenues in 2002…or at least, the only major enterprise application player. All it took was focus and execution.
Angel Mehta: Those words again. Let’s talk about focus and execution in the context of corporate culture. First, what was the JD Edwards culture like when you first started…was it necessary to try and change it in order to execute efficiently?
Bob Dutkowsky: JD Edwards had and has a distinct culture - there is no question. It’s very much reflective of Ed McVaney…obviously a founder - the ‘Edwards’ in JD Edwards. What’s really interesting is that perhaps because JD Edwards grew up building products for IBM back in the 70’s, it shares a lot in common with the IBM culture – though it’s a much smaller version of it, you know?
Angel Mehta: Expand on that. How is it similar to IBM’s organization?
Bob Dutkowsky: For example, one of the tenets of IBM is a principle that says, ‘respect for the individual’. It’s this notion that everybody has equal footing in the company and everybody is going to be treated the same way. It’s a respectful, honest, and fair place to work. When I arrived at JD Edwards, what I found is the exact same thing….the individual is important…that the company cares about its employees…that your DOOR is always open and anytime of the day or time people are allowed to walk in and sit down and chat with you. There isn’t a pretense of organizational structure or hierarchy that dominates the way the company works.
Angel Mehta: So what was it missing from the IBM culture?
Bob Dutkowsky: Well for one thing, it didn’t have its bureaucracy because JD Edwards wasn’t anywhere near as big. What would take a month to get decided at IBM gets decided in a 15-minute meeting at JD Edwards. You have to do that when you’re as small as JD Edwards is – you can either execute, or get run over by the big guys.