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| Home - CEO Spotlight - Aug 03 Issue |
CEO Spotlight: Bob Dutkowsky, JD Edwards
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Angel Mehta: Let’s talk about Ed McVaney. When you were evaluating the opportunity, how much of a concern was it that you’d be stepping into the shoes of someone who had been around for so long…when founders have been with a company for so long, the business is usually merged into their personal identity…how did you deal with that?
Bob Dutkowsky: I would say it was something that I thought about, no question. I was like, am I comfortable replacing a legend? Am I comfortable replacing a guy who the company is named after? In our case, Ed personally recruited me and we spent a lot of time together before I joined the company. I spent a lot of time listening to why he wanted to step aside and why he thought the time was right…I wanted to understand what he had to see in a person that was going to come in and take his place. So I was really comfortable with what Ed wanted in terms of his involvement after I joined the company. We pre-determined how we wanted the transition to go and executed it to the minute.
Angel Mehta: I know that JD Edward is – or WAS - trying to make a push into the Fortune 500 market, and it wasn’t exactly successful. Many of our clients - smaller software companies in particular - still regard that as part of their strategy – to try to go head-to-head with SAP at the Fortune 500 level. What advice would you have for them based on your experience of trying to attack that market at JD Edwards?
Bob Dutkowsky: That’s a great question. JD Edwards’ strength is in what we call, the mid-market - not the Fortune 500. Our products are built to be implemented and deployed very effectively in a mid-market environment…so it’s back to my original point of ‘focus’. You have to focus on what you’re GOOD at. Don’t try to throw the 50 yard bomb if all you can do is run 3 yards in a cloud of dust. You have to play to your strengths, though every once in a while you’ve got to throw the bomb just to keep the other team off balance – that way, you can score some quick touchdowns.
For example, once in a while, we go upstream into the Fortune 1000…but we go there only because the customer brings us there. For example, we recently signed a 10 year deal with Walmart for a very specific application. We had the best solution to a very specific business problem they had. But Walmart BROUGHT US there – we didn’t do it because we are wild-eyed and crazy enough to go running up into that end of the field, thinking that we can change the game. We aren’t going ot go up to every Fortune 1000 company and say, ‘“Well Wal-Mart bought from JD Edwards so you should too”.
Angel Mehta: Do you think it’s a viable strategy, then, for a software start-up to try and compete at the Fortune 500 level? Let’s talk specifically about applications plays…can they realistically compete against an SAP or PeopleSoft or whoever it is?
Bob Dutkowsky: If I answer the question the way I want to, you’ll say that there’s no point in anyone ever innovating again. But the answer to your question is ‘No.’ The little guy can’t go up with a good idea and win in the Fortune 500 market. They want tried and tested solutions with infrastructure to support them over the long haul. However, if you’re idea is to change the game…to invent a technology or architecture that changes the way business happens…well, then the Fortune 1000 guys might invest in you because they’re always looking for a competitive edge. My experience with that kind of challenge is at EMC. IBM holds the patents on storage…they invested it. But EMC figured out a better way to do storage and ultimately took over and dominated the Fortune 1000 marketplace. Yes, it can be done, but you have to change the game if you’re going to break upstream.
Angel Mehta: As opposed to being a ‘me too’ vendor….
Bob Dutkowsky: If you ‘me-too’ your way up, the only leverage you have is price and that isn’t sustainable. There are too many software companies, I think, who have had great ideas but they try to ‘me-too’ their way into the market and they just don’t make it.
Angel Mehta: I want to ask you a question about the importance of talent acquisition. You referred to JD Edwards as a small company, which relative to the companies you’ve been with, I suppose it is, but certainly JD Edwards is one of the larger enterprise software players. At the startup level, everyone acknowledges that a good portion of the CEO’s time should go into recruiting. How significant a task is it for the CEO of a large software company like JD Edwards?
Bob Dutkowsky: God what a great question…these are so much more fun then tender offer questions…(Everyone laughing). The short answer is, I think effective CEO’s spend an awful lot of their time recruiting, to the point where recruiting is a constant process. You can’t NOT recruit. You have to recruit all the time, even if you don’t have actual openings. So consequently you know if you do need to hire a person you have kind of a rolodex full of people who you can COMPARE your candidates to.
Angel Mehta: How do you know if you’re hiring the right person?
Bob Dutkowsky: Do your homework….and then listen to your gut. Every person that I’ve ever hired that’s been a mistake, I knew – deep down – that they had the potential to be a mistake. The little Devil on your shoulder is whispering…saying, “I don’t think so” - but you still went forward because of whatever factor…
Angel Mehta: Like how the candidate looks on paper…
Bob Dutkowsky: Right. Every time I’ve hired a person that hasn’t worked out, the little voice inside of me was saying, “I don’t think so”. I should have listened.
Angel Mehta: Did you ever get the urge to join a start-up? In the bubble, I mean? So many great executives did…it seemed hard to resist, given how easily so the exit seemed to be.
Bob Dutkowsky: Before I came to JD Edwards I looked very carefully at one start-up. It was privately held, no revenue…but it had a product. In the end, I turned it down. I think that’s one of those things that you have to be really honest with yourself about. You have to make an honest assessment of what your strengths are. I grew up in companies of 400,000 employees and billions of dollars in revenues with tons of infrastructure. I went from an $80 billion dollar company (IBM) to EMC, which was about a $1 billion dollar company. It wasn’t a startup, but there was a HUGE difference in terms of the company’s capacity and delivery capabilities. And what I realized is that I liked the smaller company better…but TOO small – ie., the early stage plays you’re talking about – didn’t play to my strengths necessarily.
Angel Mehta: Is there really that much of a difference between EMC at a billion dollars in revenue and IBM at $80 billion in terms of the experience for you, or the infrastructure present?
Bob Dutkowsky: Oh man, you can’t imagine how different it is. Let me give you an example. I think at the time I arrived, EMC had about 8,000 employees and probably the day I arrived 5,000 of them reported to me. I looked at some of the leaders inside the company and figured out that these are not the leaders that are going to take the company to the next level. So I said internally, show me the pipeline of other candidates –up and comers inside the company that can fill these gaps. Angel, if you asked that question at IBM, the next minute you get 25 resumes of internal candidates for every job you have open. And all of those candidates grew up the way you did…they were mentored and trained…you could call five layers of mentors at IBM and say, ‘Tell me what this guy is good at and where he needs work.” The bench is so deep in a company like IBM…but at EMC there was no bench at all! So the response at EMC is, if you want to make some changes in leadership, go find those candidates yourself. Forget mentors, forget development organization….everyone in the company at EMC was working 80 hour weeks. Nobody has time to think about things like who goes to the next level.
Angel Mehta: Let’s talk about next steps for you personally. At this point, you’re probably in a position where you don’t need to work to live, right? [Everyone Laughing]…so what keeps you going? I mean, what are you motivated by?
Bob Dutkowsky: Did my wife ask you to ask that question? (Everyone Laughing)…Look, I love to compete - that’s what keeps me going. Here’s little JD Edwards, the fourth player in the game taking on Goliath…the Oracles and the SAP’s of the world - and for the last couple of years, we’ve been beating them. By merging with PeopleSoft I think we have an even BETTER chance to compete against the big players but that’s what motivates me. To build a team that’s competitive, put it out into the field, tape up your ankles, play the game, and see what happens.
Angel Mehta: Let’s go back to the family issue, because I think this is a huge question or personal struggle for CEO’s and entrepreneurs all over the world, in every industry. What have you learned about balancing work and family? What advice would you have for entrepreneurs or CEO’s that may be just about to start a family and a company at the same time?
Bob Dutkowsky: Marry the right person! (Everyone laughing). I was lucky - I married someone who understands what motivates me and is the perfect partner at figuring out how to make it work. I mean, imagine telling your wife we’re going to move 13 times…in every case, I just show up ready to go – meanwhile, she has to find schools and doctors and dentists, games and teams and clubs for the kids…. all that stuff. If you’re going to go the path I did, you’ve got to have a compatible spouse who understands the challenges.
Angel Mehta: It’s something that gets decided up front?
Bob Dutkowsky: Yes. My wife and I decided back 21 years ago that I was going to work and she was going to be there for our family – and it’s been the perfect partnership. It’s not been without its challenges and there are always days and minutes when you question whether this is the right stuff to do….but at the end of the day, we make it work – and it’s a tribute to her, more than to me.
The other important thing is, my wife - I would say - barely knows what I do. I mean, she knows I’m CEO of JD Edwards and she knows JD Edwards is a software company with lots of employees, but at the end of the day, we don’t talk about JD Edwards and the day to day events. I don’t go home at the end of the night and have staff meetings. When I’m with my family, I’m with my family. If you get to the point where you’re having staff meetings at home every night, it’ll get pretty difficult to keep perspective. At the same time, as a result of that disconnect, she’s a great person to bounce tough questions off every now and then because she asks all the simple questions that are so incredibly important. She really is the perfect partner.
Bob Dutkowsky is CEO and Chairman of the Board of JD Edwards and Company. He was previously President of Teradyne’s Assembly Test Division, CEO of GenRad, and Executive Vice President of EMC. Earlier in his career, Bob spent over 20 years at IBM, including an assignment as executive assistant Lou Gertsner. Send Bob feedback at: bob_dutkowsky@jdedwards.com
Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies. He can be reached for feedback at: amehta@sterlinghoffman.net
 
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