Larry Ellison’s (CEO Oracle) management style and CIOs

Oracle logo at the Oracle headquarters.

Image via Wikipedia

Updated 12.12.11

“Pick battles big enough to matter, small enough to win.”

Jonathan Kozol (1936 – ) Writer, Educator and Activist

Larry Ellison (1944 – ) Oracle Corporation’s Founder and CEO

Today’s article is the fifth in a series of articles (1st Steve Jobs, 2nd Michael Dell, 3rd Warren Buffet and fourth was Bill Gates), analysing current and past leaders to ascertain how Chief Information Officer’s (CIOs) can learn better management by applying the management practices of leadership, practiced by these leaders.

This article also follows my previous articles on ERP, Enterprise Resource Planning (ERP) – Past, Present, Future and successful implementation, Cloud based ERP. Fact or fiction?, Back to basics Enterprise Resource Planning – Blog version and Back to basics Enterprise Resource Planning – CIO.co.uk version.

Larry Ellison has led Oracle from start-up to ‘software giant’ with a style that many view as narcissist. “According to psychoanalyst Michael Maccoby, author of Narcissistic Leaders: The Incredible Pros, The Inevitable Cons, “What makes Ellison so successful, even though he’s a narcissist visionary and really not very good at working with people, is that he understands himself, and he understands who he needs to work with – Courtesy of Canadian Business.” Larry Ellison is both an innovator and visionary, I believe these traits will be his legacy, “When you innovate, you’ve got to be prepared for everyone telling you you’re nuts.” – Larry Ellison

PS: CIO is a generic term and other analogous titles are Head of IT, IT Director, Director of IT etc.

The Management Style

What can CIOs learn from Larry Ellison’s management style? Let’s investigate while allowing you to decide.  (In no particular order and a few other sources utilised):

1. Follow your instinct and develop a Clear Vision–and Stick to It: – Courtesy of Canadian Business magazine (with a few changes), ‘While Larry Ellison was employed at Ampex, a firm that did contracts for the U.S. government (mid–1970s), he got his first taste of database software while working on a project for the CIA with the code name “Oracle.” Around the same time, he read a paper published by IBM, which outlined a way to make it easier to store and retrieve data — a prototype for the first relational database. “I saw the paper, and thought that, on the basis of this research, we could build a commercial system,” Ellison, who solicited the assistance of fellow programmers Bob Miner and Ed Oates, recalled in a 1995 interview. “If we were clever, we could take IBM’s research … and beat IBM to the marketplace with this technology. Because we thought we could move faster than they could.” He was right. By 1984, the company he founded with Miner and Oates, originally called Software Development Laboratories, was logging nearly $13 million in annual sales. (Miner died in 1994; Oates retired in 1996.)’

Right from the outset, he dreamed of developing Oracle into a viable successful business. For CIOs this is one of the most important traits that MUST be part of the toolbox.

CIOs need to clearly identify to themselves and communicate to the environment that they work in ‘the vision’ that they have set out to achieve. They then need to have the confidence to deliver that vision.

2. ‘Image’ is everything. – According to People Soft Planet,Ellison has Oracle in his own image. Now in his late 50s, tall and trim, he has kept himself in excellent shape. His hair is still dark, running to reddish; he has brown eyes and a short beard that helps to camouflage his long jaw. Ellison radiates enthusiasm and charm. He’s animated and engaging on stage, at his best in informal Q&A sessions where he can rap with the crowd.”

According to Canadian Business, “A fan of, and expert on, Japanese culture, he sees himself as a samurai warrior. He also likes to quote a saying attributed to Genghis Khan: “It is not sufficient that I succeed. Everyone else must fail.” The incredible success that he has enjoyed is a marvel to anyone familiar with the accepted literature on what it takes to make a great leader, qualities like empathy, mediation skills and humility. By all accounts, he is a bad listener and a big talker, whose brash, take–no–prisoners approach tends to alienate employees and customers alike. Yet, in the past 35 years, the jet–flying, sailboat–racing renegade has built Oracle into one of the most important tech firms on the planet, with annual revenues of $27 billion — about a billion dollars shy of his personal fortune. (All figures are in U.S. dollars.) While many of his contemporaries have moved to arms–length positions or other projects, Ellison remains the driving force behind the computing juggernaut, continuing to fashion it according to his own design. After acquiring more than 65 tech firms in the past five years, the mercurial CEO announced in September that he would be “buying chip companies,” suggesting that Oracle is positioning itself for what Bill Tatham, head of Toronto–based enterprise software firm NexJ Systems, describes as “another level of world domination.”

But while it may be tempting to single out Ellison as the ruthless villain of high technology, “none of these guys are nice,” says Jeffrey Pfeffer, a business professor at Stanford University and author of Power: Why Some People Have It — And Others Don’t. Before his ousting from Apple, Steve Jobs is said to have become increasingly difficult to work with, refusing to acknowledge that sales were tumbling; since his return, he has often been criticized for his obsessive secrecy, and ruling the company with an iron fist. Meanwhile, it was Bill Gates’s attempt to snuff out the competition that led to antitrust allegations — and sent Ellison rooting through Microsoft’s trash. “It’s very unpopular to say in today’s world, where we have these Kumbaya theories of leadership,” says Pfeffer, “but it actually doesn’t work well.” If anything, Ellison is merely the poster boy for what it takes to thrive in an increasingly ruthless environment. His rare combination of hubris and self–awareness enables him to skid recklessly to the edge, stopping just short of the cliff. And his stunning trajectory offers a valuable lesson: in the cutthroat arena of big business, sometimes it pays to be a jerk.”

3. Be ‘shrewd’ and keep the team on its ‘toes.’ – LE “Years ago, I gave a speech that earned me the eternal enmity of the Netscape board. I said that the biggest problem with Netscape was that Microsoft could copy what they had very quickly. It was a clever product, but there was no technical barrier to entry. It’s much harder to copy a database like Oracle. There are millions of lines of code. It’s an incredibly difficult program to duplicate.

But a browser is not a difficult program to duplicate and I said, at the time, that my cat could write the browser. The board members were very offended by all this, but in fact Microsoft later did do exactly what I had predicted.”

4. Succession: LE – Courtesy of CNET magazine (with a few changes)”If Larry was incapacitated, the cult would dissolve,” former executive Marc Benioff says. “It’s unclear if Oracle is a sustainable enterprise without Larry, because his personality is so firmly entrenched.”

This is an area of weakness for the Oracle leader, as he has not planned effectively for a successor. As Larry Ellison approaches retirement, we will all have to witness whether he appoints a successor or leaves succession to the almighty.

5. Competitive advantage: LE – Courtesy of PeopleSoft Planet (with a few changes)Just because you’re good at R&D doesn’t mean you’ve commercialized R&D. The tragedy of Xerox PARC was that they had brilliant R&D but terrible execution in terms of turning that R&D into really wonderful products. Contrast that to IBM. During its glory days, IBM was fabulous at translating their innovation into products, into market domination.”

CIOs need to ask themselves how they can help the business through leveraging IT to create competitive advantage. I covered this in my post, Leveraging IT for Competitive Advantage – Myth or Reality?

6. Follow your instinct: LE – Courtesy of People Soft Planet magazine “We are the leader in bio-informatics, and a lot of things there are exciting. Sure, Wi-Fi, even 3G, is fairly cool, albeit expensive. But the thing I’m most interested in is software as a service. That idea that every customer who wants to do accounting on computers, or every customer who wants to do inventory, or manufacturing, has to figure out what computer to buy, what operating system to buy, what Cisco router and switch to buy, what database to buy, is just nonsense.

Companies should be experts in their business, and computing should be available on the Net as a service. So more and more, our business is changing from selling our applications to our customers to: We buy the computers, we run the applications, and you use it. We’ll be the experts. And you just pay us a monthly fee. That really is utility computing.”

7. Talent acquisition – Hire ‘Action’ oriented employees: Courtesy of People Soft Planet magazine, “

Geoff Squire, who ran various divisions of Oracle’s world operations from 1984 to 1993, described the manner in which Ellison selected new programmers and salespeople as “clinical,” Squire attributes Oracle’s success largely to the premium he has always placed on choosing the right candidates. “He really did hire very, very good people,” says Squire. Though Squire acknowledges that Ellison could quickly turn on his charges — as he puts it, “He backs people until he doesn’t” — he sees Ellison’s willingness to constantly refresh the talent pool as a strength. “People who do a great job don’t just get to stick around in companies forever,” says Squire, who is currently the non–executive chairman of Kognito, a U.K.–based data management firm. Despite the fact that he was cut loose shortly before the last of his stock options would have vested, Squire harbours no ill will, insisting that the fortune and experience he amassed at Oracle “set me up for life.” Squire’s trajectory is not unique: Oracle is often credited with creating the most millionaires in Silicon Valley; many of those ousted by Ellison went on to head tech firms that competed in the same high–profile realm. (Incidentally, in the midst of the Hurd debacle, Lane was named non–executive chairman of HP.) ”

A CIO needs to trust their gut instinct, as one can only learn a certain amount in an interview. I think, the strategic fit, is a very good measure. How will a new hire fit into the culture of the company? Will they enjoy it here? Have they worked in a similar culture before? The danger is that the culture could be so alien to the new hire, that they find it difficult to adjust.

Larry Ellison has always hired the smartest people who can ‘get the job done.’ Hire your friends and past colleagues, as they will have loyalty to you and as you know them personally, an informed decision can be made on whether they have what it takes to realise your ‘vision.’

8. Spotting opportunities and innovation: LE – Courtesy of PeopleSoft Planet (with a few changes)When you’re the first person whose beliefs are different from what everyone else believes, you’re basically saying, “I’m right, and everyone else is wrong.” That’s a very unpleasant position to be in. It’s at once exhilarating and at the same time an invitation to be attacked.

There are really four phases. In phase one, everyone tells you you’re crazy and it’s the stupidest thing they ever heard. In phase two, they say, “There is some merit to the argument. It’s still crazy, but there’s some merit to it.” Phase three is, “Well, we’ve done it better than they have.” And phase four is, “What are you talking about? It was our idea in the first place.”

It’s fascinating as we continue to innovate and lead the way in both the application space and the database space. In the very beginning, people said you couldn’t make relational databases fast enough to be commercially viable. I thought we could, and we were the first to do it. But we took tremendous abuse until IBM said, “Oh yeah, this stuff is good.”

We were the first company that said all the applications had to be on the internet and not client/server. Everyone said that was a bad idea. That was 1995. Now everyone has moved all their applications to the internet.

And now we’re saying you have to have a suite—that this best-of-breed approach is crazy. You can’t sell parts that were never designed to fit together. They’re still saying we’re crazy about that. But it’s interesting, SAP and PeopleSoft are now advertising they have suites. Everyone has started using the “suite” word.

And so the four phases repeat over and over again. As long as we continue to innovate, I don’t think that’s going to change. When you innovate, you’ve got to be prepared for everyone telling you you’re nuts.”

The lesson that can be learnt is that within IT we need to spot opportunities for improvement. It is not enough, however, just to spot them, the onus is to spot them and then to create an environment to leverage that opportunity and to make it happen.

For More Info:

Oracle – Larry Ellison Interviews by PeopleSoft Planet

Can Oracle survive Larry Ellison

Larry Ellison – The Source of Oracle’s Wisdom

Larry Ellison’s one man show

What Larry Ellison said about Cisco and Corporate Culture<

CIO 20/20 Honorees–Innovator’s Profile: Lawrence J. Ellison of Oracle Corp.

Top CEO: Larry Ellison / Convinced that the future in high tech depends on consolidation, Oracle’s founder refused to give up on a PeopleSoft takeover, no matter what the obstacles

About.com –Larry Ellison

Hackers take up Larry Ellison’s challenge

Larry Ellison Slams HP Board: “Worst Personnel Decision Since The Idiots On The Apple Board Fired Steve Jobs Many Years Ago”

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Enterprise Resource Planning (ERP) – Past, Present, Future and successful implementation

Brief History and introduction

ERP’s origins can be traced to the beginning of the Database and Material Requirements Planning (MRP), in particular, relational databases and its founder Edgar Frank “Ted” Codd. Good current examples are SAP, Oracle (Click for Oracle Database History) and Microsoft Dynamics. The concept has evolved around Data warehouse functionality. ERP software attempts to link all internal business processes into a common set of applications that share a common database. It is the common database that allows an ERP system to serve as a source for a robust data warehouse that can support sophisticated decision support and analysis.

Data Warehouse design can also involve a process of Extract, Transform, load (ETL) that allows business intelligence software to perform its queries and predictive analysis.

Recently, Business Intelligence (BI) has driven the adoption of ERP systems due to its ability to sit on top of a data warehouse and perform intelligent querying of data through Data Mining, OLAP and Business Performance Management (BPM). In particular, it is the BPM aspect that MDs/CEOs utilise the most as it becomes a decision support system, providing dashboards for all sorts of performance indicators allowing management quick synopsis of any given situation, allowing quicker decision making.

For more information on ERP design, Click here

For more information on Data Warehousing and ERP, Click here

Current Consolidation, who owns who and how it will affect the future of ERP

The IT market is undergoing significant reshuffle and consolidation. This has led to a great deal of confusion on who owns who, especially if you are not actively following the IT industry. For the uninitiated and for the benefit of everyone, I will now clarify. ERP system supplier consolidation has meant that Microsoft has bought Navision and Great Plains. SAP now owns BI vendor Business Objects (BI). Oracle is the supplier that is the most influential as far as acquisitions are concerned as it has bought, Sun Microsystems, PeopleSoft (Therefore JD Edwards), Siebel, Primavera and Hyperion (BI). I will also mention that IBM bought Cognos (BI) as it is software for business intelligence (BI).

How this consolidation will affect ERP and the IT market in the future is uncertain at the moment. For example, Oracle has acquisitioned over 100 businesses in the last few years; the test for Oracle will be on how well it can leverage all these acquisitions for competitive advantage. Even with all this consolidation, a newcomer arriving with a new product that upsets the applecart is all too common within the IT arena.

The businesses of the future will be very different to the businesses of today and will have to think long and hard about other areas as well such as a mobile workforce and mobility (Smart phones), social networking and Cloud Computing.

Lessons learnt that allow future successful implementations

While challenges may exist, project leadership can mitigate risks with a strong plan that remains focused on the buyer’s goals and objectives. A spirit of cooperation between the vendor and buyer for mutual benefit is often quoted as the single most important factor for success. It is interesting that on average an ERP implementation takes approx 20 months and that only 7% of projects finish on time while 68% took “much longer” than expected.

I have studied many successful/unsuccessful ERP implementations, interesting statistics and as there is a body of existing knowledge, I am concluding this article by suggesting that a new ERP implementation is done by splitting the project into three discrete areas. Planning, Change and Review. The areas below will on occasion be conducted in parallel. Successful ERP is best done when the focus is to do it right, first time as in many cases by the second round the damage is often irreparable.

Planning –

The business needs to appoint a steering committee to conduct a thorough SWOT and STEP (PEST) analysis with a view to setting up an ERP capability. It can then be used to identify gaps that need to be addressed. For example, if the STEP analysis highlights that politically, many departments aren’t interested or do not know about the new ERP implementation, it needs to be addressed. It also needs to be recorded in the SWOT analysis as a threat. This will highlight how prepared the business is for the required change and the next step can take these findings and ensure:

  1. A senior Executive is appointed – Ensure project is top driven (Senior exec – CEO etc) and not bottom up (IT driven)
  2. Business strategy is clearly defined.
  3. IT ERP system fits within that strategy.
  4. Definition of goals/objectives of introducing the ERP system (Ensure questions such as what do we hope to achieve at the end? How will we know that we have arrived? – are answered, i.e. clearly define business requirements in detail and set realistic business benefits to manage expectations better.
  5. Processes in 6, 7 and 8 need to be aligned to the overall business/IT strategy by involvement from both senior managers of functions and experienced users who understand the processes.
  6. Processes are analysed for alignment to business vision and business/IT strategy and fixed accordingly.
  7. Processes that are not captured by existing systems are captured.
  8. Processed are improved.
  9. Resources both human and technical – Ensure miscalculation of time/effort is minimised, manage delivery timeframe expectations.
  10. The above steps have been completed and a realistic budget is assigned.
  11. ERP Package selection is according to business requirements/process mapping.
  12. ERP software is aligned to user procedures (May require new procedures)

Change –

  1. Ensure that all interested parties are engaged and feel involved (Business buy in) and that resistance to change is reduced and addressed accordingly. (This can be accomplished by creating a steering committee that has reps from both senior management (each function) and a super user who understands current processes. The super user needs to have taken the time to create his/her steering committee to analyse current processes and suggest improvements (See item 5 under planning).
  2. How do we communicate that this change is required (Education)? – On going communications with all stakeholders.
  3. How will training elements be addressed? What is the current process (Manual/IT based system and if it is an IT system, are there any problems in the way that the system is used?
  4. Reviews, for example, Gateway Reviews should be conducted to deliver a “peer review” where independent practitioners from outside the programme/project use their experience and expertise to examine the progress and likelihood of successful delivery of the programme or project.

Review –

Once the project has been delivered successfully, a yearly review should be conducted to enhance or improve the system allowing for continuous improvement. Minor modifications, tweaks and fixes can be performed as business as usual.