Abstract: To get rich, do you have to be miserable? To be successful, do you have to punish your customers? Tough questions from a CEO who’s smart enough to admit he doesn’t have all the answers.
Link: http://www.fastcompany.com/magazine/02/meyerson.html?partner=rss
In 1992 Ross Perot asked me if I would join Perot Systems as CEO. It had been five years since he and I had left EDS. I told him I would do it — with the disclaimer that I didn’t know much about the current shape of the business. Ross told me, “Just follow your nose.”
That’s what I did. It took me six months. I visited with all the associates of Perot Systems and all of our customers. Then I went back to Ross and told him, “Everything I thought I knew about leadership is wrong.”
All the reasons he’d asked me to rejoin him for were wrong. The people who had signed on, thinking we’d recreate a new and improved EDS at Perot Systems had expectations that were wrong. They would have to either change or leave.
It was a traumatic meeting. Not that he got mad. It was just a mouthful to tell somebody.
I was telling him that everything had changed. Technology, customers, the environment around customers, the market — all had changed. The people in the organization and what they wanted from their work had changed.
Organizations must change radically: we are at the beginning of a revolutionary time in business. Not just an evolutionary time. Not a year-to-year change. A fundamental revolution. Many companies that have enjoyed decades of fabulous success will find themselves out of business in the next five years if they don’t make revolutionary changes.
Of course, many of these changes are about technology. They’re also about the fundamentals of business and people, and they raise elemental questions: How does this business revolution affect the organization? What does it mean to the people in the organization? What changes do we have to make in the way we communicate?
And most important: What is the new definition of leadership?
I can’t offer absolute answers to these questions. But I do know from my own experience that the leadership techniques that applied 20 years ago don’t apply anymore.
My intense self-examination left me wrestling with two questions:
To get rich, do you have to be miserable?
To be successful, do you have to punish your customers?
To answer these questions, I would have to look deeply into myself, reinvent my concept of leadership. And in the process, we’d all have to reinvent Perot Systems.
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Sidebar: My Intro to Leadership Course
In 1967 Ross Perot gave me my intro to leadership course at EDS. I had just joined the company in January 1966 and already I was going to Ross about once a week with a new way I thought we should change things. He rejected every idea. He even wondered aloud if I belonged at EDS. Finally he offered me a chance to be the leader of a five-person project, working with Blue Cross and Blue Shield of Texas on a system that processed Medicare insurance claims. This was Ross’s original customer, the client he had had when he was with IBM before he founded EDS. That told me it was highly important; I assumed that this was the test. At the time I didn’t know the reason there was an opening for a project team leader. Much later I learned that the five people on the project had told Ross that if he didn’t remove the project leader they were all going to quit. Nobody told me that. But it was clear when I walked in the door and announced I was the new team leader, I had entered a tense situation. One of the team members told me that he was 10 years my senior, had already been on the project a year, and that he should be the team leader. Why was I even there?
Somehow it worked. This project was the first of its kind. We developed a brand new system in a brand new language working with a brand new computer in just 90 days: over one year’s work crammed into 3 months. In the process we took project revenues from $16,000 a month to $400,000 a month. We took it from a breakeven project to 80% pretax profitable.
That began my training as a leader at EDS. Then in the summer of 1967, Ross gave me the two-week crash course in sales and leadership. We had a major opportunity for a contract with Blue Shield to process their Medicaid claims. It was my project to lead. But I didn’t know the first thing about putting together a proposal.
I went to Ross and asked him: How do you price a contract? He said, “Why don’t you go back and make a proposal, figure it out, and then sit down and give me the options?” The next week it was time to present it to the customer. I’d never done that either, so I asked Ross: How do you present this? He said, “Why don’t you go make an outline and then come back and show me your proposal?”
So I did. Then the day came to meet the customer. At 8 a.m. I went to meet Ross so we could make our 9 a.m. meeting with the customer. When I got there, Ross’s secretary told me he had left town. I had never met the customer. I had never made a sales pitch in my life. But I didn’t have any choice. When I sat down in front of the customer’s executive vice president, I was so scared I literally couldn’t talk.
Fortunately, the manager of the customer’s unit I’d been working with sat next to me. I had a written offer in my hand, and he took it away from me and started reading the proposal aloud. In an act of charity, the executive vice president listened to the offer and then asked me a question about the technology. I was very comfortable with the technology, so I could answer that. Finally I loosened up and at the end of an hour the executive vice president signed the contract.
Within three years we took the 5-person group I was leading and grew it to 1,500 people. That became the health care business of EDS — at that time the financial engine of the company.
In 1979 I became president of EDS. It was roughly a $200 million company. Five years later we reached $1 billion in revenues. That same year General Motors suggested that they buy us for $2.5 billion; the deal was closed in October 1984. I was the lead manager for the next two years when EDS went from $1 billion in revenues to $4.4 billion. So I went from managing 5 people in 1967 to managing 45,000 people in 1986. When I left EDS, it was the largest computer services company in the world.
