For true innovation to thrive, business leaders should primarily value the interests of their company’s customers, said Bill McDermott, co-CEO of German software corporation SAP AG, in a talk at the Fuqua School of Business Tuesday afternoon.
McDermott, who became co-CEO of SAP alongside Danish businessman Jim Hagemann Snabe in 2010, came to Duke as a part of Fuqua’s Distinguished Speakers Series. He spoke about his experiences with global business leadership in a question-and-answer style discussion hosted by Fuqua Dean Bill Boulding.
McDermott is known for his high energy, altruistic and ambitious leadership style—he was awarded the “Idealist of the Year” award in 2008 by City Year Greater Philadelphia for his civic service and leadership in the city of Philadelphia, and he has lead many corporations including Xerox, Under Armour and Ansys.
“The real measure of a person and a company is not what they take from the world, but what they give back,” he said in his talk, noting that empathy and teamwork are keys to success in the world of business.
After 40 minutes of questions from Boulding and McDermott’s responses, McDermott fielded a handful of questions from the audience, which was comprised of about 200 Fuqua students and other community members. The Chronicle sat down with McDermott after the talk and discussed what it takes to be an effective business leader on the modern global stage.
The Chronicle: What exactly is SAP?
Bill McDermott: We make the software that helps companies run better. Our mission is to make every customer a best-run business. Our vision is to make the world run better and improve people’s lives. We do that with business software so that you can connect everything, from the way you manage your supply chain, to the way you build your products, to the way you run your financials, to the way you connect with your customers. And, on an end-to-end basis, all of these processes are fully integrated in 25 distinctly different industries for small, medium and large companies alike. That’s what we do.
TC: In your talk, you said “Innovation begins with the empathy you have for the user of that product.” This strikes me as a unique mindset when tackling the business world. Will you elaborate on this idea?
BM: It’s having that complete single-minded passion for the customers and what they want. You want to create an experience for them that is unmatched, as opposed to creating products to make money. If you satisfy the fantasies of the user, you’ll make money. But you’ll make money for the right reason, and it will scale a lot better. What we think is that every good innovation began with the customer in mind.
Imagination begets the event. If you can truly put yourself in the mind of the consumer and listen to the consumer on what it is they really want and then you give it to them in a form that is breathtaking, fun to use and easy to use, you’ll sell a lot of units.
TC: How do you best collect and then work with user feedback?
BM: There are a few dimensions of the customer that should matter to a large organization. One is the geography—you have to be in touch with language, the currency and the culture.
Another is the industry—you really have to have the breadth and depth in domain expertise to discuss their industry as a thought leader. Users know their business and they’ll only be responsive to those who know their business as well as they do and can provide ideas they don’t already have. When it comes down to it, they’re buying your fresh ideas.
Finally, you need to know the role each person has in a company. Role-based user experience is even better. For example, if I’m a CFO, the user experience I will expect will be very different from the head of sales, the head of marketing or the CEO.
Personalizing your product to the industry-specific needs of your user and being thoughtful about the domain and geography play into the value chain that we see drive user acceptance and user satisfaction.
TC: Many people perceive a need to be ambitious and competitive to succeed as a business leader. But you’ve said you employ a “user-first” or “empathy-first” leadership style. Where and how did you develop this attitude?
BM: It all comes back to what I said on stage today—this idea of “the team” and the joy of having your team win the game.
My biggest lesson for any upcoming leader is that you can get more by giving more. The big thing is that you can really get anything you want in this life so long as you help enough other people get what they want. To lead, you need to be a person who wants to help others. In return, you’ll end up helping yourself, because you’ll be identified as a leader.
To be the student with the A+ because you outflanked all of your other classmates with your better study habits is not nearly as fun as getting an A- while helping another classmate jump from a C to a B+. Those are the things your classmates will remember about you for a long time—long after you forgot about your A+, by the way.
TC: In your talk, you told a story about how you went into a major job interview at age 24—eight or 10 years younger than the rest of the job candidates—and got the job. You said the way you convinced the interviewers to give you the job was by guaranteeing to them that you would excel at leading in the position and that you wanted the job more than the other applicants. How can a young interviewee prove that he or she is the best person for the job?
BM: Passion is something that doesn’t need to come through in words. I believe that passion comes through in body language. When you have it in your eyes that you want something, smart people are good at detecting that. The other piece is probably—During that interview, I was also leaning far enough forward in my chair that I almost tipped over. [Laughter]
It’s just raw passion. But at the same time, there should be a humanity about the passion. You’ve got to be very humble and recognize that you cannot be mad if you don’t get what you want. There might have been another candidate with eight or 10 years of experience who would have been the logical bet. But to change people’s minds is what leadership is all about. Changing people’s minds is the most basic thing that a leader can do.
People ask me all the time: “What’s the common trait among leaders?” But that’s the fascinating thing about leaders—they don’t have to have common traits. Leaders come in all shapes and sizes, genders, socioeconomic backgrounds. But they have one thing perfectly in common—all leaders have followers. It’s that simple.
TC: In your talk, you mentioned the importance of both decisiveness and collaboration and communication. You said that mostly everything that needs to be communicated is undercommunicated. Where do you think an effective leader should draw the line between allowing many voices into a collective decision and decisively making a choice as an executive?
BM: That’s a really good question. I think the big decisions have to be “job-profile” appropriate. So, if you’re buying a company or you’re delivering the strategy of a company or delivering to the market a breakthrough innovation, that’s a CEO message—you don’t delegate it.
At the same time, you must be aware of the decisions to delegate. Your people in your leadership chain have a very important role to play in the company. They are also willing to take responsibility as they are leaders. I’ll give you an example.
Some companies buy other companies so they can get the best price. They go through all the financial models, and they say, “Hey, based on price and return this is a smart call.” To which I say, “B.S.” The smart call is the one that isn’t the cheapest one necessarily, but is the best one. Again, it’s having the strength of the convictions to make a big call even though on paper it may cost a billion too much.
The other thing is, as it relates to big acquisition versus a small acquisition, a small acquisition is called a small acquisition for a reason—because it’s small. And when you have a big company, often, unless you’re buying a small company for the technology itself, it can be a bit of a distraction. Big companies tend to react to big things. What I’ve tried to do is to focus on deals that are big enough to get everybody’s attention as a game changer. When you do little ones, you should tuck them in for the technology alone and not pretend that a little one will organically grow within a big company into a giant—because it isn’t without your size and scale taking ownership of it.
TC: What is the best way to motivate or inspire leaders within a company or organization?
BM: The first thing is to listen. You need to find out what it is they really want. How do leaders want to be treated? What is the protocol around communications? You dream big dreams, where are you and what are you doing?
Then it becomes an exercise in coaching. How can I help you fulfill your dreams and how can we do the best job so you that we both feel good about the work. Money is not unimportant. It’s not the ultimate thing, but it is also important that you fare with people financially. You don’t want to be the guy that is not looking out for others’ interests, because they have families to take care of and college educations to pay for. It matters that you take care of them and they can trust you. I’ve seen leadership relationships that, in the last mile, the trust is broken because the relationship is lacking the generosity gene and the relationship lacks the trust.
In the end, most good leaders have the generosity gene. They should be able to argue on the side of the people as opposed to the balance sheet. In the long run, it’s the people who will be around after there have been a lot of different fluctuations in the balance sheet.