SAS CEO Jim Goodnight shares insights in business and his motivation to make a difference

1/06/2015

Melbourne Business School was delighted to welcome Jim Goodnight, CEO of SAS, the world’s leading business analytics software vendor, and other senior SAS executives, including Chief Marketing Officer Jim Davis, to share their insights with students and alumni in Melbourne recently.

 

With the digital universe doubling every 18 months, organisations are grappling with both the challenges and opportunities presented.  Founded in 1976, SAS has not only been able to meet the needs of its customers but also experience unparalleled growth and profitability over the past 39 years, including during the dot-com crisis that decimated many of its competitors.
 
“We’re in the third phase of evolution,” explained Davis. “We started as a company providing people with the tools and products they needed – software packages. In 1995, we realized that the future of our business was not in the products, which were limited because they were a commodity. Our customers needed to solve problems, so we took the 200 products that we had created and treated them as components in building that solution for our clients.

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“When the dot-com bubble burst, we took a further step in our evolution and focused on solutions related to specific industries, such as risk assessment for financial services and bringing new medicines to market. So we went from a product-driven company, to one which provided broad solutions to all organisations, to now one which provides deep solutions to targeted industries.  What this also means is a change in the discussion around the value that we can bring to an organization. If we can reduce fraud by 10 percent and save a company $100 million, then our clients will be more willing to invest in our services and even if the economy is tough, people will still do business with you.”
 
Innovations such as these have driven SAS’ evolution and can be considered to be part of the company’s DNA. But how this is nurtured is a case study for all organisations. SAS has long been described as an example of a utopian workplace culture, with benefits such as health care, flexible work hours and a campus set in 900 acres of natural surroundings.
 
“We started out as a knowledge company. Software comes out of people’s brains and you have to encourage people to develop this,” explained Goodnight in a conversation with Professor Ujwal Kayande of MBS. “If you treat people like they have the capacity to make a difference, then they will.”
 
This culture explains why the turnover at SAS is only 4 percent, incredibly low for the software industry. “Half of what we do is bottom up. Ideas come from everywhere, including our customers,” says Goodnight.
 
SAS is also unique in that most companies on the same trajectory would have become public to raise more capital to fund growth. Recalling the decision to stay private, Goodnight explained, “In the dot-com bust, everyone said we had to go public but 85 percent of our employees begged us not to. They saw pressure from Wall Street to lay off people whenever anything goes bad and they were worried about that. And you know, I probably shouldn’t be saying this,” he said wryly looking around the room with students, “But as a private company, we don’t have to worry about what a bunch of 28-year-olds on Wall Street are telling us!”

In the end, it was the right decision. By late 2008, when it was clear that the US was headed for a deep recession and competitors were reducing their workforce by the thousands, SAS communicated to its workforce that it wouldn’t be taking the same path. “We told people there would be no layoffs and we cut costs. We ended up having a very profitable year,” says Goodnight.

 
In considering the management style of some of his contemporaries, Goodnight noted that when executives announce that they will get rid of a large number of their workforce in a bid to improve productivity and reduce costs, they end up damaging their own organization. “If you’re spending all your time trying to impress your manager and thinking about how to keep your job, you’re not innovating and developing new products.”
 
Goodnight also shared his stories of investing in other companies. “You want to encourage people to take risks,” he says. “One of the things we invested in was an idea to develop a virtual reality. It was great. That little company grew and when the revenue was $55 million, we decided to get out - because their expenses were $85million! You’ve got to learn when to stop digging a hole. Accept the loss, move on and start something else.”
 
The evening ended with a discussion of the need to invest in education.  Goodnight spoke about the importance of early childhood education and qualified math teachers. These led to SAS’ development of SAS® Curriculum Pathways®, which provides materials for both teachers and students. It also explains Goodnight’s commitment to supporting programs such as the Melbourne Business School’s Master of Business Analytics, where SAS is an industry founding partner.

 
All Master of Business Analytics students from MBS will receive a SAS Certificate in Business Analytics upon graduation. Rebecca Wilson, a Master of Business Analytics student, expressed her thanks at the event, citing what most students felt: “I was passionate about math in school, and it is great to have SAS’ support to convert that passion into amazing career opportunities.”