| BUSINESSWEEK ONLINE : MARCH 29, 1999 ISSUE | ||||||||
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| COVER STORY
Q&A with EMC's Michael Ruettgers ''Sense of urgency is what we call a competency'' Booming demand for big data storage equipment helped EMC Corp. move up to No. 5 in the BW 50 this year. But credit also goes to EMC's driven management culture, led by CEO and President Michael C. Ruettgers. EMC was the only storage systems company to increase its market share significantly in 1998, according to Dataquest, and its net profit margin of 20% last year put EMC in the same profitability league as Intel and Cisco. Ruettgers recently spoke with Business Week's Paul C. Judge about how he drives that kind of performance, the importance of speed, and prospects for continued growth. Here are excerpts of their conversation: Q: Technology has an outsized affect on the economy these days, particularly in the U.S. How long do you expect that to keep up? A: It looks to me that we're starting a long wave here, kicked off by what we are seeing around the Internet. People are starting to get access to information and use it in ways that they couldn't or didn't before. From our vantage point as a data-storage company, what we've seen up to now is businesses trying to use information for competitive advantage. The way they did that was by collecting more information on customers and suppliers. But that was only in their own spheres of influence. The Internet lets you move suddenly past those local spheres of influence. One of the stories I like best about the business impact of giving people access to information on the Internet is Victoria's Secret. Everyone knows about the Victoria's Secret commercials on the Superbowl. What I found interesting wasn't the models -- people laugh when I say this -- but the way those commercials got 100,000 people to log on to the Victoria's Secret Web site from around the world. Within 15 minutes, the company had sold stuff in 27 countries. All that demand for information is promising for us because it needs to be stored someplace. Q: How important is speed in EMC's culture, and how do you drive that? A: Sense of urgency is what we call a competency here and it's absolutely critical. Once you decide on a course of action, it still takes time to do it. We can't waste time. We look for people who have the same sense of urgency. It's one of the selection criteria we have for managers. Another way we try to push it is any time we're looking at schedules, we try to accelerate them. We try to take decisions in one meeting instead of waiting for the second or third meeting. Q: Execution looks like the big challenge now for EMC. What key measures do you look at to gauge whether EMC is executing well? A: We look at how certain product areas are growing. The growth of our open storage systems, for instance, rose from $200 million in 1995, the first year we shipped those products, to $800 million in 1996. And in 1998, they were more than half of our revenues of $4 billion. That told us we were onto the opportunity and executing well to take advantage of it. Now we are tracking our software revenues very closely. They've gone from $25 million in the first year, 1995, to $445 million in 1998, and we expect that number to increase by 50% this year. Those are key measurements of how we're executing. The entire company has to be changing in a good way to capture that kind of growth. Q: What will you do to keep EMC's eye on the ball? A: We're very focused on storage. When you know what you're supposed to be doing, it's easy to know what you're not supposed to be doing. I'll keep looking at revenue growth in the key product areas, product failure rates, turnover. Paying attention to those things as a company helps us stay focused. Q: EMC has managed to push into new markets for storage equipment ahead of its competitors and be first to exploit some of the important technologies in your industry. How have you done that? A: You have to be heavily focused on the customer. We see lots of companies that aren't -- competitors and some others we don't compete with in the computer industry. When you go talk to them, frankly it's frightening to me how they talk about customers. It's like customers are there to be used rather than served. We're very much focused on helping our customers excel in their own businesses. It also requires the strength of leadership to make tough decisions and get at it. People who were part of Digital Equipment Corp.'s senior management say one of the problems that company had was that they would not make the hard decisions, even when they knew what was wrong with their business. Q: Do you regard customer service as a competitive advantage for EMC? A: It's a huge competitive advantage. We have remote support for all of our stuff, the same level of support in New Orleans or Kyoto as in Boston. Our industry has some complexity. We support 15 different operating systems that run on computers connected to our equipment. That's a huge investment, but you have to be prepared to support the complexity. Q: Couldn't that same level of customer service be duplicated by your competitors? A: We always watch what our competitors are doing. But many of these things take a long time to get in place and do it right. Philosophically, many of our competitors are not willing to do what we do in customer service. Q: What do you mean? A: One thing we do that's unusual is we've made customer service into an investment center, and we don't run it on a profit-and-loss basis. That's because one of the first things that's likely to go in order to make money is to cut service. When that service operation is run as a P&L, it creates conflicts. It's hard to get people to spend extra dollars to solve customer problems. Q: What's your top concern in the next year? A: Execution and getting the right people to do the right thing. We will add 3,000 people this year. That's meant we've had to increase our focus on recruiting, hiring, training, getting people who are effective. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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