The next time you need some cold cuts, consider this about the deli worker slicing your turkey: He could be a CEO someday.
It might sound like a Horatio Alger rags to riches story, but this is precisely the career path of Bill McDermott, CEO of SAP. McDermott’s new book, Winners Dream, offers a highly personal view into the global business leader’s early days and rise to the top. Despite sickness, death, economic disadvantage, and his family's house literally burning down around him, McDermott never let his dream of achieving success die.
But it wasn’t a lucky break or a fluke event that launched McDermott from the deli counter to the corner office. The narrative details the path of an exceptionally hard worker and an unusually gifted motivator. From managing a newspaper route and buying a delicatessen in his younger years to coaching sales team after sales team to turn around lagging numbers -- in one case actually taking a division from worst to first in a single year -- McDermott has made his dream a reality through sweat and tears.
I had the pleasure of talking with him to hear some of his insights on motivation, employee recognition, and the power of manager-employee relationships. True to form, he was on the conference line even before I joined the call (and I dialed in two minutes early).
You started working at a very young age. What are some of the enduring lessons from your early jobs that have stuck with you throughout the years?
The first thing is a real appreciation for work itself. Especially at those young jobs, whether it was the newspaper route or the deli, I found work to be very liberating because you can take command of your own situation. I think there’s an amazing sense of self-control and pride a person develops when they’re earning money and trying to make something of themselves.
The second lesson is an amazing empathy for the customer. You really have to focus on your customer, and serve them in ways that your competition either doesn’t, can't, or chooses not to.
During your 17 years at Xerox, the company at which you got your first sales job and worked your way up to president, you were often tasked with turning around teams that weren’t performing. You even got the lowest-performing division in Puerto Rico, ranked 64th out of 64 teams, to steal the number one spot the following year. How did you pull off these major reversals?
First, listen to the people -- they generally know why things aren’t working. In Puerto Rico, I spent the first few weeks really getting a sense of what the people felt needed to be done, as opposed to coming in there as a dictator. Essentially, there were three main themes: They wanted to have a vision, they wanted to be inspired when they came to work, and -- it wouldn’t be obvious if you didn’t listen -- they wanted to have their holiday party back. I found out the most important things to the people and built everything around what they wanted, beginning with the holiday party. I said when we go from number 64 to first, Gilberto Santa Rosa will play for you at the Old San Juan Hotel and you’ll have a holiday party like no other ever. And that became the battle cry.
The other thing is you have to have really audacious, bold goals with enduring value. Nobody gets out of bed in the morning to win the silver, so we’ve always focused on things that have never been done before. There’s some shock value to it, but it also has to be backed up by a solid, well thought out plan. It’s not just one big number or one big management [objective] -- all the people have to be doing his or his part to pull it off. The idea of getting everyone on the same page and wanting it more is kind of the secret to it.
What are some of your best motivational tactics?
I think that leaders will be forgiven for a lot of mistakes, but they will never be forgiven for lack of vision or authenticity. So I always try to create a bold, compelling, truly inspiring vision for where we have to go -- not where we’ve been.
The second thing is be you. The most important part of you is you. I think [when] you’re not trying to be somebody else and you’re standing tall based upon what you believe is possible, other people start to believe it, and before you know it, you all can achieve it. Belief in things that are unseen and unknown is a very powerful inspiration factor.
You’re a firm believer in employee recognition. The book describes several team parties that you personally orchestrated. Why are business celebrations so important to you?
When people work hard, they deserve to be recognized, and when they do a really good job they deserve a really good celebration. Leaders today have somehow gotten away from the celebration. They’re so busy being busy that they forget when these targets are achieved you have to stop the music for a minute and lavishly recognize the people who got the job done.
When I first came to SAP, their president’s club was pretty much nonexistent. Where’s the winners’ circle trip? On a boat somewhere. Where’s somewhere? Oh, probably the Caribbean. Who’s the entertainment? Shirley and the Shirelles. You know, nothing against Shirley or the Shirelles, but ‘Soldier Boy’ was a hit in the 1950s. So what I did was change people’s mind about the power of pageantry. We started to buy out the island of Hawaii, and because people were on the road away from their families, [we established that] when we recognized them, they could bring their spouses and kids.
It created an unbelievable culture, where being in the winners’ circle was such an honor. I’ve had other CEOs try to recruit our people and they’re like ‘What are you doing with this winners’ circle? It must be unbelievable -- nobody wants to leave because they’re in line to make the winners circle!' That’s a culture of high performance and celebration.
If you don’t have the power of pageantry, you can push people for one year to make the target, but then they feel like, here we go again. Another year, another high task -- it’s just money, it’s just a job. No. It’s not just money and it’s not just a job -- it’s all about you, your family, and celebrating the unbelievable human being you are and the difference you’re making in this world. So I have the best entertainment, the best venues, the best activities for the kids and the spouses, notes in the rooms, and gifts for the families. There are things they’ll never forget, and that, to me, is pageantry at its best.
You said that you aspired to be the CEO of Xerox when you were interviewing for your entry-level sales job at the company, and you stayed for nearly two decades. According to the book, one of the reasons you left was the organization’s unwillingness to embrace market change. What’s your approach to executing change?
Everything is constantly changing, so change is an ever-present dynamic in our lives, our marketplaces, and our companies. The problem that most people have when they try to drive organizational change is they forget a very simple principle: anything worth communicating is almost always under-communicated. So you have to be very thoughtful in explaining to people why they’re changing and that the world they once knew actually went away. Its not like we're abandoning it -- it left us. Then describe the new world -- why it’s worth winning, the road map to getting there, and how individual goals all the way down through the organization tie in. I find that this process sometimes gets short-circuited in companies. People don’t spend enough time painting the vision, putting together the strategy, and making sure everybody knows what to do.
In 2010, when we revamped the strategy for SAP, I told them it’s great being the number one business applications and analytics company in the world. It’s a $110 billion dollar market, and it’s exciting. But the world is going mobile, cloud is going to be the pervasive consumption mode, and personalized communications [will rise]. Incidentally, this vision was a $350 billion dollar vision. So why change? Because this new world has three and a half times more potential than the one we’re transitioning from!
Here’s the funny thing -- I took the top 250 managers in the company to Germany and explained the strategy and role modeled it to them. Then I told them now you’re going to randomly go into the coffee corners and role model this new strategy for the people, and I’m going walk around, and so is my co-CEO and the board. People panicked. Some people did it well, some didn’t, and some hid.
The point is a lot of senior executives have a difficult time communicating a vision to their followers, and if you can't get your top people to cascade that with clarity, by the time it gets to the person on the street they don’t know what to do. So we spent a lot of time taking the strategy back to every corner of the world in all 190 countries. To me, that’s how you drive change and get people inspired by the new world.
What’s your advice for young people just starting out in sales today?
I think the most important lesson in sales is having an enormous will to win. In Winners Dream, I talk about beginning everything with a dream. When I was 21 and interviewing for a sales job at Xerox, I realized on that train ride into the city that I was actually interviewing to be the next David Kearns -- the CEO. That was my dream. That will to win tied to a dream is the first thing people have to get in their minds, hearts, and bodies.
Then, once you have a dream, it can’t sustain unless you have the immense work ethic, preparation, and grit to grind it out like a champion each and every day. The good news is if you start with the dream, every day you’re in the grind, you’re happy and inspired because you’re not working. You’re going for your dream.
You also have to have an immense empathy and respect for the customer. Too often, people go in with a solution looking for a problem, but they should instead listen thoughtfully to uncover the problem before they even contemplate the solution. That’s when you become the trusted innovator.
The other thing I would say is don’t go for 100%. A lot of people have a ceiling they put on themselves -- this is what’s expected of me and that’s what I’m going for. I always started my planning process thinking about what percent I would have to achieve to be the number one performer in the world. Some reps will start with a simple target of 100%, and they sell whatever they’re selling one at a time. I was always trying to sell 10,000 at a time. You have to think really big, and what I’ve learned along the way is most people are afraid of taking chances. That’s why people who have a dream have such an advantage.
You use the term “player-coach” several times in the book. What does that mean?
I got that [idea] from my grandfather, who was not only a hall of fame basketball player but also the coach of the team. Instead of sitting on the bench barking from the sidelines, he was on the court calling the plays and showing the players what to do.
A lot of managers make the mistake of sitting in their office and spending 100% of [their time] on email. I call this playing office, and it’s a bad move. The idea of management is not to spend your day inspecting what other people are doing. When you lay out a vision and a strategy, and everyone has their individual goals, the manager needs to get on the front line and help the people achieve the objective. Is what we’re doing making an impact, and moving the world forward? If not, you should be the first to know. If you’re playing office, you’re going to be the last, and you won't have the respect of your followers.
People also want real-time feedback. I used to do all my review sessions with my people in the street, and by observing them I would offer a couple coaching tips. I simply said, ‘Here are a couple things I think you’re doing really well, and this is one of those things that if you just tweak a little bit you’d be almost perfect.’ I just saw it, so it’s fresh. Now they feel like this guy is a player-coach -- he’s on the front lines with me teaching me.
You’re a proponent of leaders getting to know their direct reports on a personal level. Why is that important?
Trust is the ultimate human currency. As a leader, you have to deeply care about the people who follow you -- not just in terms of what they can do for you or your company, but how you can help them achieve their dreams and aspirations in life. Workplaces shouldn’t be prison cells -- they should be places where people come to flourish and fulfill their dreams.
A lot of times, people who are not performing on the job have things outside of work impacting them. Be sensitive to that, and lend an ear. There are times when they need a little extra help or maybe even a break, and you should give it to them. They’ll come back and give you 10 times the effort because they know you’ve got their back. I used to say that to [my team members] all the time -- we’ve got each other’s backs. The leaders that pretend people don’t have lives outside of the workplace or think those lives don’t matter are completely missing the point of management.
When my colleague Richard had a daughter at Lenox Hill hospital, I was a pretty driven guy on the street, and I dropped everything, grabbed some flowers from a bodega, and headed over to congratulate him. I just got a letter the other day from a guy who said, ‘Bill, I’ll never forget when you showed up at my father’s funeral.’ There are just things you need to know matter more to an individual than achieving a target at work, and if you can balance those two worlds, you can really inspire people.
As for myself, that was the dream. If you can lead with passion and really do the right thing for the customer, the company, and the people, and three decades later have [that dream] be just as real now as it was then, that’s pretty good.