The acquisition of Unix Systems Laboratories Inc by Novell Inc will be complete on June 14. The future of Unix lies in the hands of 69-year-old Novell chief executive officer Ray Noorda, a man who pos sesses a management style markedly different from the competition and who engenders a corporate culture that exists nowhere else […]
The acquisition of Unix Systems Laboratories Inc by Novell Inc will be complete on June 14. The future of Unix lies in the hands of 69-year-old Novell chief executive officer Ray Noorda, a man who pos sesses a management style markedly different from the competition and who engenders a corporate culture that exists nowhere else in the industry. Geof Wheelwright reports.
To understand what makes Ray Noorda tick – and just how that reflects on the way he manages Novell Inc – you have to look at where he came from. To start with, he isn’t a product of any Ivy League college or a guy who discovered some cool software while tinkering away with minicomputers in the late 1970s. Noorda is one of the few personal computer software company founders to have seen combat in World War II – and to have survived more than two decades in one of corporate America’s technological monoliths (in his case, General Electric Co Inc). Both these experiences appear to give Noorda something of a perspective on life that he might not otherwise have. Noorda has been in the computer business, one way or another, since 1949. He was there when it all started and, as an electrical engineer, worked on some of the world’s earliest commercial systems at GE. His perspective combines pragmatism with a keen understanding of human nature and an apparent desire continually to prove the idea that the computer industry can be more than the sum of its parts.
Noorda’s support for evolving co-opetition, where competitors form strategic alliances to achieve goals that are in the interests of users and computer companies alike, has played a key role in Novell’s success, and makes him the only successor to the Unix crown that the industry will accept. Networking in the personal computer business is not like the mainframe business or the minicomputer business – each in its own way had its own networking skills and they were fairly well-enclosed, he recalls, as he reveals the starting point to his brand of co-opetition. But because the personal computer was destined to become a ubiquitous item and was based on a common set of technologies, it was quite clear that networking in that environment was going to have to be inclusive of many other businesses – including mainframes and minicomputer systems and lots of different software suppliers. We feel that he who will co-operate the most will be the longer term survivor. This co-operative strategy is not limited to Noorda’s handling of industry alliances. He says he has always believed it to be a better way of managing people that work for you. A visit to the company’s headquarters confirms this fact – there is no huge tower with a chief executive’s penthouse office, no army of corporate minders preventing access to the man that runs the company and, perhaps most of all, no huge difference in the salary Noorda pays himself and what he pays his employees. If anything, Noorda is likely to come off as the poor relation in any comparison between salaries. Until last year, he took a salary of only $38,000 a year – between one tenth and one twentieth of the amount taken home by most chief executives of similar-sized corporations. Noorda says that the board forced him to take a salary hike to $198,000 after some Wall Street analysts started suggesting that Noorda’s commitment to the publicly-quoted almost $1,000m-a-year company might appear to be in doubt if he drew so little money from it. Noorda’s reasons for not wanting a big salary, however, are hardly altruistic. As someone who still holds 11% of Novell stock, Noorda says that it make little sense to pay himself money he didn’t need when it could be used more profitably to hire people that he did need. He initially took the pay cut (from a modest $100,000) in the mid-1980s when two of his sons came to work for Novell – and kept it at that level until 1992. Noorda’s approach to business meetings also illustrates the style you can expect from him. He hates meeting people in his office – which is just a modest room on the ground floor of Novell’s h
eadquarters building, and prefers instead to have clients meet the company at hotels, while internal company meetings take place in meeting rooms and other people’s offices. So for Novell employees, it is rare that they sit sweaty-palmed in the waiting room of the mega-boss before a meeting – Noorda comes to them. He also recognises that this corporate culture will take some getting used to for Unix System Laboratories Inc employees joining the Novell family this month. We are still in the process of acclimatising each of us to our different environments, he admits. They (Unix Labs employees) are coming out of a very large company – and have the mentalities which go with that. And that isn’t bad, but it is different. We are making sure there is a comfort zone as they move from one environment to the other. And it takes a long time – it doesn’t happen overnight. Noorda also recognises that there are opportunities for mergers that, unlike the Unix Labs deal, just won’t work. One of the best-known of these is Novell and Lotus Development Corp’s abortive attempt to join forces. That took place because I was quite aware of what Microsoft Corp’s intentions were in tying together a lot of its products. This would have made it difficult for a lot of the other horizontal applications people in the word-processing and spreadsheets business to compete in those businesses, he explains.
So I went first to WordPerfect Corp and then to Lotus and said: why don’t we form a marketing alliance and try to exploit the fact that we are leaders in our own environments? Out of those discussions came the merger discussion – and that didn’t work basically because our board felt there were some cultural, and probably some organisational and geographical differences, that wouldn’t line up very well. Some conditions were placed on the merger that we really couldn’t accept. With the benefit of hindsight, it is probably just as well. At the time, Novell and Lotus were each $500m-a-year companies – and now Novell is a $933m company and second only to Microsoft in the personal computer software company arena, while Lotus Development has had a rough ride in the past couple of years. If there were any talk today of a Novell-Lotus tie-up, it would be of a buyout by the former of the latter. So while Noorda makes it clear that he wants to win by creating win-win situations, he has enough maturity and experience to admit that they don’t always work.