When Iain MacKenzie started at SMART Modular Technologies
in 1997, he didn’t exactly get warm, fuzzy vibes from many of his
colleagues. The company, which manufactures computer memory
and liquid crystal display solutions, was successful, but its leadership regularly threw words at each other, swearing and yelling for
all to hear.
“You did that wrong!”
“You failed!”
These outbursts happened inside and outside the boardroom,
and nobody cared who heard.
“It was ruthless, and as much as that feedback would happen
immediately and openly, no matter whom was hearing, it would
happen in front of my direct reports, so it was undermining the
authority, and it’s a little bit belittling,” MacKenzie says.
As a Scotsman, MacKenzie came from an old-school background
of respect and courtesy, so when he got the reins as president in
2002 and then also CEO in 2005, he knew he needed to change the
culture and eliminate the dictatorship strategy if SMART Modular
was going to succeed as it expanded globally.
“In a start-up environment when there’s no culture, no standard
and there’s one person as the old hub in the middle of the spokes
of wheels, you can be very successful in directing the traffic,”
MacKenzie says. “When that runs out of steam, a global operation
and a global business with multiple connections needs to live and
sleep and breathe on its own.”
If MacKenzie was going to dismantle the company’s ruthless,
centralized command structure and create an independent structure that would be more efficient in today’s market, then he was
going to need a new team, a new vision and a new culture.
Creating a team
MacKenzie needed to get himself out of the hub of the operations, getting people to focus their attention outward rather than
inward. He didn’t want everyone coming to him for answers, so he
needed to push decision-making down through the organization,
but that requires a team you can trust.
“The first thing is to find the people and set the guidelines,” he
says.
He started by looking for people who can brainstorm, problem
solve, communicate, and are trusted and respected. He also looks
at how someone performs in a bad situation and if they solicit multiple inputs instead of relying on one person’s opinions.
“It’s a lot of questioning of how do you do that? How do you
behave?” MacKenzie says. “It’s not asking what have you done and
why were you successful. It’s more saying what would you do in
these circumstances and how do you deal with these situations.”
He says the key is taking your time and not hiring too fast. Once
you have the right people in place, then you can start setting guidelines and expectations for how they should perform.
MacKenzie emphasizes their decision-making authority to make
sure his reports are clear on what they need to be doing.
“You have the ability to make any decision you like, but you just
need to stand by that decision upon measurement,” he says.
“Typically, because of time differences [SMART has 11 locations
across the globe], you cannot ask me on a daily basis. The worst
thing to do is to not make the decision, so you have to make the local decision.
“You know your rules, and you have the lead. You have the A-plus. You have the job. You have my trust and respect — it’s yours
to lose. That puts a huge ownership and responsibility and
accountability onto the person on the other side.”
Setting — and selling — a vision
MacKenzie needed a new vision for the company that would
serve as the guiding principles for all the managers. The key to creating a vision that everyone can get excited about is getting everyone involved.
He shows his team the goals they should hit based on growth
expectations and asks them to brainstorm ways to achieve those
numbers. They then research those ideas and ultimately choose
the top 10 ways to get there, including how everyone will be
rewarded.
“It’s almost like an acquisition — you think about the amount of
work people put into acquisitions and diligence and what’s the
direction and the market, what’s the IP, what’s the differentiator,
why would you be successful, and what price point could you sell
that at,” MacKenzie says.
The goals are reviewed and tweaked each quarter, but the larger
goals guide daily decisions.
“It’s pushing and jiving on a daily basis,” MacKenzie says. “In any
one week, I’ll say, ‘This is the goal; does that help us get there, or
is it inconsequential?’ It’s just constant focus, and every manager
making that decision on, ‘Is this helping us get to our goal, or is this
noise, or do I need that?’ That assessment just keeps it driven.”
It’s also important to welcome feedback from employees about
decisions and progress.
“You want to be clear and clinically clean on your goals, but you
want to keep listening and be careful because a dictatorship does-n’t welcome input,” MacKenzie says. “When the style is all trust,
respect, soft empowerment, open door … that sets it open to get
the feedback — ‘I thought you said this, but it doesn’t look like
we’re going that direction,’ so there are tentacles out there to get
the communication to come back.
“If someone can get on board and believe that where you’re
painting the picture of where you want to go is a good thing, and
we believe that’s success, then watch everyone get aligned. You
don’t have to define the road to within 2 inches. You define, ‘We’ll
go northeast. It’s on the hill over there. Let’s go.’ You don’t have to
control the exact how you do something. You don’t have to say,
‘Don’t make that step to the side; make that step forward.’ If you
don’t focus on the little pieces, the people know that they can do
the little pieces on their own.”
Despite your best efforts, some will still resist, and MacKenzie
says you have to set parameters for changes and address people
who aren’t working within them.
“If there are real negative influences, you draw it to their attention, you ask for repair,” he says. “If that can’t fix it, then you need
to agree to part.”
MacKenzie says you can’t wait forever for people to get on board.
Someone may have a ton of great attributes, but if they can’t
improve the things that are holding them and the team back, and
it’s been more than a year, then you have to remove them.
“If the goal is for 10 people to run a 400-yard relay, and the team who
wins is the team that gets all 10 across the line, what happens if one
person dawdles and says, ‘I don’t care if we win or not.’” MacKenzie
says. “The other nine can work as hard as they like, but if that one
person doesn’t run, they lose the game.
“It’s so disappointing for the nine who ran that whole race in 10
seconds, and one person is wandering along eating a banana and
says, ‘I don’t care.’ How would you get the nine people to run the
next race without taking the one person out and saying, ‘Look,
you’re not part of the race; I’m going to replace you.’ So for the
good of the nine, you have to move forward.”
Building a new culture
MacKenzie wanted to get rid of the old oppressive environment
and create a culture where people were excited to come to work
every day.
“We must be successful, we must meet the business goals —
that’s the business piece,” MacKenzie says. “We must communicate and be open and have a style … and get everyone on board,
but there must be a reason not to wake up in the morning and go,
‘Ugh, I just don’t want to go to work.”
MacKenzie put in pool tables, ping pong tables and dart boards
for people to use, and one day he bought 60 pizzas and let employees challenge him in table tennis. Having an environment that promotes fun helps people feel excited to achieve goals.
“You don’t have to pay as much attention to the smaller items,”
MacKenzie says. “It makes people more motivated to succeed and
less sidetracked to whine and moan to each other in the corridor.
More of the engagement will be about what we need to do and
what we need to fix as opposed to misery loves company and isn’t
this terrible … It focuses people better toward the goals and keeps
them on track.”
As part of fixing the overall cultural tone, MacKenzie also evaluates people not just on completing their tasks but also their attitude.
“It has to be measured,” MacKenzie says. “It’s a very strange thing
to give a goal to say, ‘OK, your goal is you must have fun,’ and it’s
difficult to say, ‘You must smile today,’ but it cannot be HR’s
responsibility. It has to be something that you want to create and
is enjoyable.”
You must reward people based on those expectations in order
for them to be effective.
“The management team first of all has to agree that they’re going
to concentrate on it, and it’s going to be part of the measurement
system,” MacKenzie says. “Where all of it fails is if you pay 100 percent of your reward for meeting the goal. ‘The goal was 10; you made 10. You get 100 percent, but, by the way, I didn’t like how you
did this.’ That will fail.
“You met the job. You got a 10. That was excellent. You now have
a score of seven because you messed up those people because
you’ve given them no respect, no regard and you were a grump.
That’s more important, so you’ve got to set it, as a management
system, something that’s meaningful, and it has to be rewarded
upon.”
You also need to take the time to show employees that you really care about them. You can take all the time hiring, creating a plan
and getting buy-in, but if you don’t build relationships with employees, it’s hard to succeed.
“The relationship is deep, and relationships and motivation and
the fun and the engagement and knowledge of people is important,” MacKenzie says. “I’m interested in people. It’s getting all the
aspects of being a friend, a confidant, a decision-maker — it’s that
fairness measure that really gives us a base of trust and respect
that they can do a good job.”
MacKenzie requires his managers to report to him what’s going
on with people.
“My managers are programmed — I must know about births,
deaths, marriages, affairs, new houses, new cars … It’s important,”
MacKenzie says. “I get irked if someone has had an illness or something major in their life, and I don’t know about it. It’s not a pretend
management style, I physically feel irked, and I reach out to that
person.”
When one employee was battling tongue cancer, MacKenzie’s
team continuously phoned him and checked on his family. He
recently received a letter from the man thanking him for his support.
It’s all part of the new culture that will help the company become
a more efficient global organization.
MacKenzie says if he hadn’t created a better culture at SMART,
not only would his managers probably have had heart attacks, but
he would not have been able to grow SMART’s net sales to $707.4
million in fiscal 2006, a 16 percent increase from fiscal 2005, and
the company is projecting at least $823 million for fiscal 2007.
“It was fairly aggressive, fairly dictatorial, fairly centralized decision-making management when I took over, and I think now it
would be measured as each person has to pull their own weight,”
MacKenzie says. “They have the responsibility to do the job. They
know they have an ear. We can change direction, and it is trusted
and respected.”
HOW TO REACH: SMART Modular Technologies, (510) 623-1231 or www.smartmodular.com