When business at Riverbed Technology Inc. grew from $2 million in revenue in 2004 to $23 million in 2005, Jerry M. Kennelly was
ecstatic. But when it jumped to $90 million in 2006, he had a problem. Sure, Kennelly, Riverbed’s chairman, president and CEO, was
tickled with the results, but suddenly the staff that he and Steve McCanne started with was unable to keep up with the demands. As
a result, he had to make some tough decisions about the wide-area data services company. With employee numbers mushrooming
to almost 500, Kennelly had to put his personal affection for the people he started with aside and make some management changes
to fit the scale of the company. The result has been a company on pace for 2007 revenue of $225 million. Smart Business spoke
with Kennelly about why hard work boosts morale and how today’s leader is less of a general and more of an orchestra conductor.
Keep a high-energy atmosphere to boost morale.
If you don’t have a lot of hard work, it’s
impossible to have high morale. If people
don’t have a lot to do, then there is this ho-hum, lazy attitude about the place.
There are companies where you get to sit
in beanbag chairs and get free food, but
what happens, over time, is the high performers don’t want to work in that environment because it becomes a slower environment — like a kindergarten or a college
dormitory. High performers want to be
proud, see success and move forward.
Success is a tonic; people like to feel successful. We have aggressive challenge targets that go out to the teams, and early on,
we made the cultural point that it wasn’t
about making money but about being
focused on our customers and on winning
as a team. Those values will endure
through ups and downs financially. It’s an
unselfish goal to be focused on your team
success, so it’s uplifting — as uplifting as
you can get for a commercial enterprise.
We’re not feeding starving children or anything, but it’s a higher-level goal than, ‘How
is the stock doing?’ and they respond to
that. I call it psychic income — feeling like
you’re part of something good — and psychic income is important.
Make tough decisions to move forward. If people can’t perform here, we ask them to
leave. If you don’t do that, you’re not demonstrating a performance environment.
At the end of the day, it’s all about performance; it’s not about free coffee and
doughnuts. Those people get in the way of
other employees, and people resent having
someone in their way.
As we were growing, some of the senior
staff wasn’t the exact right fit to go forward
as a bigger public company, and you
become close to those people, but it was
important for the business that I change
out those positions, and that’s where a lot
of companies stumble.
When you go from 20 employees to 500,
there are people who have individual skills that just don’t scale up. They work well for
that person or for managing a small group,
but when you extrapolate doing that at a
larger scale, with hundreds of employees,
you can’t imagine that person, either their
personal energy or intellectual capacity,
dealing with the bigger challenge.
When someone does leave, we treat them
very honorably. We respect people in general, but also, every other employee is
watching, and they say, ‘God, if they did
that nasty thing to Bill or Mary, they could
do that to me.’
Give employees the instruments to succeed. I’m
not the general ordering the forces; I’m
more like the conductor of an orchestra
getting people to share their talents with
us. What’s coming from their brains is what
we want, and what causes burnout is when
you’re held responsible but you have no
control. We hold people responsible, but
we give them control, the resources to do
their job.
You try to have people be the masters of
their own fate, so you say, ‘Mr. Sales
Manager, your job is to deliver this amount
of sales revenue,’ and we hold them liable
to that. But we say, ‘To do that, we have
resources to help you, here’s your budget
for the quarter, here’s a guy who can help you with leads,’ so you hold them responsible, but you also give them resources and
control.
Hire carefully, even — and especially — during
growth. Over the years, you develop a network of people that you know, but that
doesn’t mean hire someone just because
you knew them. You know 10,000 people,
but maybe there’s a half dozen that you’d
want to work with again. You can build a
core from that, and then start doing it the
old-fashioned way: recruiters, networking
and recommendations. You have to be
careful and take every hire very seriously.
It’s the everyday work blocking and tackling of building a company, so have multiple interviews for every candidate. There’s
an old saying, ‘When it comes to hiring, a
single person’s opinion is like no opinion at
all.’ So have at least three, sometimes as
many as 10, people interview each candidate. Then, you do it the old-fashioned
way: Hire one person at a time.
Be careful with advice. The challenge for any
CEO is you have a lot of people giving you
advice, and there’s the 20-80-100 percent
rule in dealing with advice. In any given situation, informed people will give you the
right advice 80 percent of the time. It’s the
common wisdom of them saying, ‘When
this happens, you do this.’
The problem is, it’s wrong 20 percent of
the time. So your job as CEO is to figure
out, ‘Am I in the 80 percent chance where I
should take this advice, or is there something about my company, my industry, my
particular situation that puts me in the 20
percent case?’ And I have to think of the
right answer for myself.
It’s a subtle thing that a lot of leaders
don’t appreciate, but that’s the key to the
job. There’s no place to hide at the top, so
you have to decide when to deviate from
the basic advice.
HOW TO REACH: Riverbed Technology Inc., (415) 247-8800 or
www.riverbed.com