How Bill Nuti reinvented NCR Corp.’s culture and infrastructure

Bill Nuti, Chairman, President and CEO, NCR Corp.

When Bill Nuti took the reins at NCR Corp. in 2005, he inherited a troubled company. As he describes it, NCR at that time was a stagnant 120-year-old technology conglomerate that had developed “muscle memory on how not to grow.”

Eight years before Nuti came aboard, NCR had been spun off by AT&T as an independent company after having been owned and operated as a unit of the telecommunications giant for six years. From the point of that 1997 spinoff until Nuti took the helm at NCR in 2005, the company’s revenue growth had been practically nonexistent. In fact, Nuti says, NCR’s compound annual growth rate for that eight-year period was less than 1 percent.

“We had bad habits,” he says. “We were not fast-moving or agile or entrepreneurial enough, and we were not taking enough risks as a company. We had a culture that had simply learned how not to grow.

“Now, [NCR] was still making profits during this period, but it was doing it the wrong way, by cutting costs — costs that were not sustainable in nature,” Nuti says. “They were making cuts in areas like training and development, innovation expenses, costs around research and development. You just can’t do those things. But we were doing them in the early part of the last decade, because we made everything about the current quarter versus building a great company for the long term.”

What NCR needed to fix itself went well beyond mere makeover. The company’s problems were deep-seated. Some were cultural, some were structural, and they needed to be addressed directly.

“What we needed to do, essentially, was to reinvent our company,” Nuti says. “We needed to reinvent the iconic brand that NCR is. And reinvention is a completely different business process than a turnaround, and much more difficult.

“You know, ‘Chainsaw Al’ does turnarounds,” he explains. “We don’t. We’re not in here to cut the costs and get the short-term profits up. We’re in here to build a long-term sustainably growing company that is meaningful to our customers, that can attack new market opportunities, and can also continue to grow its profit while building a stronger and larger customer base on a global basis.”

Quicken the pace

Nuti says one of the first things he did when he joined NCR was to address what he calls the company’s lack of agility by installing a new system to give managers more timely, useful company-performance data to base their business decisions on.

“We installed a management system in the company that was designed to speed up — like an engine’s RPM would speed up — the way the company works, in order to report on what was going on with our business and our customers.”

The new management system, Nuti says, has “a very strong, regular cadence.”

“We started to review our business, the key metrics that run our company, on a weekly basis, something we hadn’t usually done on a quarterly basis [in the past],” he says.

Among the metrics that NCR’s management team now reviews once a week are orders, revenue, services, “file value” or backlog, customer loyalty data, operations by country, data about the company’s manufacturing plants and their effectiveness, accounts receivable, and accounts payable, as well as a deep dive on every business line the company operates.

“We have a two-to-three-hour meeting per week now to discuss all of those key metrics and customers,” he says. “What this does is it very quickly ferrets out who can run at that speed and who cannot. So you almost have people self-select, based on this increased speed and momentum of the business you install.”

Fix broken contract

Another area Nuti turned his attention to early in his NCR tenure is what the company calls its social contract with its employees. This pact encompasses items such as compensation, health care benefits, retirement plans, the company’s culture and personality, its work environment, which includes facilities and the tools provided to workers to do their jobs, and employee training and development.

Nuti and his leadership team assessed the status of NCR’s social contract with its employees and were deeply dissatisfied with what they found.

“Candidly, it was broken,” Nuti says. “We had broken the trust with our employees. We had not been well focused on these elements that we feel make for a better company.”

While virtually all aspects of the social contract needed upgrading, some parts of the it were in much worse shape than others.

“We had OK compensation; we had OK benefits; we had less-than-OK facilities, at the time,” he says. “But those things could be fixed relatively easily over time.”

The element that needed the most work was employee training and development.

“We had been haphazardly cutting costs for the sake of [quarterly profits], without understanding the long-term impact on the company and our people,” he says. “As a result, training and development was destroyed.

“If you know the history of NCR, going back 127 years, we were well known for training and development. In fact, we invented sales training and many other contemporary sales training techniques today. But we had gone on a rampant cost-cutting campaign. We took out the training and development department, all of their people. We sold our training center in Dayton, Ohio. We removed virtually all aspects of training — leader-led training, online training and so on. And therefore, from that perspective of the social contract, we had broken that bond.”

With a lot of sweat, a lot of nerve and at considerable investment cost to the company, Nuti says he and his leadership team put NCR’s employee training and development program back on track to sustain the company’s success over the long haul.

 “Today, NCR is 180 degrees from the NCR back in 2002-2003 that I described to you,” Nuti says. “At the height of the Great Recession in 2009, we rebuilt NCR University in Peachtree City, Ga. It’s a university system we have down there. We have a staff, a dean who runs our university. We flew in and trained over 5,000 people last year at that facility. And in 2009, we invested in online e-learning. Last year alone, we had about 230,000 registrants for training online. That’s about 10 courses per person at NCR.

“We now do training of our people in multiple countries around the world,” Nuti says. “We have completely revamped and reinvested in training at NCR, to the point where I would say we’re back at our height in terms of our company capability and in terms of delivery on that piece of the social contract. The most important element keeping NCR competitive long term is having people who are well trained and developed to do their jobs.”

Move the rocks

Another important move to rebuild NCR that Nuti’s team set in motion was a trio of company infrastructure changes. The first was to build a global manufacturing footprint by closing its plant in Scotland and building five new plants around the world. The second was to spin out Teradata, NCR’s highly profitable database software division. And the third was to move the company’s headquarters from Dayton, Ohio, to Duluth, Georgia.

Up until 2007, NCR had a single 40-year-old manufacturing plant in Dundee, Scotland, that served the globe for all of the company’s automated teller machine needs. Today, NCR operates manufacturing plants in Columbus, Ga., Manaus, Brazil, Budapest, Hungary, Pondicherry, India, and Beijing, China.

“We knew that longer term, we needed to be better positioned in the emerging markets, to have a balanced geographic footprint and revenue contribution coming from higher-growth emerging countries,” he says. “So, tactically, we had a program to move out of Scotland and build five plants around the world.”

Nuti says when NCR started the ball rolling with the change in global manufacturing footprint in 2007, the company got some tactical short-term gain in terms of cost savings, because it was  moving from high-cost manufacturing locations to lower cost.

“So it helped us in the short term,” he says. “But over the long term, of course, the investment was significantly higher, and therefore you recycle those savings into building your longer-term strategy. And as you do that, you gain more traction in those other markets.”

When NCR spun out Teradata in 2007, the database software unit was the company’s most profitable division. “People thought we were crazy,” Nuti says.

“The problem was, Teradata was essentially getting all of the resources in the company, and the rest of NCR was starving,” he says. “We knew we needed to spin out Teradata for several reasons, one of which was that they served a different marketplace with a different technology and required a completely different infrastructure to be successful long term.”

The Teradata spinout has been a resounding success. In 2006, just before the move, the combined market cap of NCR and Teradata was about $6 billion; the combined market cap of NCR and Teradata today is more than $12 billion.

“It might go down as one of the best spinouts in history in terms of market cap appreciation,” he says. “We not only created a lot of value, we took two great companies that weren’t getting enough resources internal to themselves, and gave them enough resources and focus, and now they’re both thriving.”

In 2009, NCR moved its headquarters from Dayton, Ohio, to Duluth, Ga. Nuti says the move has had multiple benefits, the main one being cultural.

“We brought in a couple of thousand new people, new ideas, best practices from other companies, and a lot diversity,” he says. “It has made a big impact on NCR culturally. It’s been very positive.”

“So, strategically, we had a long-term view, but we knew we had to do things tactically to get us there — that would benefit us in the short term and medium term while helping us to achieve our long-term goals. And those are three big rocks that we moved.”

All of the infrastructural and cultural changes at NCR are starting to bear fruit. The company has put together two straight years of solid growth and strong financial results. And Nuti notes that in the fourth quarter of 2011, the company posted a record year-on-year revenue increase, which was up 17 percent, as well as records in operating income, cash flow, and earnings per share.

“All of those numbers are the best we’ve ever achieved, on top of a tough [comparison year], because 2010 was also a very good year for NCR. We had a good growth year, a solid growth year, and a great profit year. So we’ve now strung together a couple years of significant growth and expansion of profits.”

HOW TO REACH: NCR Corp. (800) 225-5627 or www.ncr.com
 

THE NUTI FILE

NAME: Bill Nuti

TITLE: Chairman, president and CEO

COMPANY: NCR Corp.

Born: Bronx, New York

Education: Long Island University, Bachelor’s Degree in Finance and Economics, 1986

What was your first job, and what did you learn from it?

I started as a newspaper boy when I was 9. I delivered newspapers for the New York Post. And I learned that hard work pays off. I used to deliver papers roof to roof. Because I lived in the projects, I would actually walk up one building, and my last paper would be delivered on the top floor, and then I’d go over the roof to another roof, and I’d start delivering papers from the top floor to the bottom floor. And then I’d go to another building, start on the bottom floor to the top floor. So I actually delivered papers by jumping over buildings and rooftops. I was kind of like Batman.

Do you have an overriding business philosophy that you use to guide you?

Do the right thing when no one is looking.

What trait do you think is the most important one for a CEO to have in order to be a successful leader?

I think the most important trait is a willingness to learn, and continue to be a learner. You know, when you get to this level, people think that you’re supposed to have all the answers, and that if you don’t have the answer, it’s a sign of weakness. And I think that you have to recognize that life is a continuous journey for learning. In this job, listening and learning is critical.

How do you define success?

I define success as being the most important business to your customers in the sector that you participate in.

What the best advice anyone ever gave you?

It would have to be John Chambers, my boss at Cisco [Systems Inc.], and his advice was, ‘Don’t be afraid to take risks — always.’