A little over a year ago, Tom Reilly’s company was smack in the middle of what he calls a pretty amazing transition.
Reilly was president and CEO of ArcSight LLC, a high-growth, publicly traded company in Silicon Valley, when the company was acquired overnight by Hewlett-Packard Development Co. LP in a $1.5 billion transaction. ArcSight was about to become part of the largest IT corporation on the planet.
“It’s probably the most monumental transition that we’ve had to navigate through — going from a 500-person company that’s very nimble, can set its direction and has a lot of autonomy to becoming part of 300,000-person organization,” Reilly says.
“We went through a cycle of emotions. When the acquisition was announced, there was a tremendous sense of euphoria, success and great validation of what we had built as a company, but quickly after that, a bit of disillusionment as you realize that we’re part of a bigger company and there are a lot more people that we have to interface with and a lot of integration activity that takes place.”
As CEO, Reilly understood that how he steered employees through the first six months of change and uncertainty would be a critical in the company’s continued success and harmony within HP.
Show the value
Reilly was elated to have his company joining a multibillion-dollar corporation with vast technology assets and research teams that were incredibly advanced at understanding the latest cyber security threats and techniques. These resources would mean better security for customers and increased opportunities for his $181.4 million business.
“I’m in the cyber-security business,” he says. “So everything we do every day is to help our customers protect their brand, protect their customers and protect their operations from cyber attack. Being part of HP has allowed us to do it a lot more effectively.”
When people don’t know what to expect, they can become fearful of change and afraid to embrace it. While Reilly was aware of the many advantages of the acquisition for the company, he knew he also had to communicate that employees and customers to get their buy-in.
So on day one of the announcement, Reilly made sure he explained in detail how the move would accelerate the company’s vision and mission by improving security for customers, advancing research and providing more tools for employees, greater facilities, better test labs and so on.
“One of the first things I had to do with my customers and with my employees when it was announced that HP was acquiring ArcSight was explain why is this was a good thing,” he says.
“What we did is a lot of communication, first on why we felt that our business, our customers and our employees would be better served as part of a larger company. We continually came back to our long-term vision of what our capabilities were and how being part of a larger company could actually help us accelerate that vision.”
By setting a clear vision upfront, you can fend off uncertainty that can make people uncomfortable or insecure about embracing change. Once people saw that falling under the ownership of an established company like HP would be a positive move for the business, their uncertainty turned into excitement and eagerness.
“All of this is allowing us to deliver a lot more a lot faster, and our customers benefit from that,” Reilly says. “And then for my employees — there are greater career path opportunities for them, a lot of other really smart people for them to collaborate with, down to simple things like we have better briefing centers. We have better facilities when they are playing basketball at lunch. All of that stuff just comes since we’ve become part of HP and that is making us a better company and more competitive. And it directly benefits our customers.”
Because the organization was dealing with a great deal of change during the first six months of the acquisition, it was extremely important to give people direction so everyone was on the same page. Providing clear and consistent communication for employees was critical in achieving that.
“We tried to communicate as much as possible what was going to be happening in the coming months around the integration challenges because there was a lot of uncertainty,” he says. “Uncertainty leads to concern and concern gets people unfocused. We tried to communicate the rationale, why we were part of HP, the long-term vision and then what to expect in the coming months. That helped us really keep the team focused and motivated and excited.”
Reilly and his team have always spent a lot of time keeping the organization aligned on communication and making sure there is alignment on goals and strategy internally and externally.
“I’m very comfortable with anyone communicating with my customers or partners as long as they understand those things, and then we have a consistent message and voice,” he says.
Aligning communications starts with the leadership team. Every quarter Reilly takes his leadership team of around 40 executives and goes offsite for two days on a retreat. The purpose is to align everyone on three to five key focus areas for the company, which Reilly calls “business imperatives.” Since the acquisition, redefining these imperatives has been vital in pushing out a consistent, focused message for employees and customers.
“When I say align, we talk them through and really make sure that everybody understands what it is we’re trying to accomplish,” Reilly says. “We don’t lay out every tactical action item or plan, but we make sure that everyone’s very comfortable with why this is our strategy, why these are the key business imperatives that will get us there and what are the main milestones that we want to achieve in the next six to 12 months.”
Focusing communication on continual refinement of the key business imperatives and then letting employees determine how to achieve helps the organization minimize most centralized decision-making and proof-of-processes thinking. With strong alignment, the decision-making process can be loose and independent.
“What we find is it’s a very efficient way of getting everyone on the same page, yet giving people a lot of autonomy and accountability for striving toward a goal,” Reilly says. “If everyone understands the vision and everyone understands the business imperatives and how you get there, suddenly people can start charging and making decisions.
“When it comes to communication, I think if you always try to funnel it through any one individual you are always going to get one perspective, one slant on things.”
Reilly meets with his leadership team every week in addition to the cadence meeting to check in against the key business imperatives that they are leading. As the company continues to implement changes, those imperatives can change and grow with the company. Reilly says he knows the fewer decisions he has to make as CEO, the better the job he is doing in creating strong alignment within the company.
“The day that I show up at work and I have no meetings on my calendar, no one walks into my office with an emergency, discussion or request, I get all my e-mail done and I find myself surfing the Web and I head home at 3 o’clock — that’s when I know I’ve done my job very well,” he says. “I know my organization is in alignment and they’re all working together.”
Give and take
One of the most visible challenges in merging 500 people into a company with hundreds of thousands of employees is integrating two developed and successful corporate cultures.
“When you look at the world’s largest IT company, that in of itself says it’s a very successful business,” Reilly says. “HP has some great cultural aspects that make it the world’s largest IT company. That said, ArcSight was one of the fastest growing high-tech companies and it recently reached the public market. So it obviously was a successful company and has some great cultural aspects.”
The 11-year-old company was its own cultural success story, so Reilly knew there would be some give and take involved when merging its culture with HP.
“We don’t want to adopt everything that HP does, because HP doesn’t grow as fast as our business grows,” he says. “Yet we don’t want to retain the culture that ArcSight had standalone, because we won’t necessarily be leveraging the breadth and power that HP brings.”
When you are in a situation where your culture needs to adapt, it’s important to take time and define which aspects and practices are most crucial to your success to make sure they are not compromised in the process. Reilly and his team spent a lot of time evaluating the culture before joining HP. Over time, it becomes obvious what parts of a culture are most essential to your company’s success.
“If our technology fails, it can have a big impact for our customers,” Reilly says. “I think it’s that level of focus on customer success, which is one of the things that’s unique about our culture and what’s unique about the company when you look at us and evaluate us versus other vendors. It sets us apart.”
While HP is also focused on customer success, Reilly says the degree and communication on this area within his company is core to the business’s revenue and growth. It is a cultural focus that employees have redefined and built a cadence around over the years. So maintaining or increasing this focus at HP is of chief importance for Reilly.
“That is something that I know is near and dear to ArcSight’s success and I will protect that level of investment, emphasis and kind of culture within HP,” he says.
When people know you are keeping intact the parts of your culture that are valuable to the vision, employees and customers, they can embrace other areas where they need to adapt more openly. Once Reilly called out which cultural aspects he wanted to protect, he shifted to planning how to adopt new ones that could help give the company scale. The key is to first identify and retain your cultural strengths and then build on other areas.
“So we knew the things that worked very well for us,” Reilly says. “That said, there’s a lot of things within your culture or your environment that aren’t necessarily all that differentiating — you don’t have to be as defensive and you can adopt things from the broader company. It is really understanding what is core.
“The thing that we’re very focused on, and I am with our leadership team, is not defending one or the other but really trying to identify which are the important aspects of each culture that we either need to retain or adopt to succeed in this new environment.”
Over the past year, Reilly has succeeded in minimizing uncertainty and motivating his team to embrace the many changes that it made and will continue to make. In 2010, the Bay Area News Group ranked ArcSight third in its category of top workplaces in the Bay Area. Reilly, who now has the title of vice president and general manager of HP Enterprise Security Products, credits the ranking to the company’s clear, enduring vision, strong communication and environment of employee autonomy.
“There are a lot of things that I don’t know, like what the world will be like six or 12 months from now,” he says. “It’s something that you continually have to work on, continually having to communicate, continually having to anticipate what may come about, and make sure you have good actions in place.
“Your job as a leader is to always assume that there will always be uncertainty and that it never goes away. Your job is to always try to give your team the confidence that the path that they’re executing on is the right one.”
How to reach: ArcSight LLC, (888) 415-2778 or www.arcsight.com
The Reilly File
Vice president and general manager of HP Enterprise Security
(Before the acquisition, he was president and CEO of ArcSight LLC.)
Education: University of California, Berkeley — class of 1985
Born: San Francisco, Calif.
What was your first job?
Held three paper routes for San Jose Mercury News
What is one part of your daily routine that you wouldn’t change?
Waking up to my 1-year-old boy standing in his crib, all smiles.
Who are your heroes in the business world and why?
Entrepreneurs — whether they are successful, unsuccessful or yet to find out.