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