Posted by: A.R. Cherian | October 8, 2009

CEO Style at SAS Institute

While reading a Stanford Business School case study on how the SAS Institute approaches incentives and management practices in the software industry, the leadership style and management philosophy of its CEO, James Goodnight, stood out to me.

James Goodnight, CEO SAS Institute

James Goodnight, CEO SAS Institute

Here is a list of some of the unique management perspectives that I thought were different from a lot of other CEOs I’ve read about (quotes in italics from Jim Goodnight):

  • No formal industry vision. Believes the industry is going too fast.
    • “I’m not as much of a visionary as Bill Gates, so I can’t tell where the industry is going.”
  • Claims that he has no philosophy or grand plan that guides the company’s operations
    • Rather, there are some simple premises and principles that guide day to day decisions and behavior
  • No cubicles.

    • Everyone has private offices from frontline to managers.
  • No specific financial goals
    • “Just to take in more money than we spend”
  • No specific growth goals
    • However, sales force has aggressive goals
    • Goodnight believes if you don’t grow, you die
  • Simple metrics
    • Once a month, Goodnight sees a one-page report on revenues and expenses.
    • Believes software development and customer service are difficult to quantify, so don’t spend a lot of time trying to measure the unmeasurable.
  • Limits the bureaucracy.
    • Goodnight himself has 27 direct reports from all parts of the company (managers, directors, and VPs)
  • Does not believe in stock options.
    • Refers to them as Ponzi schemes
  • Approves the general floor plan of every new building on the SAS Institute campus in Cary, NC (200 acres).
    • Architectural aim is to gie people a sense of belonging to a particular group.
  • Does not believe people work well under conditions of exhaustion. Believes in a 35 hour week, 9 to 5 work day with very low extra time spent.
    • “I’ve seen some of the code that people produce after long nights and it’s garbage.”
    • “I’d rather have sharp focused people that write good code that doesn’t need as much testing.”
    • “I recently came back from a Microsoft conference and they said that now Microsoft has three testers for every programmer.”
  • He is also a “working manager” like all the company’s other managers.
    • Spends a significant percentage of his time programming and leading product development teams

SAS Institute outsources only a little and does not offshore at all. Almost all the nurses, security guards, and cafe workers on the campus are SAS Institute employees. It’s one of the few companies in the software industry that bucks the trend of outsourcing or offshoring.

SAS Institute is usually a perennial feature on such lists as The 100 Best Companies to Work for in America, 100 Best Companies for Working Mothers, Companies that Care, and listed as high as #3 in Fortune’s survey of the best companies to work for.

It’s a unique company with a unique CEO in the software industry. Then again, SAS Institute is a private company – one of the largest private companies in the world.

How much of this would change if they were to go public? I’m sure a board and shareholders may want some of Goodnight’s policies changed.

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