Winners Dream

Bill McDermott: Yes.

Rachel Salaman: Your roots are working class and, through hard work, talent, and ingenuity, you are now a highly paid CEO and renowned business leader. How different do you think you are now from the young Bill McDermott who worked three jobs in high school?

Bill McDermott: I'm the same Bill McDermott. I have really never changed and there's a spark inside me that always started it with the dream, whatever I was working on at the time, whether it was those jobs before I took on my own business in high school or it's here at SAP. You get up every day and you just feel this energy and this passion to go for it, and I have come to terms with what that is. And I think that is that dream, where you're not going through the day in your working life – your working life has become your life's work in pursuit of this dream.

Rachel Salaman: So the dream is essential to success?

Bill McDermott: Absolutely, because when the dream is bigger than the circumstances, whether they're good or bad – you can always chase it, you can always get back up the next day. Even when you get knocked down, you can still get back up.

Rachel Salaman: You obviously had a dream. What about people who don't have dreams – what can they do to succeed?

Bill McDermott: Maybe in some way, the "Winners Dream" can give them that seed; that idea, that "maybe what I really need to do is take an assessment of myself, who I am, where I've been and what I want out of this life, and really start to calibrate on what's possible." The funny thing is, when I went for my first job interview at Xerox when I was 21 and I had sold a delicatessen business, I was on the train reading the annual report and I was reading how David Kearns, the CEO, was reinventing Xerox on quality management. I went in that day with the intent to get the sales job, but the dream actually came out of that reading of the annual report, and I said, "Boy, it sure would be good to be David Kearns or the CEO of Xerox one day." So, little things can spark it.

Rachel Salaman: Can I take you back to the deli? Your first business, which you bought while you were a teenager and you turned it around. Could you talk us through some of the lessons you learned at that time that have stayed with you through your career?

Bill McDermott: Absolutely. Well, the first is understand really what you are, who you are, and what you do. I went into a small deli that was perfectly positioned between two very large commercial entities that were much bigger, much richer and much more capable than my little store, and I went in and started discounting things to put loss leaders like cheap milk and bread and things that people regularly use at the lowest possible price. And, of course, my competition immediately mimicked that and nearly put me out of business. So I learned fast that you have to be aware of your circumstances and who you are, and my model was a service-driven model. So the first thing you learn is who your customer is and who your base is, and at that time my base was senior citizens who lived about two blocks away and preferred not to leave their home. So we delivered. We had blue collar workers who were very loyal – they liked to have their food, cigarettes and beer. But by Friday after they were paid it didn't last very long because they'd come in Sunday morning pretty broke, and I gave them credit. Then there were the high school students, and one day I was down at my competition and I saw that they were lining kids up about 40 at a time outside the building and only letting them in four at a time. I essentially asked the kids, "Why are you waiting in line? How can I get you to come a block down to my store?" And they told me, "Well, I guess they think we're going to take things," and I said, "Don't worry about all that – you come down to my store," and I let them in 40 at a time. And to underscore the impact of knowing your customer, which was the number one and most important lesson, one of the kids one day was having a sandwich and potato chips in the store and said, "You know, Bill, when we want to have good food and be treated well, we come here, and when we want to steal stuff, we go to 7-Eleven." So it was all about the customer and really caring deeply about your base and serving that base in very unique ways.

Rachel Salaman: You mentioned you went from the deli, sold the deli and then you got a job at Xerox, and you actually performed very well right from the very beginning of your time there. What did you learn selling photocopiers?

Bill McDermott: Well, the first thing is I considered it such an honor and such a blessing to have that job and I loved that job and I wanted that job more than anything, and I think that's the first thing: you've got to really want to work and you've got to really want that job. So I came in there and totally applied myself. I went into the training program and I graduated at top of my class in the training program, and I couldn't wait to hit the streets and apply what I had learned, all my life but also from my professional training at Xerox. So I think the thing most of all that I learned is be a professional, get up every day with passion and heart and soul, know your product, respect your customer, don't ever get in front of your customer without knowing your business, and then do whatever it takes to get the job done. And when everyone else was heading home to get their night's fun in, I was heading back to the office to get ready for the next day, because I considered that the most important thing I could be doing at that time.

Rachel Salaman: Some of the stories in your book show that you always had a very good instinct for people and situations; what's now sometimes called emotional intelligence. So tell us about the time you were jumped on by a cat and how you handled it and what you learned.

Bill McDermott: I was in Manhattan in August. It was a really hot, humid day and at that time I was a sales trainee, so I was carrying a copier on my back up four flights of stairs in a brownstone in New York City in my $99 suit. By the time I got to the top, as you can imagine, you could feel the sweat dripping down the side of your face. We walked into this brownstone and I'm traveling with a seasoned Xerox professional and, as I walk in, this cat in this beautiful brownstone jumps onto my shoulder and sticks its claws into my skin. Of course, the skin wasn't so bad – it was that $99 suit that I was worried about! Right away I knew that the important thing was not to lose sight of the fact that that cat was the most important thing, and I held the cat, I petted the cat, and the owner of the company comes through and the conversation begins with, "I can see you love cats," and we began talking about her cat, and I told stories about my dog and a dog at the restaurant and, before you know it, we became famous friends. So the lesson is read the room – you have to feel the room. Most people go in with a preconceived set of things they want to say, things they want to do, and things they want to get. Hold on, have some patience, and study the room. Have empathy for what's going on in front of you, and respond to that. It's that real-time ability to really focus on what matters. I knew Garfield, which was the cat, was the president in that company.

Rachel Salaman: How easy is it for people to learn that kind of intuition?

Bill McDermott: You've got to live it. People, especially young people, ask me a lot, "How did you get it? What is that thing that you have?" I think a lot of it came from my childhood – just being the oldest of four, being in or around adult conversations, and then working. My working life started way before the deli and then obviously way before Xerox. I think constantly interacting with people, being intellectually curious. Put yourself in a lot of different situations, in a lot of conversations, and you will be amazed at how it starts to rub off on you.

Rachel Salaman: Throughout your career you've taken the helm of struggling teams and also built them up from scratch. What did you learn when you were leading your very first sales team at Xerox, because you go into that in quite some detail?

Bill McDermott: The first thing I learned was be authentic, and be true to yourself. At that time I was 24 years old and I don't think I knew everything there was to know about management. But I knew what I was good at and I simply stuck to my script. I knew what I could do and I really tried to teach everybody what it was that I could do, and I tried to learn from them because everybody has something to give you – what they're really good at – so we really had a philosophy that none of us is as smart as all of us. And I focused on my core competency, but I realized quickly that there were other people that could perhaps write a more beautiful letter, perhaps have a better sales protocol in terms of opening comments, and perhaps closing techniques, and everybody had something to offer and we tried to really build the whole team around sharing knowledge and giving that effort to one another.

Rachel Salaman: If I could talk about a couple of the techniques that were built on those ideas. One of them is "Feel, Felt, Found" – a sales technique that you developed. What's that?

Bill McDermott: I know how you feel. Others have felt that way too and they found that by doing something a certain way they came to terms with their goals. I go back to this topic of empathy a lot and most people, especially in the sales profession, are selling and telling, and constantly pushing their agenda forward. What I always try to do is explain the situation in terms of how other people felt, what we learned or what they found, and then, ultimately, what we could do to find a really nice way of solving the problem or a really nice way of helping them achieve their goals. It's amazing when you really take that time to focus on them and not you, what's possible.

Rachel Salaman: Listeners might be interested in another technique you used back then which is giving discretionary effort, and this goes back to what you said about the team supporting each other. Whenever your team members hit or surpassed their targets, they had to spend 10 percent of their time helping team members who were missing their targets. How effective was that and have you used it since those early days?

Bill McDermott: Yes, I think discretionary efforts is one of the most important things. In those early days, you could have a person who was really underperforming and what we tried to do is have a team philosophy that everybody had to succeed on the team and everybody had to give whatever their secret sauce was to their colleagues, and the camaraderie that that builds is unbelievable. When you could take a person who is down and out – who is failing and not hitting their targets – and put all the energy of the entire team behind that person, or take 10 percent of the discretionary effort of several people and apply it towards that individual, that individual certainly feels like they're part of a family. It is part of a movement and it lifts them up and, ultimately, they can achieve their goals. Most people can achieve their goals but they need some help once in a while, and what I learned is, the more people gave to the other person, the more they felt they got themselves, and it was a force multiplier effect because now the passion rose and everybody felt like they were gaining something from it. And I think today it's very important because young people today are far less interested in how much money they make – they're much more interested in the difference they're making in the world and the cause they're fighting for. If they're fighting for a cause for their team mates and everybody is in it together, it's amazing what can be achieved.

Rachel Salaman: Now, in most sales teams, incentives are applied on individual performance so, if you have a sales team that's being driven by a group performance, how can you apply incentives? Or didn't you?

Bill McDermott: The way we did it, we focused on the group performance. At that time, the pageantry of going to this President's Club trip – which was for the top performers – was the highest honor in the company. So everybody had to go to the President's Club – that was our goal. The big picture, though, was we had to be the number one team in the United States at that time. If you could be the number one team in the United States, that was pretty prestigious. And everybody worked towards that team goal – to be the best, to be number one, and everybody to be recognized in the President's Club. What's amazing about that is nobody really cared about what the specific earnings were for each individual – they cared about being the best and to be recognized among the best. So this idea of lofty goals and the pride that goes along with being the best needs to be brought back into business. The second thing was on an individual level: each person had very unique and discrete goals, so we wrote down the top three goals each person had, and we put them on a wall. We called it the "Wall of Goals," and, as the person would achieve a goal, they got check-marked on the list and they rang the bell, and everybody celebrated when they achieved their individual goals. What was fascinating – and it ties back to discretionary effort – is that everybody cared about the other person's goals and their attainment of their individual goals, even though they were entirely different from their own. So that discretionary effort got applied towards helping you achieve your goal, and you helped me achieve my goal, and together everyone achieved more. That's how we did it.

Rachel Salaman: And just to let listeners know, the goals were sometimes quite personal. They were things like you want to go on a certain holiday.

Bill McDermott: Exactly, it could have been "I want to buy a new car," "I want to finish paying off my college education," "I want to go on a holiday to Italy." They were entirely different and that was the fascinating part. It also spoke to how different each person was. We had a team that was very much like the United Nations and that was another part of it – diversity brings people much closer together and, if you can have a diverse team with a diverse set of goals but a common interest in each other and, ultimately, the achievement of the dream, you can do anything.

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Rachel Salaman: You were doing very well in Xerox in New York and then you accepted quite a challenging job in the firm's regional office in Puerto Rico. It worked out well in the end, but what did that move teach you about career decision making? How do you weigh up career options when they come along?

Bill McDermott: The first thing is there's a difference between the person who is likely to say, "Yes, I will go for it and take the chance," and the person who is constantly playing the options, playing it safe or thinking it through – overthinking careers in fact. I was always the guy who had the bias for taking the opportunity when the opportunity was on the table, even if it wasn't the perfect opportunity. And in the case of Puerto Rico of course, they ranked dead last in the company. So looking at that from the outside, you were wondering if it was a blessing that you're going to get this promotion, or a curse. But we went for it, and what I learned in going after something like that is that you become so much more, because the skills that you applied in all the jobs that led up to that opportunity were so applicable to that opportunity. And, to go from last to first is just such a great joy in a person's life. I basically went in there, and again this is part of the empathy equation – you don't go in day one with your vision, your strategy and your plan. What you really have to do is understand what the problems are, what problems you're trying to solve, and what the people need. And the fascinating part there was in speaking with the people and the management to really learn how basic the things were that were missing. And we focused on those things. Things like, for example, motivation, things like clear direction, but also something that I always found extremely interesting and entertaining – they wanted their Christmas party back, and this was a very unique single thing where they really wanted to have their Christmas party back. So once I had formed the vision and the strategy for turning this all around, of course with the help of my colleagues - no leader does that alone - we had a very specific goal around the Christmas party at the El San Juan Hotel with Gilberto Santa Rosa, who at the time was the number one salsa singer and band director in Puerto Rico. And when they realized that my requirement was they go from last to first and I had already hired Gilberto to honor them, I guess we all aligned on the goal pretty quickly!

Rachel Salaman: You spent 17 years at Xerox and then you took a couple of senior executive positions in other companies, before moving to your present company, SAP. And, along the way, you did an MBA. Why did you choose to go back to education and how important has it been for your career?

Bill McDermott: Well, it's interesting because I felt very blessed at the time. I went for my MBA at North Western at the suggestion of the then President of the division I was in at Xerox, and at the suggestion of the CEO. That was designed as a grooming step in preparing me to compete some day to be potentially the CEO of the company. So, when faced with an opportunity like that, my advice to people is take it. I went for the degree because I wanted to strengthen my résumé, because I said my dream was to be the CEO and, some day, I don't want to get passed over because somebody else has a degree that I don't have. So that was really honestly the reason. But, in going for the MBA, it became so much more. I got to know some really amazing people. We worked on fascinating case studies and projects, and the friendships that I built in the MBA class, and putting yourself in positions of learning and exposing yourself to new ways of approaching problems and solving problems was an incredible experience. To that end, it was a very important step in preparing me for today. I'm not sure I ever needed the degree because nobody ever told me, but it certainly couldn't have hurt.

Rachel Salaman: And in your experience, how much does leadership change from company to company? Are there universal skills, or do you need to be really good at adapting?

Bill McDermott: It's both. The universal skills of truly being authentic, that's the most important thing for a leader. Leaders all have strengths and weaknesses. People will forgive you for them but they will never forgive you for inauthenticity, because trust is the ultimate currency. So you have to be authentic and always be true to yourself. So that's the first thing, but then you have to be highly skilled and adaptive to the culture that you're going into. That's why I advise people, when you're thinking about your career, make sure you truly understand that the culture of the company you're thinking about joining matches that of your own DNA – really matches that of your own DNA. But when you go to these companies again – very thoughtful about their culture, the way they do things, the business that you're in, the networks that exist – make sure you understand how you can add value to what it is they're doing. Another mistake I think a lot of people make is they go into new cultures and new companies and they have the old playbook. Well, the old playbook may not be the right playbook for this new company. You could still be yourself and develop a new playbook.

Rachel Salaman: How much of a challenge was it for you to lead a technology company when you joined SAP, not coming from a specifically technology background?

Bill McDermott: I'd been around technology for 30 years, and I've never been the person that was the computer scientist that wrote the code, or the inventor that made the great invention, although I have immense respect for the individuals that do that. So I think you have to have respect and an intellectual curiosity for that technology. But my gift has always been to figure out what that technology does for customers, for markets, for ecosystems; how it creates value for people and for families and businesses, how they can grow and prosper and do great things in the world. And so, as a leader, I think that would be my core competency – how do I take that invention and make it more than anybody else possibly could have, and get a whole lot of other people behind that cause?

Rachel Salaman: So it's more about understanding what the technology does rather than how it works?

Bill McDermott: Yes, one of the fascinating things about technology companies is that, very often, you wonder why a great invention never gets off the ground. Sometimes it could be a great invention but it could be early and there's no market for it. Other times, it could be an interesting idea but it's never been connected to a customer requirement or something anybody will actually use. So I always believe that there's a beautiful bridge between the innovator and the consumer. Some people, they're very rare, can do both. Most people are good at one thing or the other. I guess my gift is trying to understand what the innovator wanted to do in the first place, and connecting that idea to a market and making something of it.

Rachel Salaman: You've mentioned innovation a couple of times. It's in your book as well. What tips do you have for leaders who want to encourage and develop innovation in their organizations, whether they're a technology company or not?

Bill McDermott: Well, innovation happens everywhere. Don't limit it just to the innovation department. Everybody has good ideas and I think a culture of innovation is a culture of really thinking through what the next dream is to change the dynamics of the marketplace, and thinking through what the customers are doing and what they need. In 2010, we were in an amazing situation because we were the market leader in the applications and analytics market, a very good and a very exciting market. But we really were looking around corners to see where the next big things were. This idea of mobile and all the devices that are in the world; this idea of cloud computing and the ease of consumption and delivering things in a service instead of making it complicated and putting things in big enterprise environments on premise. And then, of course, the business network – the idea of networks and the network of the network, putting value chains together and a business that never existed before - was something that we found incredibly interesting. Therefore, it wasn't just the people that were building these innovations but it was the people that were selling them or applying service techniques to the customer, or the people that were just simply learning and coming into the company brand new. So innovation spurs excitement and big ideas, and I think that companies, to survive today, they just constantly have to be disrupting themselves and thinking about the next thing.

Rachel Salaman: In your book the importance of strong family support comes through, whether it's your parents, or your wife Julie and your sons. But not everyone has that. So do you have any advice for people who need to find that extra resilience within themselves?

Bill McDermott: Yes, I absolutely do. The resilience that I believe in strongly in the "Winners Dream" is ultimately that it really does come down to you and what your goals are, what your dreams are, and what your aspirations are. And once you come to terms with what it is you really want and what it is you really want to give to the world, you tend to find other people that have common interests, that have common goals, and you form your own sense of network and your own sense of purpose. So I think that it all starts with the dream, and if you can connect that dream and you can take that dream to the world in a way that affects other people. I can't tell you how many countless people I've met just talking about what might be important to them, by asking them questions, but I always knew inside of me what I wanted. I think a lot of people need to figure out what it is they want.

Rachel Salaman: If you could give any advice to your teenage self what would it be?

Bill McDermott: Well my teenage self I would say what I said then, just every day keep getting better and working hard. Whether I was working three part time jobs to make money and find some personal independence, or I was investing all of my energy in buying a delicatessen and then succeeding, give it everything you've got, keep getting better every day and remember that whatever you do, it's most important that you're focused on what other people are trying to do and are trying to derive from what it is you do. For example, in the delicatessen, customers would come into the deli – it really wasn't about us. It really wasn't about how we're trying to make money, it was about a mother coming in with her children, buying something on the shelf, and how can we pack it up just right and put it in the car, and help her get on with her day and have a great experience when all the stuff comes out of the bag, and the food is good. And how do you take the high school kids and have empathy for the fact that they're just looking for a place to hang out when they've got 40 minutes off from lunch. You give them a video game room so they can have some fun and some good food. So we really always tried to apply everything that it was we were trying to do through the eyes of the consumer.

Rachel Salaman: And that's a lesson most leaders should take on board?

Bill McDermott: I would try to live everything in a leadership role through the eyes of your employees and their dreams, and what they're trying to achieve, and the impact that what you do for them and with them has on their families and the value that that can create. I'm also a big believer in the ecosystem – it's not just your employees and you but also the supporting cast that can help you. I give examples of that, of course, in the book. Then finally, it's like in the end the true measure of a person is not what they take from this world – it's what they give to this world and you really want to have a lasting legacy. I think that will always be based on not what you did when we're super successful and it's at the end of the rainbow, but what you did every day along the way. Were you a giver or were you a taker? I would rather see you be a giver.

Rachel Salaman: Bill McDermott talking to me in London. The name of Bill's book again is "Winners Dream: A Global CEO's Life Lessons in Sales, Motivation and Leadership."

I'll be back in a few weeks with another Expert Interview, until then goodbye.