Capitalism with a human face: how to make $8.7 billion without layoffs

Capitalism with a human face: how to make $8.7 billion without layoffs


All 19 years that Fortune magazine publishes a rating of the best employers in the world, it is an American company SAS is the world’s largest private producer of analysis software for business. This year she occupied the eighth place, and from 2010 to 2014 were in the top three, twice ranked first. Founder and CEO James Goodnight from the very beginning set a task to create for employees an environment which would allow them to realize their potential — working day at seven o’clock, cheap dinner with live music, free clinics and kindergartens. In IT, as it turned out, this approach works. Goodnight, according to the counter “real-time” Forbes on April 28, he helped earn the state $8.7 billion.

University business

The future founder of the SAS was born on 6 Jan 1943 in Salisbury, North Carolina. James’s father owned a construction shop where his son often worked after school. But the family business James chose science: from items most of all he loved math and chemistry, and that chemistry teacher influenced his choice.

On the advice of a friend Goodnight entered the University of North Carolina. In 1966 in his second year he first became acquainted with computers and came from them in delight. “I fell in love with machines that do something for people,” he recalled.

Less than a year 24-year-old Goodnight began participating in the development project, systems analysis of agricultural data, which is performed by a group of experts from eight universities receiving research grants from the U.S. Department of agriculture. The program, called the Statistical Analysis System (statistical analysis), started the company in future SAS.

The main developer of the program was University, where he studied Goodnight. The first full version of SAS for IBM, was released in 1972, and at the same time the project lost government funding. By the time Goodnight defended his thesis in statistics and began teaching. For the whole year, the young Professor received a $1 — mainly it was to have an unrestricted ability to use the mainframe to work on the project. Initially, funds for the project are allocated national Institute of health, but in 1972, he stopped funding, and to pay for the work themselves became universities. They put a condition that the program must be sold under license to private companies and state organizations to ensure that the project was self-sustaining.

By 1976, SAS has been almost one hundred customers. “We had a SAS users conference in Florida. It’s 350 people. They really liked that some of the things we worked. And when the conference ended, we decided to leave the University. We could support yourself without his help” — he recalled in an interview with Forbes. The University, which did not set a goal to do a research project on business and didn’t mind.

Goodnight, project Manager Anthony James Barr, their colleague programmer John Soll and another partner Jane Helwig, engaged in the preparation of documentation, has opened an office in the building directly opposite the University. Thus was founded the company SAS, whose aim was the support and further development of the system.

“To work with the Goodnight was torture”

Now the first part of the management of the company were two people — Goodnight and Soll. They are the same — its only the owners. In 2007, Forbes wrote that Goodnight owned two thirds of the company, one-third belonged to Sallu. Since then, information about the change of structure of shareholders of the company did not appear. Barr, who had with them an equal share, went out of business in 1979, co-founders sold their stake for $340 million — in 30 years, estimated Forbes, it would cost $1 billion Helwig left the company a few years later.

As later recalled Barr, to work with the Goodnight for him was “pure torture”. “Motivation is Jim’s number one — control and absolute superiority… I had to get out of there,” — quoted by his newspaper News & Observer in 1996. After leaving Barra Goodnight made a bid for investment in development. From the very first days he made a bet on innovation. From year to year, the two largest expenditure items of the company is investment in research (annually not less than 20%) and maintaining favorable working conditions.

Now SAS is the world leader in the field of business intelligence. The company’s services are used by over 80 thousand public and private organizations worldwide, of which 91 included in the first hundred rankings 2016 Fortune Global 500.

System developed by the company, its appearance is similar to traditional ERP-systems (enterprise resource planning). From the mass of competitors in the market analytical, allocates its signature product — the SAS Forecasting system, automatically the components of the analytical predictions. ERP system for the most part represent the software tools for acquisition, collection, archiving and subsequent data visualization in the form of standard graphs and tables, but not predict.

Goodnight calls such systems obsolete. “Almost all major companies in the world involved themselves at one or another ERP system, and then discovered that I can extract from it any useful information. They can’t predict trends,” — quoted SAS CEO in 2010, the financial analyst Sergey Golubitsky’s book, “the Wrong lessons”. Software SAS, for example, allow banks to predict the behavior of potential defaulters on loans, and retailers to identify attractive locations for new points of sales. In 2015, SAS along with IBM was called the analytical company Forrester Wave one of the leaders in the market of predictive Analytics on large data volumes (Big Data).

Money for education, ballet and refugees

James Goodnight is an active philanthropist, his charitable work extends to education and culture, and humanitarian organizations. According to the portal InsidePhylantrophy, for my life Goodnight has directed over $1 billion in funding for educational initiatives, primarily in his home state — North Carolina. In particular, in 1997, he became one of the co-founders of Cary Academy, an independent school in which technology is so integrated into the learning process. At least $5 million he donated to the Institute the William and IDA fraydey, which is engaged in the development of innovation in education, another $3 million to North Carolina state University, where he studied.

Goodnight also provides financial support to the Carolina Ballet theatre, and the Museum of natural Sciences North Carolina, he donated his rock collection, which numbered more than 400 samples. Writes InsidePhylantrophy, the Museum of art of North Carolina, he plans to donate his impressive collection of art objects.

In addition, SAS has collaborated with the International organization for migration in the aftermath of the earthquake in Nepal in the beginning of last year — the company analyzed the data about the shelters in order to improve the allocation of resources.” Similar assistance provided after Typhoon “Hai’an” in the Philippines 2.5 years ago.

For all employees

The founder of SAS has always placed an unusually great attention to corporate culture. “Software is an intellectual product. 95% of my assets every night going home. My job is to create an environment in which they will want to return every morning,” said Goodnight. These thoughts came to him when in the late 1960s, he briefly worked at NASA, in the company to install equipment for ground stations, which were supposed to contact the capsule of the spaceship “Apollo”. Goodnight got into the team, where annual staff turnover was 50%. “No attempt was made to establish a trust relationship [between NASA and employees]. They used the registration card and metal detectors to ensure that employees work the required hours and do not steal. The NASA management put themselves above other workers: they had a private Parking, a lounge and dining room” — quoted impressions Goodnight the authors of the report dedicated to the SAS Work/Life Integration Project, published in 2001.

After that, Goodnight decided that if he ever will a business, the conditions will be the opposite. Since the founding of SAS the company has an extensive benefits package. On an area of 1.2 sq km, which is the headquarters of the SAS in Kare (North Carolina), there are two kindergartens, free health center and fitness club, two cafeteria, one of which plays live music, a basketball court. On each floor of the main building has restrooms with free drinks and snacks. On the territory of the headquarters there is a free Barber, dry cleaning and even advice on tax reporting. The company introduced a 35-hour working week, and the leadership actively encourages its employees not to stay overtime. Goodnight allows your employees come in any time to watch and distribute as they see fit. “Creativity is a fickle thing. A flexible schedule encourages people to start their day in the best time for them”, — he explained.

The authors of the report Work/Life Integration Project called SAS Institute a company with a horizontal control: “between the grass-roots positions and Goodnight all four levels — this means that he has a large number of direct subordinates”. It is called the “quiet leader”: on the one hand, the owner encourages their employees to independence, on the other — his presence in the company is constantly significantly, most of the key decisions that he takes. SAS executives fundamentally open to communication with the rank and file employees, with whom they dine in the same dining room, and the Goodnight still continues to program.

As he said Goodnight in his article in Harward Business Review, while on the search for a single employee takes on average six months to complete his dive into the deep-seated in the company environment can take years. The persistence of the state allows to establish long-term relationships between the developers, sales staff and customers and, as a consequence, increase the revenue and expand the business. According to Fortune, in April 2016, the turnover was at the level of 4% per year, whereas the average for the industry was 20-25%.

Fundamental nonpublic

At the turn of the Millennium, when the U.S. was rapidly developing market of Internet companies, the Goodnight is thinking about an IPO. In the fall of 2001, he announced about this decision, but on the background of the collapse of the dotcom market reversed the placement until at least 2002. Part of management SAS, he said, was “generally against IPO”. “Joint-stock company instead to concentrate on the customers and their own staff, begins to think only about quarterly profits,” — quoted by CNews Goodnight. In 2002, he interviewed the staff at SAS about how they relate to IPO, 87% voted against it. More Goodnight to this question did not come back.

The company did not disclose any financial figures, except earnings, in 2015, it amounted to $3.16 billion As a private company SAS is smaller than a public company depends on the fluctuations of the stock market. When the collapse of the dot-com bubble 16 years ago bankrupted thousands of companies and dumped on the labour market thousands of IT professionals, it has played Goodnight at hand. In the crisis of 2007-2009 Goodnight decided during the year not to fire and not to cut staff salaries, refusing at the same time, from raising salaries to management.

To get a job in the company Goodnight difficult. The applicant will have an interview, whose purpose is to find out not only his knowledge but the attitude to work and money — motivated solely financial in SAS are not taken. “Creative people work for the love of challenges. They are filled with a sense of accomplishment that comes as a result of the victory over the problem”, — says Goodnight.

James Goodnight in numbers

In $8.7 billion was estimated as of the head of the SAS, Forbes magazine on April 28

$3.16 billion revenues totaled SAS in 2015

25% of our sales revenue in 2015 were reinvested in R & d

SAS has offices in 138 countries of the world, including in Russia since 1996

More than 80 thousand commercial, governmental and educational organizations around the world use the services of the company

13,8 thousand people work in the state of SAS