Fireside Chat with Compuware CEO Chris O’Malley

I took the General Manager Mainframe job for CA Technologies. If you think back 10 years ago, that was the middle of the recession, so companies on a whole were doing incredibly poorly. The mainframe business today is going through a renaissance, but 10 years ago, there was a lot of mainframe naysayers and there was a lot of negative energy around the mainframe.

CA itself was going through some difficult times. There was an accounting scandal that put actually some people into jail. There was a Fortune article that came out that said that “Computer Associates is actually the most dysfunctional company in the United States.” So those are a lot of things that are working against you.

It’s important for you to understand this because when you get a job like that, you don’t get a pass. There’s this expectation from shareholders, specifically through the board, that they want you to create value. They didn’t put you in that job to make excuses.

You can see, sometimes a person creates these situations but sometimes the situation creates the person. If you’re going to influence these Type Two people, you need to understand, it’s not the situation they don’t get it. Trust me, I didn’t sleep a lot of nights when I had that job. They get it.

It’s just that for them, there are very few avenues for things to actually improve. So, on a spectrum of growth to value, you tend to focus on the value side, and that’s usually cutting costs. Looking at things that have a long-term return horizon is something that you’re cynical towards. Again, we’re talking about trying to influence these people, you have to understand kind of the motives and where they come from.

The job I had after CA was actually the other extreme. I was a startup CEO and I started the job by going out and getting money. In a scenario where you’re trying to get your first customer, you can see a sense of purity in terms of having to have a strong vision of a changed future. You have to have a disruptive mission, you’re trying to change the way that jobs are done so that you can make a case for selling your technologies.

You get a sense of having to be these extremes in terms of zealous and passion, but you also get to see the value of things like DevOps and Agile. And that these things become an essential part of actually the birth of innovation within these companies.

From there, I went to Compuware and I became the CEO of Compuware four years ago, which is a mainframe software company. What excited me about that job, was that Compuware at that moment was in a lot of trouble. It was in a chronic state of decline, some people thought it was at a pace to basically go out of business. It hadn’t come out with a product for 15 years. It was associated with the mainframe market, and there was a sense of decline.

My thesis was, that if you could take what I had learned as a startup CEO, with the passion of a vision, and a mission that gave a sense of purpose to the company, and apply these techniques like DevOps and Agile, then you could restart a company and create something new and different — that could actually disrupt the market generally and change the fate of Compuware.

So, for a company that hadn’t come out with a new product in 15 years and had done waterfall for 40, whose backlog was dominated by maintenance and basically compliance issues and the complaints of the largest customers. In January, we will come out with our 16th consecutive quarter of new capabilities, upgrades of our classic offerings, integration with leading DevOps tools and improvements in customer experience.

We’ve gone from a company in a state of decline, to a company that’s now, in fact, growing. And what’s interesting for any Type Two person who is constantly looking at a short list of cost cuts as the answer to everything, Compuware did this in a way where we had no restructuring costs of any nature. We had basically no negative effects in terms of cash flow, and what it really means when you double-click it, is that the people changed.

We had people who had the same outcome for 40 years, which wasn’t nearly as successful and was leading them to the failure of the organization — reset themselves, reinvent themselves. Embrace things like DevOps, embrace things like Agile, and get a successful outcome almost immediately. When you look at the core people within Compuware today, it’s basically the same people there as the day I started.

And I say that you because a lot of people in leadership believe that you have to purge and start again. You need restructuring costs, the consequence of cash flow, and Type Two people hate that because, in the short-term, it creates a decrease in the value of the firm.

So, to think that we change the tire on a moving car, and actually created an outcome and bent the curve so fast, is an incredible testament to what you’re trying to do and the importance of what you’re trying to do, to help the businesses you serve.

I want to set the context for the other side of the story that’s not told enough, if at all. And I’ll use an example of a discussion I had with a CIO of a large financial services company. I was having a discussion with him, and the subject of DevOps came up, and he got a little bit upset. Actually not a little bit upset, he got really upset.

His perspective on it was, “I’m tired of people coming to my office and talking about improvements of a release frequency, that MTTR is getting better, that there are fewer and fewer bugs are going into the wild when those things are placebos in the eyes of our customers.”

The point that he was making is that the ideas are as important as how you do it, and they have to be made in balance. You’ve probably heard in the course of these past few days the terms, “Change of mindset,” and, “Being product-minded rather than project-minded,” or something like that. And that doesn’t mean that much to me, so I want to double click on this idea of ideation because it’s important for you to understand it.

One of the greatest successes in this modern digital age obviously is Amazon, Jeff Bezos is amazing. He is a person that shares his successes. He’s not hiding it. He’s not like Willy Wonka and his chocolate factory, keeping everything secret in terms of what goes on. He shares the ways that made Amazon different.

A couple of years ago, in his letter to the shareholders that he wrote as part of his annual report, he talked about a bunch of things that makes Amazon different. But one of the first things he talked about was Customer Obsession and how important that is to what’s made Amazon what it is, today. And he goes, “What’s amazing about being obsessed with customers, is that customers are always wonderfully and beautifully dissatisfied. No matter if things are good, or they think things are alright, there’s always something more that they want. And your earnestness to try to understand those things will drive you to invent on their behalf. It’s that cycle, that virtuous cycle of being better at building customer experiences, customer journeys, eventually will separate you from your competition.”

It’s incredibly important, just as you’re trying to do all these efforts to improve throughput, quality, velocity, efficiency, that you counterbalance it with discussions about what ideas you’re harvesting and finding, and then turning those into deliverables that are actually making a difference to your customers.

On the ideation side, we have to have awesome ideas — not maintenance, not compliance stuff, but awesome ideas that are going to transform the company in the eyes of our customers and the market generally. You need those two kind of ‘people’ to make sweet music together, but they also have to fight. That combativeness as Lennon and McCartney had when they were sitting in the studio, is important for both of them to escalate in their efforts.

When you think about these Type Twos, and what’s involved in trying to change their minds, there’s not a pill you can give them. They’re sitting there thinking about, “How do I create value?” And almost always the shortlist is on cost-cutting. So you, in partnership with product management, need to start becoming storytellers.

At Compuware what we do is at the same time every two weeks, we do a town hall. In that town hall, if you came and listened to it, you’re going to hear product managers talking about ideas that we’ve harvested, that we’re fashioning into deliverables that make a difference, and how customers are reacting to it. We’re showing the fact that we’re evolving the products that we have to nail the jobs that our customers are trying to do.

You would also hear engineering talk about their progress, how they’re throwing out constraints and getting the flow of work to go faster.

Most importantly, they’re saying it in authentic ways. We’re not, “Everything’s wonderful and beautiful.” They’re talking about the good, the bad, and the ugly. There were times when we had significant quality issues, but we put it front and center, and we worked it through.

If you listen to those discussions each week, it gives you a sense of two things that are really important in trying to tune in to these Type Twos:

One is that you’re showing them efficiency. You’re showing them that you’re changing a tire on a moving a car because you’re a culture that’s constantly looking at its constraints while trying to think “How do I improve them? How do I get them faster? How do I get the throughput to be better?” Which is music to their ears. That’s greater return from the assets within the business without adding more to it.

Secondly, you’re also showing them something that’s equally important, which is resilience. All these ideas that are coming in are allowing the company to bob and weave and have the days matter in terms of better serving customers. And that’s critically important, because as much as these Type Twos think about, “I have to cut costs; I have to cut costs. I have to make these decisive decisions as to what we’re going to do.” They also fear making a mistake.

What if they make a huge decision, and they can’t unwind it, and they put the company into a cul-de-sac? That scares that crap out of them. I read a recent article on Business Insider by some investors, and they had 50 retail companies that have gone out of business in recent history. Anybody that’s older than 30-years-old would recognize most of the names  — it makes you want to cry.

I think about how that happens, and to a certain degree, it’s Type Twos chasing profitability, without thinking about resilience. In the digital age, you’ve got to bob and weave. You have to get a little bit better, a little bit better, a little bit better. So, trust me, it’s not like they’re oblivious to this fact. All of them have cell phones. All of them see that shopping malls are closing. All of them shop on Amazon. They get that side of it; they just don’t know how to get that to happen within their own business.

This two-week cadence, or whatever cadence you have, where you’ve got Lennon and McCartney, (and I’m talking about it like it’s two people, but it could be organizations,) giving that message on throughput, efficiency, along with taking these ideas and keeping us in this resilient state, is something that over time will click. It may not catch them in a moment, and they might not just have this epiphany, but trust me, they’re getting beat on by boards. They’re listening to McKinsey and Bain, everybody’s telling them they have to transform. At some point, the aperture will open and they’ll have to start learning and understanding.

This idea of Lennon and McCartney I think is really important. You need to look at it, not as something that you do independent because again, you’ll look like a placebo. You’re a talking head that’s doing things that are different in ways that may be important to you but not to our customers.

You need that partner, that ideation person, to basically give you those stereo sound that makes people that are both Type One and Type Two, start to listen to you.

There was somebody that presented to me at one point, and they show this slide. The slide had GDP divided by hours into the United States over the last five years, and it was flat. As I’m looking at it, and I’m like, “How can that possibly be?” All the robotics in this world that’s come into the country. Companies like Amazon, all this technology, how can GDP, versus hours worked, be flat?

There’s a lot of reasons that economists could give that are way too complex for a kid that went to a public school, but there is something that I saw that made sense to me.

Gallup does this survey, on employee engagement, and they’ve been doing it for 30 years, every year. Every year for 30 years, it’s had the exact same outcome, which blows my mind.

What they’ve found is that a third of the people in organizations of scale are engaged. 50% of the people are what they determined to be “not engaged,” and then the remaining 17% of people are what is called “actively disengaged.” They actually sabotage the efforts of the companies that they serve. So, when you do the quick math on it, if you’re this engaged employee that’s actually trying to be part of an effort to transform, two-thirds of the company is working against you.

They want things to remain in the status quo. They want things to be in a steady state, and that aligns to human nature. Human nature does not want to take risks. We’d rather be miserable in the known than take a chance on the fact that changing will create a better outcome. You need to be aware that this is the headwinds that you face.

I tell people when I see these people that are really well at DevOps, like Gene. They’re passionate, they’re excited, they’re pumped, they’re consistent in terms of that mantra that they give. Because they understand any vacuum you create, gravity will pull that organization back too fast. So you have to be on your game, all the time.

What we talk about a lot within Compuware is this subset of engaged people called “passionate explorers.” Those are the people that you see that come on stage here that are pumped up, they fear nothing. They’re going to go after the world. And you, as a person on your side, you know who those people are. You know that there are people that feel frustrated within the business. They see a better path forward, and they’re trying to basically get people to join this journey.

There are other people within the business, that are equally frustrated. They see the problems that the business has. I tell people that, “You can’t tell me that everybody at Sears is stupid and that everybody at Kmart’s stupid.” There are smart people on the business side of the organization, but they have to have equal courage and desire to elevate themselves to be your equal.

You have to find those people, and they’re not going to be like, Lennon or McCartney, they’re probably at the outset. They’re going to be more like Peter Best, the fifth Beatle that got fired. But you have to help them to learn, through the journey that you went through. You guys have read the Phoenix Project, and maybe you’ve used that as a means of getting everybody to understand why we have to change and the fundamental things that have to be different.

There are books like that on the other side, like Marty Cagan’s book, ‘Inspired: Building Products that Customers Love.’ And you’ve had to help them to build product management skills so that they can go into that DMZ zone between customers and your value prop and understand that dissatisfaction. That beautiful and wonderful dissatisfaction, and think of creative ideas that aren’t prejudice, but are innovative to make it better. Then they become a source of really awesome backlogs that aren’t maintenance, that isn’t compliance but will help take the company to be more competitive in the digital age.

Those people exist, you have to go find them, you can’t have them be somebody that you talk to now and then. You have to hug them, you have to get involved with them, you have to teach them exactly what you did on your journey, for them to do the same from a product management standpoint.

They’re hearing that and it’s hard because if you’re a Type Two, it’s incongruent, because it feels like an investment, it feels like things that I haven’t mastered as part of my career path. If I’ve come up through the CFO route, I don’t know these things. So, it is really important that you find a partner, that Lennon or McCartney to become, in a sense, equal contributors.

That you get a platform that communicates constantly. Whether it’s weekly or bi-weekly, but you’re always on stage. You’re always talking about ideas that will be incredibly important to the customers that we have in the backlog, and you figured out a way to turn those into deliverables that make a difference.

And then having these Type Twos watch that movie unfold and understanding it a little bit more, a little bit more, will make a difference. Because, they’re getting this external stimulus, “You have to go digital; you have to do this digital transformation.” So, those things will get them eventually to the right place.

In the course of this journey, and again, it doesn’t happen in two weeks. It’s going to be a quarter, it could be years. That’s where you have to have a lot of energy and a lot of will and determination.

Eventually, you’re going to get defining moments that are either a catastrophe, an ‘it was a massive mistake, but we learned. Man, we learned so much as a result of that,’ and it’s basically moved the ball 20 yards, but now you can put that in the category of a deep lesson learned. But now you want to put that on stage. Celebrate the person that took the risk, and celebrate the person that made a difference in a mistake, and have that Type Two on stage with them as a part of that celebration.

What you’re doing is showing what this passionate explorer looks like in the flesh. Their face, it’s a person. So people can say, “Man, I want to be like Gary. I want to be like Judy.” You’re putting that person on stage, and you’re getting a Type Two person to confirm this is the subset of engaged people that we need.

Likewise, you want to use the others as examples, too. If you get a defining moment that’s just an outrageous success, you’ve delivered something that moved the needle massively in the eyes of customers, get that person on stage, and get that Type Two person on there too. Draw them into this journey alongside these people that are basically pulling the organization forward. It’s a long road. There are no silver bullets, there are no drugs you can give these people.

You’ve got a set of chemistry, both macro, all these things that they’re being told by McKinsey and Bain and Boston Consulting Group, you have to show that you’re changing, you’re working on efficiency, you’re working on resilience, and eventually, it’ll happen. Trust me, that spark will occur, they’ll engage, and you’ll look five years from now and directly correlate with what you’re doing right now to making your business turn around.

And part of the means you have to regather yourself if you stumbled and have made a mistake. I’m sure you’ve all been in this mode where something bad happened, and those two-thirds of the organization that are not engaged or actively disengaged, seize on it and say, “Oh my God. Told you. We shouldn’t change. We should keep on doing it the old way.” But you muscle through it, when you go home at night, you have to empty feeling in your stomach.

What makes it work is getting everybody to support the cause and get the cacophony going.  I think using things like social media (and not Twitter because it’s transient,) but something like LinkedIn that is looked at by your executives. Your CEOs and CIOs are certainly trying to use that platform to cultivate their own brand, so you being visible in social media and showing those successes, and getting other companies to chime in. That sense of building on something that creates momentum is incredibly important.

Your voice matters. What you have to say matters. Contribute to that conversation publicly, not just to your buddies at lunch. Those are important things in terms of getting this thing to move.

But it’s everything that you’ve done up to this point that will create a greater degree of likelihood for a successful outcome. In business, there is good luck and there is bad luck. It’s just the way it works. It’s a game of luck to a certain degree, so a good leader understands that, they’re doing things in terms of messaging efficiency, messaging resilience. There’s a crank being turned and there’s a continuous degree of improvement that’s been happening every day, every week, every month. When they get to a decision point, they’re going to say, “This one stays; we keep this thing going because I’ve seen it for what it’s done and what it can do.” But you have to involve them in the story first.

I know a lot of you work for very large organizations and this idea of two-week town hall seems like “How are we going to do that?”

When I talked about the fact that people were engaged and not engaged and actively disengaged — everybody wants to believe they’re in the first category. I’ve never presented to an audience and had anybody think, “Oh, I’m the not engaged.” I mean, they don’t think that. Everybody thinks they’re engaged. Everybody thinks, “I’m the passionate explorer.” But if you’re sitting in the audience, right now, and saying things like, “Doing a town hall, every two weeks!? That’s hard. That’s a lot of content. It’s a lot …” You’re actively disengaged. You are sabotaging the effort.

You are the problem. So, it’s everybody that you do, up until that moment, that determines what’s going to happen when the decision has to be made.

As a CEO of a company that went from a nosedive to turning itself around, and not creating growth in ways that investors look at as being extraordinary — if somebody were to ask me the how we did it, the core of it is DevOps. Core. We could not have possibly done what we’ve done at Compuware without DevOps and Agile methods. Impossible. Have that in your mind, all the time. Even when you’re lonely, and things go bad, you had a bad day, etc.

The next thing is you need an alter ego. You’re only half the story, you need your McCartney, you need your Lennon, (you don’t need Peter Best,) you need somebody who’s your equal and helping to paint a collective story. As much as you need them to make you successful, as much as you need them to be an advocate for what you’ve done — they need you to give the support to them. You’re giving them a way to iterate, to experiment, to learn things, to never go down a cul-de-sac. Always going, maybe in a meandering path, but we’re always getting to a place where customer stats are getting better. Engagement is getting better.

The third thing is, you have to talk together. You have to communicate that message as an ongoing storyline and promote in this mindset an idea of efficiency, that plays to the Type Two. But also, resiliency. They may not be able to take that leap to innovation, because that’s just a bridge too far, but they do understand resiliency because they fear making the wrong decisions. And you’re giving them a way to basically give a net, that if they do make the wrong choice, they can back out of this cul-de-sac, and take it on a different path.

And then lastly, I’ll just say, be inspired. When I look at the travels that we have, we’re seeing a lot more DevOps and Agile happen on the mainframe, and I’m getting introduced to more and more DevOps people, and they’re kind of a consistent breed. They’re inspired, they’re fired up, they get the troops going. I mean, you have to have that kind of relentless disposition about you, because gravity is so hard.

Always keep in your mind that two-thirds of the people want you dead. They don’t want you to succeed but do not fear that. Anything that is great, in any company that’s been achieved that’s been worthy, that’s really made a difference, is because it overcame that gravity.

I guarantee, if you just keep that chin up and those arguments going, that you’re going to see five years ago, that you were the core. You were the spark that turned your company around and got to a level of growth and ability to compete in the digital age that no one thought was possible today. So, thank you.