In Other Words - SAS Senior VP and CMO Jim Davis talks about business, analytics and technology

I had a busy travel week recently. I attended the SAS Forum Netherlands, a CIO roundtable event and the SAS Forum Belux.

All were great events and it was especially good to see SAS customers participating at these forums. We learn so much from direct interaction with our customers and nothing will ever replace that.

The theme of SAS Forum Netherlands was sustainability. I think a lot of people thought the economic downturn killed sustainability initiatives, but that’s not true at all. That attitude is really more of a reflection of what the media pays attention to.

It turns out sustainability has two kinds of “legs.” The sustainability play when times are good revolves around doing what’s right for the environment and showing that your company cares, with the resource issues important, but secondary.

In a down economy the economic benefit of optimization of resources like power, fuel, etc. moves to the forefront. The focus is different, but the outcome is the same. Companies optimize their activities in ways they might have gotten around to doing anyway, but now they’re doing it under the banner of sustainability, which is different from previous downturns.

As we come out of the downturn, sustainability will become more a part of everyone’s core business. We’re already seeing that in requests for proposals we get from customers. People who are doing business with us want to see what we’re doing ourselves to be more sustainable.

Did the economic downturn slow down your company’s interest in sustainability? Do you see signs of it coming back?

We’ve gotten a lot of attention since the IBM acquisition of SPSS for being a privately-held company and our desire to stay that way. While looking at all the coverage we’ve gotten, I keep coming back to an analogy made by Mary Hayes Weier in her InformationWeek post, “SAS Institute: There Is No For Sale Sign In Our Yard.”

Imagine you're a homeowner standing in the yard watering the flowers when a potential buyer walks up and makes an offer. Even if you aren’t thinking of selling, you’d probably stop and listen.

“Indeed, at this point, SAS seems content to keep watering its flowers,” she said. And it’s true.

We have been growing wonderful things in our garden for over 34 years, but a lot of these stories talk about us as being a well-kept secret. When you’re a private company you don’t get the coverage that a publicly-traded company does.

Over the years, other publicly-traded companies got recognition and media attention for their contributions to business intelligence and business analytics. Our role was often overlooked because we don’t generate those exciting share value stories. It can be a little frustrating.

But it’s pretty clear now that our strategy has paid off, and not just in a spike in media attention. We’re the largest independent vendor in our space, we have high customer retention and we put a much higher percentage of our revenue back into R&D than public companies could ever get away with.

Our garden is of great interest because of the downturn and the pain publicly-traded companies are experiencing. Buying our nicely-tended patch must look a lot more appealing than all the digging and weeding they’ve got ahead of them.

There’s an article in Tuesday’s Wall Street Journal titled “The Economic Recovery: Fast, Slow or Neither,” claiming that we’re pulling out of the economic slump, and giving various predictions on whether the economy will rebound slowly, quickly, or spike and return to a slump.

Another really interesting article in The Guardian lists “Winners and losers in the global recession,” based on a breakdown of GDP numbers for key countries. According to the figures the US is in recession but leveling out and the UK is still in recession and facing a slow recovery. Japan is still in recession and looking forward to one percent growth in the second quarter, which would be its first expansion in five quarters. Germany and France are out of recession, The Guardian concludes, and Australia stayed out of it completely.

What I find most fascinating, based on the theme I seem to have developed in this blog of growth in established and emerging markets, is that China and India are both expanding dramatically. China’s GDP grew 7.9 percent, up from 6.1 percent in the first quarter. India’s rate of growth has slowed a bit, but it’s still looking at 8 percent growth this year, making it one of the fastest-growing economies in the world.

We’re coming out of a trough. We’re headed in the right direction. What do we do differently?

That’s the real question. What do we do differently? It’s one thing to be more efficient doing what we’ve always done, but this market is different. We need to look at what new businesses we should be in – in addition to concentrating on our core. The sooner we recognize the world has changed, the sooner we are likely to be able to see outside our traditional walls.

I just got back from a trip to Singapore for our Premier Business Leadership Series, with a stop in Tokyo. Sometimes I think that if I was blindfolded, put on a plane in Raleigh and let off in Tokyo or Singapore, the only real difference I’d notice would be the time zone.

It was hot, it was humid, people are concerned about the economic downturn and they’re all trying to optimize their businesses.

If I had delivered my presentation two years ago I would have been quoting from Thomas Friedman’s The World is Flat, and talking about how emerging markets have the advantage over mature markets. There’s fiber everywhere and small economies can take advantage of easy access to data. They don’t have the red tape and entrenched attitudes. They’re starting new.

Two years later the world is flat and all those things are true, but the emerging markets are feeling the same pain as we are. We all face the same challenges: how do we do more with less and recognize this economy is changing the game.

We’re facing the same challenges, but that also means mature markets have the same opportunities as emerging markets.

Everybody is dealing with issues related to optimization, whether you’re a young company or an old company. We met with a telco that’s trying to evolve from being a wireless provider to an information provider. We met with a retailer that needs to optimize their inventory and their price points.

We had similar conversations in Mexico, and we know the Indians and Chinese are facing the same problems. The economists we heard from in Singapore are talking about the same issues as economists in the US.

The only difference is I was sleepy.

Oh, and the sushi is better.

I’ve just started reading Jim Collins’ new book, How the Mighty Fall. I’m only on the first chapter but I’ve found a lot already that is relevant not just to us at SAS, but to any company that wants to survive the downturn and come out stronger.

Jim points out the five stages of decline: Hubris Born of Success, Undisciplined Pursuit of More, Denial of Risk and Peril, Grasping for Salvation, Capitulation to Irrelevance or Death.



I’m still reading about stage one, Hubris Born of Success, but there’s a lot that resonates for me. Especially in this economic downturn, it’s essential that we stop long enough to look in the mirror and see who we really are and how we’re acting.

Jim talks about the markers for stage one: Success, Entitlement and Arrogance.

“Success is viewed as deserved rather than fortuitous, fleeting or even hard-earned in the face of daunting odds; people begin to believe that success will continue almost no matter what the organization decides to do or not to do.”

This ties in with some of the themes I’ve tried to explore in previous posts. The world is a very different place and this economic downturn is actually a marker (or tipping point, to borrow another buzzword) in the business world. The formula that has made any company successful to date probably isn’t going to work anymore. If we continue to believe that what we’ve been doing for the last 100 years will carry us forward, we’re crazy.

It takes discipline to realize that success was based on the market at that time, and we can’t ignore that the market is changing and is different now.

It’s not a doom-and-gloom message. The subtitle of the book is, “Why some companies never give in.” If you find yourself at this point, it doesn’t mean you’re finished, but you do have to stop and examine what you’re doing to take advantage of the next wave. The tide has gone out, but it’s going to come back, and we’ll need to be able to catch the wave when it does.

How does an organization prepare to catch the next wave? Think about the theme for our Premier Business Leadership Series in Singapore: “Innovate. Optimize. Transform.” You have to understand what each of those mean for your business.

Regionalization is probably gone. Globalization is a reality and isn’t reserved for the traditional markets. Technology plays a large role and the data can help us understand where the opportunities lie, and give us insights into the market.

It’s all out there - the pieces and parts we need to understand what this world will look like when the waves start crashing the beach again. Are we stopping long enough to re-evaluate how the world is changing? Are we taking advantage of the analytics and optimization tools that will help us sort it all out?

If we don’t understand what’s coming at us, the next wave becomes a tsunami that destroys our village.