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Gita Piramal |
March 03, 2005
'Mr Outside,' Charles E Phillips, Jr, in charge of Oracle Corporation's external operations always devises a plan before playing to win. A strategist by choice, he transforms aggression into an intense desire to excel, succeed and motivate.
His belief: companies that are not too belligerent, go belly up or end up being part of another aggressive company.
Richard A Matasar, Dean, New York Law School, describes him as a man of many talents. His ex-colleagues are now his adversaries, yet they call him a 'class act.' Black Enterprise Magazine recognises him as one of the top fifty African American professionals on Wall Street.
And though his first venture for his new company turned contentious and landed him and the company in a legal tussle, his CEO stands by him. He is also a confidant of the US Vice Presidential candidate John Edwards. So who is he?
Meet Charles E Phillips, Jr a.k.a. Chuck, President and member of the board of directors of the $10.2 billion Oracle Corporation, the world's largest enterprise software company and the second largest software firm, after Microsoft Corporation.
During a colourful career Phillips (45) has donned many hats: marine in the US Navy, lawyer, analyst, venture capitalist, manager. At one time he even harboured political ambitions. His growth from a little boy from Little Rock, Arkansas to his current position as the face of Oracle Corporation has been a series of risky and bold moves.
He is also unusually qualified and holds a BS degree in computer science from the United States Air Force Academy, an MBA in finance from Hampton University in Virginia and a JD from New York Law School.
He is a chartered financial analyst (CFA, Nasdaq Series 7 and 63 certified), a member of the Institute of Electrical and Electronic Engineers (IEEE), and can apply his legal skills at the Washington DC Bar, and the Georgia State Bar.
His got his first job by enrolling for a computer science degree from the United States Air Force Academy. It was to become a key turning point in his life. As he says, "Doing computer science gave me the foundation to understand the IT industry. I have always loved technology from very early on and so that wasn't surprising that I was one of those guys that, y'know, who built computers in high school." Phillips rose to the position of a captain with the Marine Corps and the management lessons he learnt there became deeply engrained in him, including the need for discipline and rigorous analysis.
He began his tryst with Wall Street starting with a stint in The Bank of New York in 1986. He joined Morgan Stanley in December 1994 as an equity research analyst covering enterprise and Internet software companies.
Prior to Morgan Stanley, he covered the same sector for Kidder Peabody and SoundView Financial. His career took a 360-degree turn when he accepted an offer from Larry Ellison, Oracle's CEO, in May 2003 and became the Executive Vice President of Oracle and returned back to his computing roots.
Tall, lanky (he is 6'5") and soft-spoken, with a ready smile, Phillips is all controlled aggression.
As he told Business Times during an Oracle software project launch in Singapore recently, "Aggressiveness is not a bad thing; companies that are not too aggressive in this industry tend to end up as being part of an aggressive company. So, you do want assertive people who like to win. And that is the type of people we hire."
But he says aggression should be a motivation to excel, and not merely a tool to bully. Aggressiveness should translate into an intense desire to win customers and solve their problems.
"That is what makes the place (Oracle) fun. I would not want to be at a company that did not feel it has any energy or assertiveness."
As a perceptive and forward thinking analyst, he was known for calling investor relations managers at all hours of the night to chase rumors and throw dinner parties for top software executives at his townhouse, just so that he could get a whiff of the latest reports. His colleagues from the investment community still swear by his credentials as a Wall Street insider.
It is this credibility that attracted Larry Ellison to Phillips. "Chuck's market perspective and strong relationships with CEOs, CFOs and CIOs across industries will be of enormous benefit to Oracle and our customers," said Ellison on the occasion of Phillips joining Oracle.
Fourteen days after he joined, Phillips launched Oracle's hostile acquisition bid on PeopleSoft. The world's second largest provider of enterprise application software, PeopleSoft was founded in 1987 and is headquartered in Pleasanton, California. It has 12,000 employees and annual revenues of over $2.3 billion.
Although the takeover has now been achieved, it was enmeshed in a fiercely acrimonious legal tussle for a while. The Justice Department's lawsuit had blocked Oracle's hostile $9.4 billion bid. And Phillips personally was under attack by JD Edwards, a Denver-based software company that PeopleSoft acquired just days before Oracle's hostile bid. In its lawsuit, JD Edwards claimed that Oracle had been 'assisted by the deception and subterfuge' of Phillips.
Until mid-May in 2003, Phillips was a software analyst and managing director at Morgan Stanley, issuing buying and selling recommendations on Oracle and PeopleSoft stock. And Morgan Stanley represented JD Edwards in its merger with PeopleSoft.
Countering accusations of misuse of insider information, Phillips stated that his last in-depth conversation with JD Edwards' CEO was in February, long before he had the offer to join Oracle. As Phillips told reporters at the time, he made this unusual move of a hostile merger simply because Ellison convinced him he could, "help change the entire industry."
A strategist by choice, Phillips transforms aggression into an intense desire to excel, succeed and motivate. A John Kerry supporter in the US presidential election and a confidant of vice presidential candidate John Edwards, Phillips' love for reading history, particularly political and military history, has influenced his ability to strategize and plan.
As 'Mr Outside' in charge of Oracle Corporation's marketing, sales, field operations, corporate strategy, consulting and customer facing activities, he always devises a plan before playing to win as we discovered during an exclusive interview with The Smart Manager.
What's your attitude towards competition?
I love to compete. I love the game. I love to win. And that's what I use internally to motivate people. Rallying people around you on a mission and focusing on the outside world and not fighting each other. Keep focusing even if we are debating internally.
Most analysts don't do what you are doing. How does it feel to run a company rather than analysing one?
Yes, it is a slightly different type of work but just as intense. There were not too many surprises. I had been covering the IT business for over twenty years -- a long time and I had been watching Oracle closely. Every consultant wants to get a chance to run a company, he or she is watching, and I just got lucky I guess.
And earlier, at Morgan Stanley, in addition to being an analyst, I was also a managing director with a management role at the firm. It was challenging. I was managing 1,000 people. I helped build a $1 billion business as the co-head of the technology group at one of the largest firms on Wall Street.
It would be naive to think that a first year analyst has the same role as someone with nearly two decades of experience. That doesn't happen in many professions. Businesses are always more complex on the inside than from afar. Most managers haven't had a formal leadership training.
You have personally financed some enterprises. How has the experience been for you? And are you tempted to become an entrepreneur, working for yourself?
Yes, I co-promoted the Jazz restaurant, and it was sold for double my investment in a year. I was a minority investor and when the majority owner decided to have a child, she sold the operation with my approval. I don't know how your magazine measures success, but at least on Wall Street, a double in a year is a well regarded return.
For the second item, my investments were solely in venture funds run by others. I have not started my own fund. All of those investments posted a positive return but that was due to the skill of the managers of those funds. I've never lost money in any investment (knock on wood), be it venture capital, real estate, or fixed income securities.
At any rate, these were personal investments in hobbies and with friends which is allowed in a democracy that values the pursuit of happiness. None of them were failures but that would be ok if they were.
What are the three big lessons you have learnt as a manager?
1. People. Human being are human beings anywhere in the world. People want the same things anywhere in the world and you need to respond. Whether it's leading your troops or managing your company, it's not so hard to get people to do what you want to do -- most things are universal.
2. Attention to detail -- this has been drilled into my head due to my military training. You need to have the energy and discipline to check. Once people realise that you are checking, you can check less often. You have to spend time and listen: lack of communication can be a problem.
With a lot of employees and many different layers, things can easily go wrong. The idea is to listen to your employees and help them find solutions. In addition to this, managers need to have a positive attitude. Fifty per cent is getting the right people. As a CEO I would like to be seen as someone who is engaging and accessible.
3. Connecting with people. A big part of my success has been that I am always learning from whom I am talking to and immediately connect with the person. I don't like to be in the box. You can be a lot smarter than the next person if you have information which helps you to make decisions.
You need to know what is going around you and learn from mistakes. If you think that you can know what's going around without talking to people, it's a disaster.
How do you manage time, stay connected, stay sane with the pressures on your time and yet have energy to dig deep into detail?
It's easier in our kind of business which is technology-driven. We can sift through a lot of information very quickly and we don't waste a lot of time on mundane things since we don't need to spend time on manual processes.
This saves me a lot of time and I encourage people to communicate with me through email. I get hundreds in a day, I'd have too much than less and if I have 10 per cent more, I can deal with that. This way I get to know a lot of what's going on.
What's your opinion on M&A vis-à-vis organic growth?
Both are important to investors if you are generating consistent growth. There may be risks in acquisitions but investors would like to see you perform. We have done about thirty acquisitions and we knew how to integrate them, but none of them turned into a public debate (referring to the PeopleSoft issue).
If you could turn back the clock, what would you have done differently in the PeopleSoft bid?
We could have been more direct and more forceful in getting our message across to PeopleSoft customers. Our initial comments should have included more commentary even though it would have been difficult since we had no access to those customers.
Our intention was to talk to customers directly but since we couldn't, we had to rely on mass media. This always happens in a hostile situation but all I will say is that I wouldn't have scared my customers.
Customers heard a lot of variations which were not true so we had to go out and talk to them. So we spent the next four months undoing the variations.
Did you then wish you hadn't touched PeopleSoft?
Well just because something is hard doesn't mean you shouldn't do it. Even if 1,000 people say don't do it, it makes me want to do it more. It's hard but we play hard to win. If we get it done, and we will get it done, people will say this is all history and we are geniuses.
Actually to me it doesn't matter at this time. It's only a handful of people who doubt our success.
The PeopleSoft acquisition is obviously an important contribution to Oracle but at the end of the day what would you like to be remembered for at Oracle?
We did not need PeopleSoft to grow. We are four times their size. It is opportunistic and nice to have them. But we are going to get those customers anyway, en masse or within five years.
Has it affected your reputation at Wall Street?
Wall Street respects somebody who plays to win and has a plan. And if it works -- great! You don't not try something because you are worried about what some-body thinks of you. This is part of the risk.
My plan is to accelerate something which is going to happen. If you take risks you can expect failure. But it has not happened to me.
Tell us about your relationship with Larry Ellison? You are meticulous about detail, he is swift into action. He once took a sledge hammer to break a hole in a wall to improve communications, he's the ultimate 'eat lunch, or be lunch' manager.
I've known him for the last two decades. What Larry likes is facts and logic and that's what I like. Larry is easy: you give him facts with logical conclusions and he will always agree with you. He's quick to process information and fast. His external persona is very different, he is actually very reserved.
Is the stock price the best indicator to be focused on?
It may not be but it is quantifiable and visible. It's a good rallying point. If the shareholders do better, you do better, I'll do better.
Currently, even though our earnings have been growing the last year or so, it has not translated into the stock price so I am concerned about this. It could be due to the acquisition issue.
The author is Managing Editor, The Smart Manager.
Published with the kind permission of The Smart Manager, India's first world class management magazine, available bi-monthly.