From a Hardware Store, a Software Giant

SAS CEO says companies succeed when they make the best use of their creative capital.



 

From February 2009

By Susan Reda, Executive Editor
Jim Goodnight
CEO, SAS
Cary, N.C.

 Sponsored by
                   

Jim Goodnight runs one of the world’s largest privately-held software companies. Since its incorporation in 1976, SAS has enjoyed an uninterrupted streak of revenue growth — a feat almost unheard of in the software industry. Yet Goodnight is among the most humble CEOs in the high-tech industry, projecting a determined yet understated demeanor.

Goodnight traces the origins of the company back to a project he worked on when he and some colleagues at North Carolina State University were tasked with analyzing agricultural-research data. Today, SAS’ business intelligence software is used by corporations across multiple verticals — including some of the nation’s largest retailers — to gain better insight into their respective businesses and, increasingly, to gain a better understanding of the consumers they serve.

Goodnight is a firm believer in a supportive corporate culture. A fixture on Fortune magazine’s “Best Places to Work” list, SAS’ corporate headquarters — better known as the “campus” — is nestled on 300 wooded acres and employees are provided with on-site health care, a fitness center and child care facilities.

Goodnight also is a fervent supporter of education initiatives: In 1996, he and his wife, Ann, co-founded Cary Academy, a college prep school created as a model for integrating technology into all facets of education.

Over the years you’ve been both criticized and praised for keeping SAS private. Why do you believe that private ownership is ultimately the best approach for SAS?
I don’t believe that business should be driven by a bunch of people on Wall Street. Analysts tend to briefly look at a business then make sweeping judgments which are not always rooted in deep understanding of what a company is trying to accomplish.

SAS analytics have had a positive impact on the retail industry. When you look at what’s been accomplished in this vertical, what are you most proud of?
It’s hard to point a finger at one thing, but I think the pricing optimization tools developed for Kohl’s stand out. We were able to apply enough computing power — not to mention from 400 to 500 man-hours — to tackle what they considered a huge problem and apply metrics to the business.

We also worked closely with Kohl’s to analyze sales by size and location to develop size optimization metrics. Bottom line: you can’t have the same pre-pack of sizes for every store; it just won’t work and the store ends up with leftover items they can’t sell and dissatisfied shoppers who can’t find the size they need. We were able to analyze various data points and determine the appropriate size range to send to each store.

Did you ever work in retail?
Actually, I grew up in retail. My dad owned a hardware store and I worked there helping out much like any family business. My experiences there convinced me that I didn’t want to be in hardware; I wanted to be in software. If ever there was a need for inventory management it was a hardware store 30 years ago. We had so much stuff it was amazing, but my dad knew where everything was.

You have been lauded over the years for creating one of the “best places to work in America.” What inspired you to do so?
Companies succeed when they make the best use of their creative capital — that is creative thinkers whose ideas generate valuable products and services. Creativity is especially important to SAS because software is a product of the mind. As such, 95 percent of my assets drive out the gate every evening. It’s my job to maintain a work environment that keeps those people coming back every morning.

What one person most influenced your career?
I have great admiration for my high school basketball coach. He treated the guys on the team with respect. He encouraged us to take responsibility, whether we achieved success or not, and he was generous with his praise. I’m not sure I realized it back then, but he was demonstrating the skills of a good manager and over the years I’ve recalled his methods many times. 

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