People rarely surprise me. But that was the case when I had a chance to sit and visit with Ray Bingham, president and CEO of Cadence Design Systems (San Jose, CA). I was very late, but he was very polite nonetheless. Of course, everybody's polite to the Press, but his courtesy seemed genuine. Laugh if you will, but I'm a hard-bitten journalist and this guy really surprised me. After an hour's chat, I decided that Ray Bingham is, in fact, a spiritual man.
Moments into our conversation, Ray offered that I probably already knew the "best known part" of his story the fact that he's not a technology guy. He's got a degree in math and economics and an MBA, did his "apprenticeships" in public accounting and investment banking, and worked for years in the chemical business. Right. He definitely doesn't deserve to be a leader of the largest company in EDA. No PhD. No thesis. No technical area of specialization. Pity, that.
When Ray wrote the essay for his business school application, he addressed the question: What do you expect to be doing in 10 years? He speculated that his career would be about building businesses, and that turned out to be more accurate than even he could have predicted. His entire career has been about building businesses.
Ray started out with a chemical engineering company intensely involved in a number of international ventures producing and providing fertilizer in numerous third-world countries. The company prided itself on being part of an industry that was improving the lives and agricultural infrastructure of regions in the world where crop technology needed improving. The company created and supplied a market for feed stock using fertilizer created out of biological materials from many places including the Indian Ocean. The product was produced in the area of the end market, instead of being produced in the first world and shipped at great cost to the end-market locale. Interesting to learn that in working for the company, Ray spent time in Venezuela, Aruba, and numerous locations in Africa and regions around the Indian Ocean. Over his years with the company, Ray spent time in Senegal, Kenya, The Sudan, Oman, and Sri Lanka, among other destinations. He knows that he went in and out of Kartoum 51 times. He has several honorary passports from some of these countries and adds with a chuckle, "I'd be set for life if there had been frequent flier miles in those days."
On one of Ray's first projects, enormous sisal bags loaded with fertilizer were delivered into the interior of a particular country. Several years into the project, no measurable improvement in the crop productivity had been observed. The company became suspicious and sent in a team to investigate. They discovered that the sisal was being used to create clothing, while piles of fertilizer were sitting unused adjacent to the homes of the people.
All told, Ray spent 10 years in these various locales and apparently enjoyed all parts of the experience. He felt then, and still feels, that the work of the company was good work that it was enhancing the lives and economies of the peoples in those regions. He, himself, gained experience at the ground level, establishing business units, prepping the local infrastructure for processing plants power generation, living quarters, education and cultural facilities, schools, roads and bridges learning to tune a plant for maximum output and efficiency, and establishing and using a distribution system within a country. He felt that in the process of converting hydrocarbons into nitrogen using oil-based feed stock as the basis for something far more complex that communities were being created. In summarizing those years, Ray says, "It's not too much of a leap to say that this kind of experience helped me enormously as I tackled other subsequent industries."
After Ray and his family returned to the States from their base in Europe, he joined the Marriott Corporation and ran a portion of the hotel portfolio. He was then involved in running and growing the Red Lion Inn Corporation, starting in 1985. He took the company public in 1993. In the end, he had an organization as big as the Westin chain was at the time over 70 hotels across a range of geographies. As far afield from fertilizer as hotels may be, Ray felt that he was continuing his lifelong interest in 'building businesses' during that period.
Per Ray, his "second" internship this time in investment banking proved to be a disappointment. The industry was reputed to be glamorous and fast-moving, all about developing and keeping business relationships. But he found investment banking to be less about glamour, and more about transactions, pure and simple. The magic just wasn't there for him and he moved on.
To Cadence and Beyond
When John Sculley came on board at Apple in 1983, he was heralded as a visionary destined to propel the company to new heights. In fact, a different story played itself out and Sculley is no longer a name in the news. I asked Ray if he felt that Sculley's persona as a "non-technology guy" contributed to his ultimate demise at Apple. After qualifying his statement to the effect that he knew little detail about Sculley's story Ray said: No. Scully's real problems arose from his personal management style, a strategy of aloofness, which had him standing atop a great pyramid and directing the organization from a very high level.
Alternatively, a successful CEO has to see the big picture, according to Ray both of the customers and of the employees in an organization. I said, "Isn't that micro-managing?" Ray countered that, although neither the customer nor the employee pictures may be easy to obtain, it's important to keep a finger on the pulse in both sectors to be successful. But, it's the unfortunate "Jimmy Carter" management style, which is true micro-managing a strategy that entails calling the shots on every micro-decision on a day-to-day basis. That's not what Ray intends by having the big picture across all details of the organization. He means that, "If you're using that [management style] in a way to set policy and strategy from a 'centered basis' instead of using it to make a lot of little decisions," then you're serving the organization in the best possible way. "I insist that my managers make decisions. That's tricky for me. That approach can be a comfort when I'm not from EDA." In fact, he adds that a leader of a technology business can bring multiple degrees in electrical engineering or computer science into a company and end up "riding on hubris" because the guy doesn't feel that he needs professional business managers to lend a steady hand to his operations. Ray agrees that business consultants observe this phenomenon repeatedly in technology companies and that venture capital folks and investors see it frequently as well.
On a daily basis, people will walk into a VC's office with unbelievable ideas but it's the rare individual in that group who's able to start and grow a company based on those ideas. Ray knows lots of stories of people with wonderful visions and creativity, but who lacked the organization to bring those ideas to market or to create a viable business organization that provides a perpetual business model for the technology. He cites the story of Walt Disney who made a decision that, rather than just being a great illustrator, he would create something more with a larger vision. Meanwhile, Jacques Cousteau had worked for years creating books and video records of his adventures, only to owe all of his proceeds to various investors due to his micro-managing. Eventually, he cared enough about his work to try to do something to make sure that the benefits of his research did not die with him. A meeting was arranged between Cousteau and Disney. As a result of Disney's advice and encouragement, Cousteau ceased micro-managing his organizations, and his legacy continues to support and develop various environmental issues and his efforts have had a long-term effect even past his death.
The same process, according to Ray, plays itself out when a technologist is not prepared to step out of his founder/leadership role and prioritize for the long haul and good of the company. On that note, I asked Ray to define a "Visionary." He laughed and said: That may be the guy who, after founding the company, becomes the CTO. Sometimes rather than the "recruiter," he becomes the "talent scout" for the enterprise.
That sparked a question from me about staff meetings. I asked Ray if he had regular meetings of this type. The answer was a resounding "Yes!" Staff meetings are weekly and they are mandatory. He requires his direct reports to attend these meetings and a larger group beyond this inner circle as well. The agenda for each meeting is drawn up over the course of the previous week. There are, on average, six or seven agenda items brought to the table at each meeting. The individual that has initiated a particular item is responsible for facilitating the conversation about that topic. Meetings last a minimum of four hours each week; sometimes they're longer, but never shorter.
I was dumbfounded. I know of many organizations that can't bring themselves to meet monthly for even an hour, let alone weekly for four. Ray feels that only by having extended, detailed conversation on a regular, mandated basis can an organization function to its full potential. He refers to it as "The Principle of Alignment." Success, according to Ray, is 1%Vision, and 99 percent Alignment a particular problem can have any number of solutions. The process of choosing one of those solutions is the process of alignment, and that requires conversation and communication. His staff meetings are free form and full of candor. Things that fall within a narrow scope, not requiring the time of the larger group, are sent out to smaller committees for resolution.
Between staff meetings, Ray is pursuing a number of initiatives. He is pushing accountability and responsibility out to "the geographies." Historically, according to Ray, geographies have been extensions of the sales channel particularly true, he says, for large companies with complex solutions and business lines. But, Ray feels that if you expect success and solutions that fit the location, you've got to commit the resources "way out there at the end of the trail." For instance, he doesn't have a head of Sales for Europe. Instead, he has a President for Europe who has responsibility for product, services, sales, and R&D. He is setting up similar structures for Japan and the Tiger Economies of the Pacific Rim. In this way, he feels that Cadence should be able to scale operations as necessary to the appropriate geography. "All good can't come from San Jose and we're not going to expect it." Ray says.
Know thy customer
Getting to know the customer constitutes the "same journey" for a CEO as knowing the employee. It's a matter of "sharing experiences with them, spending time with them and with your products or services that they're dealing with," according to Ray. "One of the surprises of my role is how much time I spend with the customers. I underestimated the amount of time I need to spend with them. Of course, I can get access to parts of their organization because of the badge that I wear. It's balances the view for me to hear from the customer. The leader in an industry must insist that the customer be in the center of everything. The fact that I'm able to tell stories from the customers [helps to enhance] the other channels Sales and Marketing. These two are good channels, but they're not enough as information is sometimes obscured in politics. How you see something depends on where you sit."
In the 19 months since Ray Bingham came into the role as CEO at Cadence (previously, he was CFO), he is very pleased with having established the Office of Customer Advocacy a sort of senior-level ombudsman to organize information into the company from customers through non-sales channels. He's expects the process to allow unfiltered information to reach Cadence from every constituency within a customer company.
Evaluating customer needs and the market has also provided motivation for the current effort to spin off an IPO from Cadence Design Services Tality. I asked Ray if it was hard to let go of this high-profile part of the company. His response: "We need to be positive about planting this opportunity in a pot and allowing it to grow, realize its destiny, and take advantage of the market, Yes, it's natural to try to hold on [to all parts of an enterprise], but the moment you think you can own every element of the $1.2 trillion dollar [semiconductor] market, is the moment you start to go down." He says that the "disaggregating activities" that have been endemic to the industry for instance, PC makers have reached a point where virtually all components are outsourced and they only assemble and market the end-product are trends that need to continue and that require a "more mature level of management." Similar to the concept behind expanding the "geographies," the move to Tality is about allowing a company (and it's spin-offs) to stay "nimble." "The regions [and Tality] are more capable, more experimental than if [central management] tries to maintain control," he says.
Ray prophesized about where Cadence would be in 5 years. "It is our plan to be the indispensable design partner to the world's design business, to provide great design tools and algorithms, and to increase the opportunity for our customers to be more successful. We, and our customers, have an amazing opportunity to be part of the electronics industry."
When Ray says it, it's hard not to buy into the enthusiasm and I certainly couldn't end an interview or an article on that kind of note without appearing naive. So, I tried to introduce a more realistic [read "cynical"] tone into the final minutes of our chat. "What do you think about Silicon Valley and the superficial, materialistic lifestyle associated with the mindset?" I asked him.
Ray answered: "I don't know any superficial people. I only know my family and friends and co-workers and I hope that I am interacting with them at a meaningful level, centering on good. It's true, you can get yourself into lots of trouble if you let yourself get caught up in the froth of the [Silicon Valley] thing."
He added, "Keeping things in perspective and concentrating on real revenue and real customers is the best way to prevent that from happening," then chuckled and said, "Just attribute this last comment to my fertilizer background."