Jim Cash is a special advisor at Highland and recently paid us a visit in Silicon Valley to speak with a few of our founders and CEOs. Jim’s bio is pretty mind boggling. He has served on 18 public company boards (currently serves on those of Walmart, GE, and Chubb) and taught at Harvard Business School from 1976-2003, where he created much of the technology curriculum and served as Chairman of the MBA Program. He works with companies that spend a minimum of $200 million on IT annually, or up to $6 billion. Jim also runs the Cash Catalyst, an exclusive CIO forum that he created to encourage the sharing of best practices. He views his job as a board member to be the connector between the creators of innovative technology and the ultimate buyer: the large multinational corporation.
Our CEOs asked Jim a few questions, and although it was a closed door session, Jim has graciously allowed me to share a few of his thoughts below. Everything you read below is my paraphrasing of his responses, so please interpret liberally. Enjoy!
How do big companies switch from on premise IT systems to the cloud?
For a large company, the first step in migrating to the cloud is to simplify on premise solutions. You must both consolidate the systems you have, and then standardize across the organization. If you don’t do this first, migrating to the cloud will be a mess. Not everything will eventually get pushed out of the enterprise though. Most big companies are looking at “hybrid clouds,” keeping certain essential resources behind the firewall and centralized.
Is monitoring and visibility increasing on the priority list of customers?
If you asked CIOs that question, they would probably say “yes.” However, until you have a big issue come up, it’s not an actual budget priority. Often, the great driver of monitoring and visibility as an enterprise application is regulation. The type of monitoring is changing, too. More and more, we are moving away from sampling transactions and towards a world in which we process all the data.
How about security? Is that now a top priority too?
It depends on the company. The way I determine a company’s priority is to ask, “Where does the Chief Information Security Officer (CISO) report?” I am pushing the companies I work with to create a reporting relationship similar to internal auditing. Some companies have a technology subcommittee of the Board of Directors, and could have the CISO report to this subcommittee. The one exception is when there are multiple autonomous business units competing in different industry segments, but otherwise I like this structure.
Can small companies effectively work with big companies?
My strong belief is that the era of centralized R&D is over for most large companies. We’re in the age of “distributed innovation,” which means that large companies must find ways to work with smaller companies to field innovative products and processes. P&G has a program called Connect & Develop, for instance, which is a good model for others.
So, if you believe that too, the real question is, “How does your target partner perceive distributed innovation?” The ones that embrace it will, of course, be more willing to let your startup guide them, and less likely to accidentally get in your way while doing so.
How do big companies decide which cloud applications to adopt?
The thing to understand is that there is a large opportunity cost in top down provisioning. You simply do not know what the best solution is. It used to be the case that you had to pick one and hope you were right. But now, each of your employees can pick what works for him, download the client software (or just open it in a browser), and then the crowd will decide what the right solution is. Big companies need to move away from command and control of the actual software, and focus on owning and securing the data those applications produce. The end play here is an open market for software inside of enterprises.
You’ve been on a lot of boards with legendary CEOs like Bill Gates of Microsoft and Mike Duke of Walmart. What’s the common attribute that you’ve found in great CEOs?
It’s a hard question to answer. The biggest commonality I’ve found is the ability to identify significant talent in other people and challenge them to push their limits. They have the humility and self-awareness to truly hire people that are better than themselves at whatever they do.
What advice do you have on constructing a Board of Directors?
My first tip is to put term limits on outside directors. You can always modify these later, but I think it’s bad to have lifetime appointments. In addition, keep the board small and relevant to the task at hand. We used to run Microsoft with 7 directors when it was a $300 billion market cap company. Why do some private companies have 10-12 directors? Also, don’t confuse advisors and board members. The former is for specific helpful tasks, while the latter is for good governance. If you want to get someone involved with your business, get them involved as an advisor first. The bar should be a lot higher for a director. Finally, the CEO should do a 30 min call with each board member before the meeting. There should be no surprises in a board meeting, and all members should be prepped on the data and key issues before going into the meeting. That way, the actual time of the board meeting is used most efficiently and everyone comes in on the same page.