SUMMARY -It's not the end for Oracle's Larry Ellison, but it's probably the beginning of a well-planned succession, but with no clear heir apparent yet.
As an ex-pat Scot, Thursday 18th September was always going to be a big day as Scotland went to the ballot box to decide whether it would break away from the rest of the UK, changing the direction of an entire nation.
But I never imagined that it would also be a day when the direction of an enterprise software giant would also begin to change course as Oracle CEO Larry Ellison kicked off what is undoubtedly intended to be a seamless transition to a new order.
Of course Scotland has opted for the status quo and to a large degree that’s true of Oracle as well, despite some of the more lurid headlines today.
As one of half of the new twin-headed CEO, Safra Catz went out of her way to emphasize to Wall Street yesterday:
I just want to make sure we are very, very clear. There will actually be no changes, no significant changes right, just want to clarify, no changes whatsoever.
Operationally, she’s quite right of course. Larry’s still chairman and CTO. He’s driving the product engineering as he always has done while Catz handles operations and the other half of the CEO Mark Hurd focuses on sales. It's hard to imagine any big decisions being taken that don't map onto the Ellison view of the world.
As Oracle alumnus and Salesforce.com CEO Marc Benioff noted last night, there’s not much here to scare the Wall Street horses:
That’s a good thing clearly from Oracle’s point of view. I’ve always been fascinated by the management transitions of tech firms that are built in their founder’s image. Sometimes these work well. There was barely a stutter when Bill Gates handed over Microsoft to Steve Ballmer (and a positive bump of enthusiasm when Ballmer handed over to Satya Nadella!)
On the other hand, HP’s succession of random CEOs over recent times from Carly Fiorina via Leo through to Meg Whitman indicates how hard it can be put a new figurehead in to follow iconic founders, while Tim Cook over at Apple has only really seemed to fit Steve Jobs shoes with the latest product announcement event.
From that perspective, Oracle clearly needs to be careful. I’d suggest that no enterprise software CEO has so shaped and imprinted himself on the market more than Lawrence J Ellison. In fact I’d go further: the success or failure of some enterprise software firms can be mapped back onto the firm in question’s relationship with Ellison.
Spawn of the Oracle
It all comes back to an industry spawning process. In the beginning there was Oracle and Oracle did begat Siebel and PeopleSoft and many others. But when those firms were born, in many cases they were born with a desire, a driving need sometimes, to compete with Ellison, to be better than their former boss and teach him a lesson.
Let’s just take Siebel as the prime example. Tom Siebel was ex-Oracle, there was great tension between him and Ellison and it showed. It had a direct or indirect impact on almost every decision that company made - up until the point where Salesforce.com took over as the tail wagging that particular dog, after which Oracle swooped to conquer and swallow up the one time CRM market leader.Or let’s look at PeopleSoft and in particular the hostile takeover bid of that firm by Oracle during which CEO Craig Conway’s transparent loathing for Oracle was exposed in a somewhat ugly and unhelpful way in terms of his attempts to hold off Ellison’s acquisitive ambitions.
The incident of Conway’s dog, Bear, comes to mind, when Conway was quoted as saying an Oracle takeover would be:
like me asking if I could buy your dog so I can go out back and shoot it!
To which Ellison replied:
If Craigy and Bear were standing next to each other and I had one bullet, trust me, it wouldn't be for the dog.
It’s comments like that that have made Ellison such an institution in Silicon Valley.
Siebel and Conway's mistake is one that the cloud generation has largely avoided. There's no love lost between the management at Workday and Oracle, but the former has tried to focus on its own concerns first and foremost. Meanwhile Salesforce.com's Benioff may have come close to poking the tiger once too often, but he's always mirrored criticism of Oracle with public admiration for his mentor Ellison.
That Larry thing
I’ll be honest: Larry was my first. My first CEO that I tracked closely, that is. My very first day at work as a journalist saw me sat in front of Oracle execs with not a clue who they were or what an Oracle was!
Back then, Ellison was accessible, much more so than today. He’d perch on a bar stool in front of an audience of media and analysts and shoot from the hip. He was verbose, he was volatile and he was always good value.
One of my abiding memories of classic Ellison was him standing on stage in Cannes, France and casually announcing in a throwaway line that the next release of the Oracle database would be the final relational one and that future generations would be object-oriented. Turning round to see the blood draining from the faces of the product managers and PR people in the room, it was instantly obvious that this was news to them.
But stopping Ellison talking about stuff was an impossible task. He’d go out of his way it seemed to find ways around attempts to rein him in by his handlers. I recall him once coming into a press session and stating that he’d promised his PR people that he wouldn’t talk about certain subjects unless he was asked the correct question.
My first question to him:
What have they told you not to talk about?
That’s the right question!
And off he went.
That’s a tough act to follow - which is why over the years we’ve taken so much interest in who might replace him when the time came. Dennis made the point in his write-up yesterday that perhaps there’s a sense that in Mark Hurd and Safra Catz, he’s finally found a team he can trust.
I’d agree with that and go further. I genuinely believe that Oracle has worked best over the years when Larry’s got a sidekick and that dates right back to co-founder Bob Miner.
Whether that person is Geoff Squire (back in the day) or Ray Lane or Charles Phillips or now Hurd and Catz, Ellison needs an bag man (or woman) and it’s when he’s had a strong personality by his side to focus on the operational aspects of the company that Oracle has performed the best.
Of course the immediate rebuttal to that is that quite a few of those I’ve just mentioned ended up leaving the firm, often acrimoniously, rather than becoming the heir apparent! Over the years there has seemed only to be a finite amount of time during which so many strong personalities can work together, which again adds weight to Dennis’s theory that Hurd and Catz are something different.
But that still leaves the question hanging over the company: who is the heir apparent? The twin-headed shared CEO status - not co-CEO! - bestowed on Hurd and Catz seems to me a pragmatic holding position. Ellison’s own rationale for the change is that:
Mark and Safra have done a spectacular job and I think they deserve the recognition of their new title. I'm going to continue to work with …Mark and Safra as I have exactly in the past. So I'm going to continue doing what I have been doing over the last several years, they're going to continue what they've been doing over the last several years.
So they deserve the recognition. They deserve the CEO title and I'm happy that our management team continues forward as a team.
But this is clearly the start of an orderly succession plan. Ellison’s just celebrated his 70th birthday and while clearly no-one could begin to make any form of case that he’s slowing down in any way, he’s a man who will want to set the wheels in motion for the day when he hands over the reins more completely.
His are big shoes to fill. Returning to the Scottish indepedence vote I mentioned at the start, there’s always been a romanticised notion in the debate around Scottish independence that focuses on ‘the King across the water’, a reference originally to Bonnie Prince Charlie who nationalists wanted to come back to Scotland from France as king.
Is there a king across the water for Oracle? As I noted above, Oracle has spawned so many of the most talented enterprise software execs of the past 20 years so maybe one of them will return? Or will the successor come from within?
I don’t know the answer to that - although I harbor some fabulous conspiracy theories! - but the one thing that’s certain is we’ve got plenty of time to worry about that.
When one analyst told Ellison yesterday that they’d miss him on the quaterly conference calls, his response was:
You should be so lucky! I am staying on the calls. You're going to have to wait a little while longer before you get me off the call. I apologize to everyone for that.
Plus ca change, plus ce le meme chose.
In other words, business as usual for a while yet, but the first step on what will be a longer journey has been taken.
Disclosure: at time of writing Oracle and Salesforce.com are premier partners of diginomica.