NetApp vice-chairman goes beyond technology

Published: August 28th, 2008

Calgary – NetApp vice-chairman Tom Mendoza‘s personal belief is that customers can use any technology to get the job done.

If this is the case, then why do high tech vendors push the technology message on the marketplace and try to leapfrog one another to get the attention of customer in hopes of increasing sales?

Even though this is what technology companies do, it’s not the sole reason for success or failure, according to Mendoza, who led NetApp as president for eight years until his appointment in March of this year.

“I don’t believe the success or failure of technology companies is primarily dependant on the technology they sell,” said the 57 year-old Mendoza during his keynote address at the recent I-Technology conference presented by Long View Systems.

Mendoza has spent more than 30 years in various positions at high tech companies such as Stratus Technologies and NetApp. During his time in Silicon Valley he has witnessed several high profile IT vendors fail, and he believes the reasons are not based on any one technology or any one bad idea, but more so how company loses their way.

NetApp’s story, as Mendoza tells it, is one of many Silicon Valley-based companies that became a darling of the marketplace and then had to face incredible challenges as the market tanked when the tech bubble burst in the earlier part of this century.

Mendoza cautioned the audience of more than 1,100 attendees at the conference that NetApp has not figured it all out, but that back in 1992, when the vendor was founded, it based its business on a culture that could scale and grow.

During the boom years NetApp reached highs that were unimaginable. NetApp went from zero dollars in revenue to a billion in six years. It was the third best stock in the history of the NASDAQ.

“Anybody can have a great culture with that kind of money,” Mendoza said. “But, what happens when you have to overcome adversity?”

NetApp followed the same path that Cisco took for networking, but in storage.NetApp executives believed that storage would continue to double each year. The problem area for NetApp was that a large percentage of its business, more than 70 per cent, was supplying the storage needs of Internet companies such as Yahoo. NetApp was slow to grow its enterprise application business. The tech bubble crashed and with that many Internet start ups and overnight darlings of the stock market went down.

Just as fast as NetApp grew, when troubled times came it did not take long for the company to rescale to overcome challenges. NetApp went from a $1 billion revenue generator down to below $800,000 in sales virtually overnight.

Mendoza and his team at NetApp had to act quickly. Even though he knew what area to focus on NetApp learned that enterprise companies usually don’t change IT systems that continue to work for them.

NetApp’s approach was very dramatic. Mendoza decided the company would no longer invest in is core NAS solutions, thinking or gambling that its competitors would also cut R&D spending in that product segment because of the recession. Instead, he was going to be disruptive and try to solve the problems companies have during a recession.The whole concept was based on doing more with less, he said.

“Storage grew at 60 per cent a year at this time. You have to manage that. There is too much data so the first thing people will do is combine stuff. We figured-out a way to help people store less and that was the key,” he said.

“We didn’t tell people how to solve their problems, but we empowered people with stuff that gets things done,” he added.

A large portion of the turnaround success was based on NetApp’s culture, Mendoza said. He looks six specific attributes in building a great culture.

* The first and most important is attitude. “I do not believe you can overcome a bad attitude. It separates people in the work space and it is 100 per cent in your control. When you describe someone you describe their attitude,” he said.
* The second is candor or being able to speak the truth.
* Catch someone doing something right. Mendoza makes about 10 phones call a day to employees who have been chosen by peers for their extraordinary work.
* Leadership more than management: Mendoza believes that as a leader you must make sure you give followers what they need to accomplish the mission and also to wipe out any impediments. “You lead from the front,” he said.
* Set you own expectations high enough.
* And, finally recognize employees.

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