Barak Eilam is the CEO of NICE. He has spent his entire career with NICE, so it was especially interesting to hear his insights as a first-time CEO heading a $1.3 billion public company. We discussed everything from how he got the CEO job (and found out about it!) to how he has steered the organization over the past three years.
NICE is a global provider of software solutions that empower organizations to capture, analyze, and apply, in real time, insights from both structured and unstructured Big Data. More than 25,000 organizations in 150+ countries use NICE solutions to do things such as improve customer experience and business results, ensure compliance, fight financial crime, and safeguard people and assets.
Did you have a grand plan when you got your education in electrical engineering?
Barak: My story is complex. I graduated high school with a technical background and then joined the Israeli army in a technical role related to engineering and computers. I then started to work at NICE and it went very well. I was very busy. But then someone told me that I probably should get a degree, because at some point I will need it. I did not think I needed it. I thought I knew everything! But no, they said I need a degree. I started at university and in parallel kept working at NICE.
So my great plan was actually to finish school as soon as possible and go back to full time work at NICE, which I did, but I actually started to enjoy it very much. So I didn’t have a grand plan of what to do with the degree. But I really enjoyed the study at the university and working almost full-time at the same time. It was a hectic four years for me.
What happened to progress you into the current role as CEO?
Barak: So I’ve been with NICE almost 18 years. I started in an R&D capacity and moved to do a bit of system engineering and then I did a shift in project management. This opened my eyes to the broader aspects of why we are developing and how we come up with development vis-a-vis enterprise or customer needs. Later on I headed up product management and then moved into sales. Then the CEO at the time asked me to initiate a start-up company within the company in the domain of analytics. This was the entrance of NICE into the analytics space. It was an interesting experience to have a start-up not in a VC environment but in a corporate venture environment. It’s somewhat different but challenging in a different way. Later on I moved to run our American subsidiary, which is our largest business. Then three years ago I became the CEO. That in a nutshell is my journey with NICE.
Good story! All at the same company. That’s unusual these days.
Barak: It is unusual. But I must tell you when I joined NICE it was not a start-up but a small company in the $100 million range. Today we are north of $1.3 billion in revenue. Seeing the company’s evolution and transformation, it doesn’t feel like working for the same place for 18 years. It has changed so much in 18 years, and I had the privilege to see those transformations. I also had changed roles every two to three years. So it gave me a great career opportunity over here.
Did you know you were going to be CEO long in advance or how did they handle that?
Barak: No, I didn’t know. Throughout my years in the company no one told me I was going to be CEO. I advanced my career pretty fast and always knew there would be a possibility to become CEO, but it wasn’t my plan. I always thought I would move on and do something else. Every year I said this is going to be my last. There was no preparation for becoming CEO.
When my predecessor decided to leave there was a process conducted by the board of directors as happens in all public companies. I was made aware of the process, but because I didn’t hold the COO role and was relatively junior, I did not think it was a serious process for me. I thought I was being considered because there was a need for the right amount of candidates. When they told me I was to be the new CEO, I was running the Americas region for the company. At the beginning of the year we have a sales kick-off, and I got the call just before I was supposed to go on stage to address a few hundreds of my sales employees. I had to go on stage and act as business as usual.
That’s a great story. It must have been stressful.
Barak: I always say that timing is always the most unexpected thing in life.
What surprised you most since you transitioned within the same company to become the CEO? You obviously knew everyone and the business. Was there anything about the day or soon after you were made CEO that you didn’t expect?
Barak: I would say a couple of things. As you grow in a company, as long as you are not the CEO, there is always someone above you. While you are very accountable for what you are doing and you work hard, you have someone you are reporting to who makes sure you are doing the right things. You have a father or mother who takes good care of you and gives you feedback, etc.
The minute you become a CEO of a company like NICE, you look up and no one is there. We are a company without major shareholders. We have multiple shareholders but none have a major stake in the company. Obviously we also have a board of directors who are important. But as a CEO when you wake up in the morning, it’s you. You dictate the pace. I always claim that a group or company will always walk slower than the pace of the leader. You have a great responsibility to set the pace for rest of the team and company. That’s one thing that hits you very quickly when you become a CEO.
Barak: Well the first thing I’m telling them is that I work for them. And the way I look at it, it’s true. The people who can make the biggest impact on the company in the day-to-day are actually the mid-level managers and junior managers.
I think it’s interesting when you go up the chain from managing a team to managing a group to managing a larger group to managing a division and so on and so forth, it takes time to learn and experience is how fast things are moving. It’s like the sensitivity of the wheel of a boat and the brakes, etc. You know when you manage a small team, you decide something in the morning and often by lunchtime it’s done. You can move things very, very fast. Then on a group level it might take you another week and so on and so forth.
And when you manage a company of six thousand employees you need to understand that in order to shift this large boat five degrees to the right, you need to invest a lot of energy, power and sometimes overshoot and then correct to the left. This is the other thing that hit me when I became CEO. I was managing a subsidiary of the company with a few hundred employees and a big portion of the business, but still I was managing things pretty fast. You can still do this as a CEO, you just need to use different tools.
There are three tools I’m using as CEO, because I cannot always be out there running things in the field as I’ve done before. The first is to set a vision. That’s one of the things that I’ve done before, but I did it immediately when I became CEO, because people connect to a vision, and when they see a vision that they can relate to, it’s easy.
The second thing is to set a strategy. Basically the strategy is how you translate the vision into reality. And third, you need to set a team that will lead you in that direction. Those are the three main things that you’re doing as CEO. I keep telling those junior managers, whether you are a CEO or a junior manager managing six or seven people, it’s no different.
The other thing I’m telling them, because I keep being asked about it, is what’s the best way to become CEO? How should I manage my career? And my answer is usually don’t manage your career. Personally I don’t feel that I managed mine. My advice is just focus very hard on your current workflow and do it extremely well. And if you’re doing it well and you have the right competencies, good things will happen to you.
Almost every new CEO faces one of two challenges: The first is they were brought into a situation where things are not going the way the board and shareholders want it to go, and they are expected to make a major change. The second is that everything is going well and they are told not to mess it up. Which category did you fall in and how did you handle it?
Barak: I think it was a bit of in between. When I became CEO, we had a challenge with sales. We were doing a lot of the right things; maybe too many things. When we looked at our share price and some other measurements of how we were doing, we realized the things we were doing were not translating to our market cap or shareholder value. So it was a mixed bag. It didn’t feel like a turnaround situation but did not feel like it was great momentum either.
So the thing that you’ve seen recently in the last year or in the last few quarters including acquisitions are actually the results of the decisions and the vision we put together three years ago when I became CEO. To answer that we embarked on a very strategic planning process. Usually when companies do this, they look at the market and market opportunities. But I wanted to start with a different question: Why are we doing so many things but not getting market appreciation from the shareholders and others?
The immediate answer at that point was that basically we had an identity crisis as a company. Back then we had a lot of divisions in the company. Some of those divisions had very loose or no synergy to the other business units. It was very hard for everyone from employees to managers to customers to shareholders to understand what type of company we were and how we should manage the company. So I knew that first, before I could do anything else, I needed to start solving identity crisis. We decided that we needed to sell two small divisions quickly and basically refocus the company to become a pure enterprise software company. This took about a year to execute. We made the decision right out of gate but were not open about it because of the competitive nature, but the plan was there.
Second, I realized that before I go and start looking for acquisitions or a way to expand our addressable market, we needed to prepare the company for scalability. We decided to stop looking at ourselves as a “special” company. Everyone wants to treat themselves as special, but let’s not invent the wheel from scratch but go to common industry best practices. The thing about NICE was that we evolved via acquisitions but never consolidated and rearranged. We started to do many classic things on how a company a size of $1 billion should operate. These things contributed to the bottom line and our ability to streamline the business.
Third, since I came from the R&D ranks, I took a look at what we were doing there. We had lot of great initiatives, but some were not aligned with our direction. We set certain focus areas and initiatives. Then we accelerated some of our R&D activities and decelerated others or some stopped them completely. Going back three years, I realized that after doing all of that successfully, we would still lack the ability to operate in broader markets and gain a larger addressable market.
I decided then that we would align ourselves to two or three major market forces that could carry us and give us enough fuel for the next 10 years. These included cloud transformation, digital transformation and data analytics transformation. If you look at the acquisitions we’ve done in 2016, one is a major cloud player and the second is the best analytics player in our domain. These allowed us to accelerate our strategy but were not opportunistic. We started these in our plan three years ago.
With all this transformation, how do you get knowledge on what’s happening on the ground in your company?
Barak: I like the size of NICE. I think we’re in a sweet spot. On one hand we are not too big. We are big but not a giant. But we’re not too small. We have enough resources with a lot of people in almost every geography. For me it’s the ideal size in order to have so many customers but be nimble enough. Your question is spot on about how we stay connected to the day-to-day. As a manager it’s very easy to find yourself going back and spending weeks or months on internal things.
Personally I take every customer interaction that I can have as a priority over anything else. If I have an opportunity to interact with a customer no matter what level – CEO of a customer or user – I’ll take that call, e-mail, LinkedIn message, etc. over any other internal meeting. Sometimes it involves escalation of issues from customers. You learn the best from them. We do have a customer-first culture so it’s not uncommon for one of our employees to share something he or she has seen in the market or heard from a customer.
We also have a user group that thousands of our customers have joined. We have a dialogue with them on a frequent basis. Once a year we have a user conference. This year 2,000 of our customers will gather for three days of intensive training. We meet all those customers. The majority of content is our customers speaking, presenting, and sharing ideas. We also have a large ecosystem of partners that act as additional sensors out there in the market.
When you bring your leadership team together for a check-in or operational review, what does that look like?
Barak: We have a management cadence. We meet virtually because we operate in so many different geographies. We have a video call every other week where we usually follow a certain deck and metrics. Once a quarter we meet as a group face-to-face to get updates and spend time together as a team. This involves some team-building activities. We always like to do some good creative and competitive things, if possible outdoors, to make sure we have time to bond in more recreational ways.