How Oracle co-CEO Mark Hurd confidently turned around the company, even while employees and shareholders doubted him

Hollis Johnson/Business Insider

Oracle co-CEO Mark Hurd spoke about his leadership style and strategy at the tech company in an episode of Business Insider’s podcast "This Is Success."
Hurd joined as president in 2010 and soon began an overhaul of the company’s sales team to prepare for an industry-wide shift to cloud software.
Veteran salespeople resisted changes, which included new sales tactics, products, and training programs.
The experience taught him that the most difficult leadership challenge is getting people to change for future trends and long-term value when they’re already comfortable and things are going well.
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When Mark Hurd started at Oracle in 2010, he turned the place upside down. Hurd was anticipating a big shift in the industry, and he wanted to change how Oracle built and sold its software.

The changes he made were dramatic. Hundreds of Oracle sales staff left the company within his first few years on the job, and Hurd was criticized by industry analysts.

But he stuck to his plan. After about six years, the public’s perception of that plan started to shift, as hiring and sales ramped up. The company still has a ways to go, as it struggles to catch up to rivals in the cloud software business. But Hurd saw that Oracle, an established company, had to reinvent itself to stay competitive, even when this seemed like a terrible idea.

We spoke with Hurd earlier this year for an episode of Business Insider’s podcast "This Is Success," and took a closer look at his first years at Oracle. Hurd explained what it was like initiating a massive culture shift at the company, and how his plan continues to unfurl. In the episode, you’ll hear from Hurd about how he’s approaching the challenges of developing his cloud business and onboarding waves of new talent, and how his success at Oracle started with a career comeback.

The podcast and a slightly edited transcript are below.

Listen to the full episode, which was produced by Sarah Wyman and Jennifer Sigl, here:

Subscribe to "This is Success" on Apple Podcasts, Google Play, or your favorite podcast app. Check out previous episodes with:

Hurd got the job at Oracle weeks after leaving HP, where he’d been CEO for five years. The 2010 departure was difficult for him. Even today, it’s not something he feels comfortable talking about. Hurd was forced to resign. That was after a public dispute with HP’s board over his expense account and a personal relationship. He stepped down that August.

Richard Feloni: How did you feel at the time, given the circumstances, of the departure at HP? Were you angry at all with the situation?

Mark Hurd: No. I liked HP. I liked the company, I liked the people of the company, etc. I had a disagreement with a couple of board members, but that’s not HP. If you looked at our financial performance at the time, it was quite positive.

Larry Ellison, who had built and led Oracle since 1977, came to Hurd’s defense. He and Hurd had worked closely while Hurd led HP, and Ellison thought the company made a huge mistake in letting him go. Ellison didn’t wait for the situation to blow over. He hired Hurd as Oracle’s president a month after Hurd was ousted from HP.

Feloni: So when did he approach you for the Oracle job?

Hurd: We had several meetings about it face to face, and talked about the industry, the role that Oracle could play within it, the role that I could do in helping Oracle from a strategic perspective. And so we had all of those dialogues as we talked about it.

Oracle makes software that companies around the world use for everyday operations. When Hurd joined the company, the industry was in the early days of shifting to "the cloud." All that means is that the software your head of HR would use, for example, could be accessed online, from anywhere, rather than installed on a single computer. It’s simple in practice, but requires major shifts in operations.

Hurd: Well of course at the time it was really just the beginnings of all this movement to the cloud, and the implication on Oracle was that we had to change many of the things we were doing, both in R&D and in the go-to market part of our business. Part of the attraction of course is the complexity of all that.

It’s one thing when you go to a company that’s struggling, and you say, "We’ve got to change." Most everybody acknowledges that and says, "Gee, I see the results, I see the performance. We have to do something different." It’s a very other thing when you go to a company that’s winning. And here’s a company in Oracle that’s winning, that’s got tremendous market presence, tremendous brand, and then you say, "Hey," in the middle of all that, "we’ve got to change."

The first question that comes up from a lot of people is, well why would that be? And so then when you have to describe that there’s a coming change in the industry it’s probably — not probably — I think it’s the most difficult leadership challenge that you have, is to take a group of people winning and then convince them it’s necessary to change. Because there’s resistance more than you’re typically used to.

Feloni: So this idea, of let’s transform even though we’re winning and people are comfortable doing things these ways, did that stem from Larry, or was that how you read the situation?

Hurd: We spent a lot of time talking about the industry, because this change was coming, but it was at its very infancy at the time. I think one of the blessing you have with somebody like Larry — and when I say somebody like, there’s not many to compare frankly, if any, certainly in the enterprise space — is that you have somebody who is a big owner in the company, the biggest owner of the company, that thinks a bit more generationally, certainly than quarterly.

I think if we didn’t mutually agree on the need for change it would never work. It’s not like we agree on everything, but the great thing about Larry, amongst many, is that you have a lot of debate. I can’t tell you how many times he said, "Yeah, you’re right, let’s do what you said". And by the way, the same way for me. We compare notes a lot, talk about a lot, and agree on certainly materially more than we don’t. But if it wasn’t mutual it wouldn’t work.

Kimberly White/Getty Images

Feloni: Your first day as president, your first several days, what did you see at the company that made you think, OK, we’re going to have to completely transform the way sales are done here?

Hurd: I think Oracle historically has been thought of as to be perhaps the greatest salesforce in the IT industry, and I wouldn’t try to persuade you differently. Now all that said, our industry, holistically, had matured into a bad space in my opinion.

Thirty years ago, when Hurd was starting out in the IT industry, companies would hire entry-level employees and groom them to succeed at the company.

Hurd: You would come out of college and you would go to work at a company, and you would actually get trained by the company. You’d have trainers, enablers, people that would help you, teach you about how to sell, how to listen, how to communicate — all sorts of great skills that frankly I still use today. Training was looked at as an investment, not as an expense, and what happened over the years is that training again became viewed as an expense as opposed to an investment. And what began happening was all of this mercenary hiring. You’d go to work for this company and then you’d go to another company, another company, another company, and it was a bit like all the companies putting their bad salespeople in the middle of the table and we’d just swap bad salespeople, with a strategy that your bad salesperson would be great once they came to our place.

Feloni: So you wanted to kind of bring it back to the world that you had started up in?

Hurd: Yeah, and maybe hopefully a little better than that. Because of the nature of cloud, what now was a technology that could only be bought by the biggest companies would now be available to every company, no matter what scale. You didn’t need to have an IT staff. You didn’t need to have a data center. You could just now get all of this great intellectual property basically over the internet.

Hurd: As a result of that, the need to grow our sales force became very important.

Feloni: Was this essentially for Oracle to survive in this new setting?

Hurd: I’d actually say to thrive. And so it wasn’t like we had a problem, you know, if we dial all the way back to 2010, that we had a cash flow problem or we weren’t about to make payroll or anything. Again, we were a very successful company saying in the middle of that success, let’s change —

Feloni: You were looking ahead of it.

Hurd: Yeah. So how’s this market gonna work five years from now?

The cloud was about to revolutionize how the IT industry did business. The product was changing. The customers were changing. And that meant the salespeople had to change too.

Hurd: I would say my view’s always been that the more focused you can make a salesperson, meaning the more I can get them to do the same thing every day, the better chance they have of winning. My view has always been to focus them on knowing their product, knowing their buyer, knowing their industry, and frankly, knowing their competitor.

So the fact that we can bring people to market that are expert at all of these issues raises their chance of success. Now if you believe that, and I do, then how you then build a salesforce becomes important based on those building blocks.

So for us, for example, if we’re selling an application like HR, it would become important, if you were a salesperson, that you knew how to communicate to a head of HR. It would be important that you would know your competitor. It would be important that you could describe that discussion in terms of HR in the context of retail, or financial services, or one of those industries. So that’s how we built our salesforce, building block by building block, and then we build them appropriately for the markets, all the way from the biggest customer to the smallest customer. That’s how we built it.

While Hurd was starting to roll out cloud software, he was still pushing Oracle’s core business technology — the stuff the company been selling for years. And his goals for those sales were ambitious. To encourage his salesforce to meet them, he made their paychecks more dependent on their performance. Skeptical employees complained that it created a more complex and stressful work environment.

Hurd: Building incentives are always important but frankly if you’re building an org, running a company as a CEO, you work on three core things: strategy, operations, and then people. The incentives piece aligned to the operations piece, and the key to operations is to execute the strategy. So in our case our strategy was to really move the market to this next generation of applications. And then we wanted to incent our sales force properly to move to these next sets of modern applications, which is what we did.

Feloni: You were saying that you have a team that’s winning and you want them to change the way they’re doing things, you’re going to face some resistance.

Hurd: "Some" might be an understatement.

Hundreds of salespeople left the company during Hurd’s first few years, including some of the team’s top performers. Hurd insists this did not upset his plan.

Hurd: You know when you have 35- or 40,000 people in your sales org you will have people that move. But I do think we moved from really a products-offered strategy, which is basically we would sell you a product. You would then implement it sometimes by yourself or with a systems integrator or something like that. We moved to selling a service. So we’re really selling a different thing than we had before.

Now we basically said, "No, you’re going to have to sell to the functional buyer. You’re going to have to sell to that head of HR or to that CFO." Now you’re saying to people, "We’re going to change what you sell and we’re going to change who you sell it to." And so a lot of people said, "I just don’t want to do that." My view is that that’s OK. We need to have people that are excited and passionate. I don’t want to make it sound like I was for a lot of dynamism in the salesforce, but I wasn’t against it either.

Feloni: Do you think that you would have felt as confident making huge changes at the company had you not had that specific relationship with Larry?

Hurd: Oh, assuredly not. Assuredly not. I would have had the same belief structure, but when you have the ability to talk through issues with, A) people that are extremely smart, B) people that really care, C) people that have a breadth of experience — this is what most CEOs don’t have.

Hurd started hiring new people to help carry out his business plan. He didn’t want to poach salespeople from his competitors, as was standard in the industry. Instead, he wanted to hire people brand new to IT — recent college grads — and get them on board with his new vision for the business.

Hurd: We really moved into this very aggressive college hiring program, because what I really thought made sense was us to hire our own. We went back and of course we found there were very few IT companies recruiting on campus, believe it or not. Over 85% of the people we offer a job accept that job. The problem we had back then, though, was that we had no machinery.

Feloni: There’s no process for it.

Hurd: Yeah. It’s like, well OK, well who’s going to do that? OK, well let’s get some people that can go do that.

And we figured out where the schools were, we figured out how to recruit, we figured out how to cut an offer letter. But then when we brought them on board we had to actually train them. So we had to build a strategy to go get in the US — the best young people in this country, frankly — to put them in the best facilities, which we didn’t have. Give them the best tools, which we didn’t have. Give them the best management, which was new because a lot of this was new management mentoring some of these great young people. And give them the best training.

So when you start saying, "Best, best, best, best, best," and you start with, "I’ve got nothing, nothing, nothing, nothing," the whole process over the last few years has been get each one of those pillars I described to being the best at what we do and build our salesforce from the ground up.

Business Insider/Julie Bort

But some Oracle veterans weren’t on board with the new training program. Not only did they essentially have to learn how to do a new job, they had to mentor some kids straight out of college. A former Oracle employee told Business Insider in 2013 that the company was getting a bad reputation among experienced salespeople in the industry. Hurd says it was just a painful but necessary byproduct of change.

Hurd: In the end of the day I take complete accountability for the strategy that I described. I believe that it was best for our customers and best for Oracle, for us to make this change. And no question it was dynamic. No question that when you’re part of a dynamic change, anytime you make decisions, you get opinions. There are going to be people that say, "I really liked it the way it was," and listen, I wish that history was a perfect predictor of the future, but it’s not. The world we’re in in, IT, is dynamic and it changes. It changes every day. And for us, we needed to stay ahead of this and there’s no question, the implication of "Staying ahead of this" has some element of pain to it.

Feloni: Did you ever question your strategy?

Hurd: No.

Feloni: No.

Hurd: No.

Feloni: What were conversations with Larry like at this point when there was some turmoil?

Hurd: Probably, his biggest quotes would be things like, "Can you go faster?"

Feloni: So as a leader, how do you know when to take resistance and be like, "OK, let me reconsider," or to think that, "OK, this is just the pain of change. I don’t have to really dwell on this." How do you differentiate that?

Hurd: I think it’s hard. I think nobody likes criticism, resistance, no matter what anybody tells you. That said, I think you have to rely on your experience, your instincts, as to where you think the market’s headed and what changes are necessary. I’ve always believed it was the company first.

I believe to the core: A) We had to expand our salesforce; B) we couldn’t do it through the traditional mechanisms in our industry. We simultaneously moved to the mid-market, we moved to college hiring, we built an in-house training program. We did all of these things simultaneously.

And to add to it, when you ask managers who have historically managed very experienced people, and you say, "Hey, I have an idea. We’re going to bring some kids right off the college campus. I’d really appreciate if you’d spent some time mentoring them and developing them," it’s amazing that they’d say, "I’d rather not do that." It’s counter-instinctive to you, but if you had a sales manager and two people working for you — let’s pretend your objectives for the year were $10 million, and you had one salesperson who had a $10 million quota and a second salesperson who had just come out of college. Who do you think the sales manager spends all their time with? The person with a $10 million quota. So we had the issues also from a mores perspective, of just mores of the company, of, was it important to really develop and mentor these people —

Feloni: Mentorship would be as important.

Hurd: The company I grew up in, it was just an unspoken value in the company that if you could sit around and brag about all the great people you developed in the company who are now in senior positions, this was a merit badge. This was something you wore on your sleeve. There was no stock option for it, it was just a source of pride and a belief this was the way things were to get done. We needed that inside of our company as well. And we still work on it today.

In 2014, Larry Ellison stepped down as head of Oracle and appointed Hurd and Safra Catz co-CEOs. As far as Hurd was concerned, the new title didn’t change anything. His plan was the same.

Feloni: Did that put a new pressure on you, being given this new title?

Hurd: I don’t think I would say it changed. I think we felt the pressure to move the company along, to accelerate the company, to add velocity to the execution of the company and do that in a way where we can deliver today and build for tomorrow. Because remember, that’s our challenge, is that we have a very large customer base that expects us to deliver on products in some cases that we built years and years and years ago. And we have to do that. That’s our commitment to them.

Justin Sullivan/Getty Images

Mark Hurd spent years defending his plan to his employees, investors, and industry analysts. And by 2017, the skeptics were coming around to his way of thinking. Even veteran salespeople who had been critical of the big changes Hurd was making at Oracle could see that his plan was paying off. One went on the record with the Wall Street Journal. He said his initial response to Hurd’s plan had been "What the hell is this?" But when he saw how much money the new hires made the company, he changed his mind. When I read Hurd this quote, he brushed it off, just like the criticisms I’d run past him earlier. Of course his plan worked. That… was the plan.

Hurd: I wouldn’t give too much credence to the early anecdote you brought up or to any other anecdote, because I think you can find a lot of these as you dig through a large organization. I think the key is that strategically this was right for us. I believe you will see more people actually imitate that strategy. Because it just makes sense.

Feloni: It sounds like you’re not concerned about the media coverage picking different anecdotes for what your plan would say, but would it be different if one of your colleagues approached you, or one of your shareholders approached you, whether it was either skepticism in the first place years ago or saying like, "I’m really happy with how this is playing out?" Would you consider that differently?

Hurd: Well let me be clear, of course I’d consider it. I remember one investor saying, "You know, I had bought the stock thinking that you were smart," meaning me, the implication being that they’d flipped their point of view based on the rise in our expense structure. The point that I would make is that in this case we had to invest in order to gain productivity.

Feloni: There’s something that I think was interesting. A moment at an Oracle convention in 2016, you had polled the audience about big three industry predictions, which would happen fastest. Forty-two percent said that none of these will ever happen. You joked about it, but is that like a recurring thing, where like you’re met maybe with some skepticism from employees at first, and then you have to convince them along the way?

Hurd: What I do frequently at our user conference is I make predictions about the industry. I do them for a couple purposes. One, they’re funny and people have various reactions to them. Second, I try to explain to customers why we’re investing the way we are, in particular, products and R&D because of the secular trends that we see occurring in the industry.

For example, we see data centers, corporate data centers, really going away. We see applications that are traditionally on premise all moving to the cloud. So we typically make these predictions, and then also we use them internally to show why we’re making the adjustments we’re making in the various things we do, strategically and operationally. So yeah, I would usually test my predictions on our own workforce, and then you get various reactions like, "This is crazy," or, "Really, is this going to happen?" It opens up debate and it’s fun.

Feloni: We’ve been talking about an example where you took something that was really ambitious and it met with some resistance, people even leaving the company — would this be something that you would be willing to do all over again with a new plan?

Hurd: If necessary, yeah. I think that we feel good about strategically where Oracle sits today. We feel good about the changes we’ve made. I’m not here to tell you that everything we’ve done we’ve done perfectly, but I am here to tell you that we feel very good about the decisions we’ve made, the investments we’ve made. We’ve continued to make changes where necessary, maybe at a lesser scale, within the context of a product or a solution, or various other parts of the company. We would always be dynamic in that nature.

Feloni: And looking at it, do you think that maybe there could have been a different way to communicate that to staff to maybe keep some of those veteran hires from leaving?

Hurd: I’m not sure that’s the approach you would want to take. I think that a leader’s job is to describe, "This is where we’re headed, this is where we are; this is the journey to get from here to there. These are now the resources we’re going to apply to get from here to there."

I tried to do some explaining of things like training and changes in our compensation, our incentives, our management, etc. There are people who say, "Listen, I’m just not up for that." You’re talking about things that are going to require work and change. Some people are up for it and some people are not. I think if you don’t have passion, and you’re not excited about the task at hand, the likelihood that you’d have as much success as you’re having is very unlikely.

You know, I think we want people that are excited about the mission, and I don’t really enjoy saying this, but some of that is necessary to get from here to there.

Feloni: So if you have an ambitious plan, and some people aren’t signed on to it, that’s OK?

Hurd: You know you hate to say it that way because it feels like it’s a non-empathetic answer, but the answer is yes. When you say, "Listen, we’re going move from here to there," not everybody is going to like it, and as a result if somebody wants to opt out because they don’t like it, in the end I do think that’s OK.

Justin Sullivan/Getty Images

Feloni: Looking at the last eight years or so at Oracle, how would you say that your leadership style has changed over that time, if it has?

Hurd: I don’t change my view: You need to lead from in front. And to me, fou us that’s with our customers and with our people. And so that’s still my primary view, that communicating to our customers, communicating to our people, is important.

I still believe the role of leading these companies is about strategy, it is about aligning the operations to the execution of the strategy, and then really surrounding the company with the best possible people. You know, we’re all faced with, in any of these jobs, making hundreds and thousands of decisions every day — doesn’t mean that you’re going to get them all right. I have confidence enough, though, in the process that if I make a decision I’m willing to listen if I’ve made a bad decision. Let’s review it and do it again.

You asked a simple question to begin with: Do I feel confident in the strategy of Oracle? I do.

Feloni: Well thank you, Mark.

Hurd: Thank you.

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Source: Business Insider – rfeloni@businessinsider.com (Richard Feloni)