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 Choosing Business for Pleasure

By J. S. Martin

Marie Thursby in the Innovation Realization Laboratory's "tool Kit-building" class. (Purdue News Service Photo by David Umberger)

Jerry Rawls

That's the advice Jerry Rawls, MSIA '68, president and CEO of Finisar Corp., gave to the 197 members of this year's entering master's class. It's advice that grew out of Rawls own experience when he and his partner, Frank Levinson, now Finisar's chairman and chief technical officer (CTO), started Finisar in 1988.

Finisar, based in Sunnyvale, Calif., is a leading provider of fiber optic subsystems and network performance test systems that enable high-speed communications over Gigabit Ethernet local area networks (LANs), Fibre Channel storage area networks (SANs), and metropolitan data networks (MANs). (For a detailed story on Finisar, see pages 6-9 of the fall 2000 issue of Krannert Magazine.)

Our goal was to create a company that we would want to work in. That was our guiding rule and we thought it would serve us well, says Rawls. The two entrepreneurs didn't have a formal business plan, he added, but they had confidence in themselves, a lot of idealism, and enough job dissatisfaction to motivate them to start a company.

Rawls still uses the word adventure to describe the story of Finisar. The company has grown at a compound rate of just over 90 percent a year for the last six years, recording $67 million in fiscal 2000 (ended April 30), with approximately $200 million expected in fiscal 2001. The company has been profitable every year, excluding merger-related costs.

More Quick Tips for Great Leadership
from Jerry Rawls

Communicate well. Acquire the discipline needed to write well. Write clear, concise sentences. Simple words and simple sentences communicate powerfully.

Be energetic and enthusiastic. It's contagious. Turn the metronome up; the organization will move a little faster. If you as leader don't have a sense of urgency about your business, you can't expect anyone else to have it.

Apply two tests. At Krannert, for business decisions, we quantify everything  numbers, facts, analyses  and that's good. But at the end of the day, all decisions must pass two tests: the common-sense test (Does it make sense?) and the gut test (Does it feel right?). Your judgment is invaluable. As a leader, you are betting on yourself.

Ask questions. In spite of the fact that I'm making a speech, making speeches is not important. Asking questions is important  and it's the quality of the questions that's most important.

Never underestimate your competition. Someone is always going to try to clean your clock. Paranoia in business is not necessarily a bad thing, especially when you're competing. Ask: "How are we vulnerable?"

Focus on the important issues. Don't get bogged down in small matters it wastes time. Some at Finisar thought devising cute product names was important. I didn't. After all, Boeing's 747 has done quite well without a name. Our company does not have a logo other than our name in a particular blue and a particular font. We haven't spent a million to design a logo. We're doing fine without it. Focus on performance, cost, reliability things that make a difference.

Stay ahead of the information revolution. Our world is going to be so different in 10 years. Imagine how we're going to use all the bandwidth and information that's available to us, and what software services can be delivered to us when we have a gigabit connection to our homes. Using information in creative, clever ways will make you successful.

"No" doesn't always mean "No". When a customer says no, go back again. Say, "Let me get my boss involved," or "Here's what my product price might be." Let's go to work on the problem. When someone you're recruiting says no, revisit the offer. You CAN turn around a customer or a recruit. Don't take no for an answer until it's "Hell, no!"

Maintain good health. Don't smoke. I've just had three of my best employees suffer health problems because of it. Exercise and stay fit. As leaders you've got to run fast. You have to maintain a pace that is invigorating for your company. You have to set the pace that you want others to follow.

Make a difference. Measure yourself by the footprints you leave. There are no sacred cows in our company. I don't want yes men. I want people who will devise new ways of doing things  new systems, programs, products. You should have a list of strategic things you are trying to accomplish over and above dealing with the daily crises. Take measure of yourself to answer the question: Is this place different because I was here?

Rawls predicts more than $1 billion in revenue in five years, with as many as 5,000 to 10,000 employees in multiple operations in the U.S. and possibly overseas. Referring to the announcement of the acquisition of Sensors Unlimited, a fiber optics company in Princeton, New Jersey, Rawls calls it "an exciting acquisition - new technology, new people, a center of excellence."

"It's a pretty heady deal," says Rawls, about the Sensors acquisition. "I often think back to the days when I was sitting in this room at age 23. That I could spend $700 million on anything is pretty unbelievable." (At time of this publication, four additional acquisitions have been announced.)

Lessons Learned Along the Way

"Baseball great Yogi Berra (that great mathematician) is reported to have said that baseball is 90 percent pitching; the other half is hitting and fielding, Rawls says. Well, in our business it's 90 percent customers, and the other half is employees and products."

It's the Customers

Rawls says his company's success depends on letting customers know how important they are to its business. "At Finisar, we strive to have multiple touches - by company executives, by people in manufacturing, marketing, engineering, purchasing, planning  to make them understand that we care, we'll support them, we'll address their concerns. If there's a problem, we'll work through it with them. You never really know your customers until you've worked through a problem with them."

It's the Employees

When it comes to employees, Rawls says, hire smart, share the vision, treat people well, and pay them well. "Work hard on the front end to hire bright, competent people," he advises. "Hire smart people who are willing to hire people even smarter than they are. Good interpersonal skills are important, especially at a company like ours where people work in small teams."

Also, he says, share your goals. If your employees know your goals, they can help reinforce them. Our employees want to know management's vision for the company. They want to know where they're headed, and why they're going to be successful. My job is not to tell people how to do their jobs. My job is to turn them loose, to unleash their creativity, to give feedback, praise, constructive criticism. That's satisfying for them and productive for our company.

Respect is also key. "Treat employees with respect," Rawls advises. "Finisar has almost no turnover, and it's more than just stock options, although they certainly do help. People leave companies because they feel unappreciated, unfairly treated."

Finally, he recommends, pay well. Overpay. "When in doubt, pay more  - bonuses should be higher, stock options bigger," he says. "A key employee can make millions for the company."

It's the Products

"When it comes to products, Finisar takes a fairly simple approach: We make very good products. We're going to try to sell the best in our industry, the most reliable, the hottest performers with the best product features," says Rawls. "We're always going to be the best, always going to command a higher price than our competitors do. For us, it's important to differentiate our product."

Learn Management, but Practice Leadership

"Management allocates resources, makes decisions about physical facilities and organizational structure," Rawls says, "but businesses succeed because of leadership, not just management. Management without leadership leaves a huge void, a vacuum, and you won't succeed."

"To those of you who are entering Krannert to be trained as leaders in management, I say you've made a good choice. Make everything out of it you can. Think about the big picture. It's a joy; it's fun; it's stimulating. Work hard at it."

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