Dr. B. book review, with MA Beyster and Peter Economy (co-writer)
Thursday, May 4, 2006: Dr. B. book review, with MA Beyster and Peter Economy (co-writer).

I’ve been asked what SAIC’s secret sauce is. Some say it’s the company’s entrepreneurial culture, others say it’s employee ownership. I personally believe that the secret sauce behind SAIC’s success is the PEOPLE.

What do you think?

Click on the comments link to share your thoughts.

Here are a few more responses to some of your postings, including some additional thoughts on Marc Warburton’s post.

Marc Warburton:
I don’t believe the ever-changing SAIC model broke down at $4 billion. Others may feel differently. However, the model did need revision — especially in view of Sarbanes-Oxley. I hope the choices that were made work out. Employee ownership seems to be alive and well in the U.S., but it is never an easy alternative to work out, and needs adjustments along the way.

Mike Flanagan:
I “secretly” enjoyed working with you in the systems integration business area. There was so much to learn and marketing success required the help of a vast array of hard-working people. As you well know, service-oriented architectures and managed services began for large projects a few years ago. SAIC adopted it reasonably fast, and it still seems to be popular. I’m curious about where it’s going, and I hope you, Scott Dowell, and others will find it worthwhile to bounce your ideas off of those of us who want to continue learning. I will keep my eyes open for any neat ideas our blog readers might find interesting! Will set up a special track on this blog if there is enough interest. I’m certainly interested.

Bill Scott:
When I think about interesting subjects to discuss on this blog, employee ownership is high on the list. I will try to make it one of the themes of my blog, and hope you and other readers do some thinking on the subject. No Black-Scholes remarks, please. You don’t need a Nobel Prize!

- Bob


29 Responses to “Week two: SAIC secret sauce”

  1. 1 Allen Herskowitz

    Bob;

    Given that the “secret sauce” is people the question might be asked what about SAIC’s culture attracted the particular (and peculiar?) group that made the company such a special place. It seems, to me, that the Entreneurial culture and EO are a single construct, as it was practiced ta SAIC, and it was that construct that attracted folks who thrived on individual accountability and were more than satisfied with a “piece of the action” as their reward.

    Allen

  2. 2 Kay Johnson

    I agree that part of the secret sauce was/is people but I think specifically that trust and the environment to develop/grow trust among the people was key. This doesn’t mean that everyone had to love one another but that each could determine where he/she stood and what to expect from others.

  3. 3 Al Botticelli

    I believe that the secret behind the Company’s success is the people who are willing to work for a common goal – Company success and their loyalty to the Company and trust in the leadership. When the loyalties from above and below begin to waver, things happen. When mamagement takes care of the employees, the employees take care of the business.

  4. 4 Brian Sharkey

    Bob,

    Because I am a great believer in you and your model for employee ownership, I have decided that my company will be employee owned and I have modeled it after the “Beyster” SAIC. On this topic I could use some help and advice. I am interested in determining how I structure the stock and option plans for growth. How do I introduce dilution with useful affect; what should I be careful about when offering shares; how can I control the stockholders anxiety as I bring in additional shareholders and motivate them; what is a fair way of valuing the company when it is too small for comperables, etc.? I have a million questions. Is there a site at the Beyster Institute that can help guide me through these minefileds?

    I have greatly missed your leadership since you have retired and look forward to these interactions to maintain our relationship and to learn from your experiences.

    My very best regards,

    Brian

  5. 5 Bob Wertheim

    As a long time consultant and former customer of SAIC, I believe that, in addition to its people and the benefits of employee ownership that attracted them, a key element in the SAIC sauce has been the priority given by management to doing what is right for the customer. The fact is that most of the time that translated into doing what is right for our country.

  6. 6 Ron Knecht

    My perspective on the key ingredient of the secret sauce is the agility of empowered division managers and project/team leads to make local decisions that are aligned with thier customer’s needs. I fear that under SOX we risk stifiling that aqility as I detect a whiff of a destructive centralized command and control mentality in the desire to eliminate risk.

  7. 7 Peter R. Ward

    “Secret Sauce”

    First, I believe that it was the setting that provided the sauce base, the entrepreneurial culture, that Dr. Beyster believed in and provided. Secondly, I believe that the major ingredient was the people that this environment attracted, the scientists and others who wanted to make a contribution to something bigger than themselves, who were excited and dedicated, who were willing to compete amongst themselves and yet join together with an “esprit de SAIC corps” attitude in the outside competitive business environment. A fine balance of a “me” attitude encouraged for unlimited professional growth balanced with a common goal of shared rewards supported through employee ownership was the work experience for those of us fortunate to have shared the SAIC ride to success.

  8. 8 Steve Rizzi

    Ron Knecht is right. Empowerment is key, but ownership comes in here too. I don’t mean stock ownership – I mean the fact that I’m willing to identify myself with the company… the fact that my reputation is tied to it, and that I feel personally responsible for the company’s performance and conduct. That kind of “ownership” that I mean.

    It has always been about the people and their passion for what they believe in. It has been about the fact that a single person can make a difference and that people had an unlimited growth potential (the org chart gets adjusted to provide opportunity for those that have earned it… the organization should facilitate and inspire the entrepreneur). It is no mistake that organizations in the company had been known by their leader’s names (not some functional title). This was a key indicator of us making it “personal”.

    I think that there are really two things here:

    1. “Ownership” meaning capitalization of the company, and
    2. “Ownership” of the kind detailed above.

    The movement of SAIC to a hybrid ownership is essential if we desire to maintain liquidity for current stock holders (guys like me that have kids to send to college). However, the critical sort of ownership (point #2) is tied to us providing entreprenuers with the climate that they need to be agile in the marketplace and feel proud of their association with the company.

    Rizzi

  9. 9 Larry Janning

    Dr. B,

    Great to hear from you!

    On the discussion of the “secret sauce” – I agree it’s the people. I also believe you can break down the ingredients of the sauce, with one of the major ingredients being their internal passion to excel (a.k.a. “fire in the belly”). The secret is how to bring that passion out and apply it to growing a successful company – and that’s through employee ownership. Dr B, what you figured out was how to allow people to satisfy an internal desire – whether it be in creating a safe and secure environment for their children, contributing to the understanding of science, or fulfilling a drive for personal achievement – with success in these endeavors being rewarded with ownership. How can one turn down an offer so generous – to be able to achieve personal goals and gain ownership in a company at the same time!

    There were few constraints on the entrepreneurial environment – it was flexible, adaptive, supportive, and virtually boundless. Personally, I never heard the word “no”. What I did hear were suggestions and “words of wisdom” that helped guide my own entrepreneurial zeal. My favorite line from you (and I must have heard it a dozen times) was “remember your roots”. I remember sitting down with a pencil one day and filling several pages with what you could have meant by those words. Interestingly, they all had valid meaning.

  10. 10 Ceil McCloy

    As an SAIC alumna, I appreciated all the elements that SAIC provided; ability to set own destiny, pursue market opportunities if you could make the business case; and working with smart people. Employee ownership/empowerment was a big motivator. BUT sometime in the late 90′s SAIC started to turn into Lockheed Martin Lite. You couldn’t bounce around the company as much. Things became stove piped. Risk management became the raison d’etre. Anyway employee ownership I found empowering and motivating. Now that I run my own company I truly appreciate all the skills I learned and beliefs I shared at SAIC.

  11. 11 Scott Dowell

    I suggest we create a forum / thread to discuss the service oriented enterprise – its business model and supporting technologies. I have gathered several links/papers on the topic and glad to pass them along.

  12. 12 Bob Yost

    First of all, it was good to hear from you–which, among other things, brought back a lot of fond memories.

    No doubt, the tremendous success of SAIC is due to the people and their motivation. But how did SAIC draw so many talented people into the Corporation? Clearly, the entrepreneurial culture, the empowerment, and the employee ownership as mentioned by many of your responders were major factors. Many, however, were attracted primarily by the desire to be associated with and to work with exceptional people–which includes the spectrum from the members of the board of directors to the project contributors. And as the employees brought in a very wide range of interesting, and important programs, this inspired more good people to join to work on these. (There was indeed a “hiring loop” with a strong positive feedback function.) Stated in other terms, the people are the secret sauce, but they were primarly motivated to come to SAIC by: the opportunity to associate and work with exceptional people; the opportunity to work on interesting, important projects; the entrepreneurial culture; the empowerment; and the employee ownership.

    Regards…..Bob Yost

  13. 13 Dr. Beyster

    Larry Janning:

    Maybe I can help you on the meaning of “remember your roots.” I’m sure I meant for you to be sure to continue to take good care of those organizations in the Dayton area that supported you when we were small.

  14. 14 kaye gerron

    I have been with the company since December of 1979 (barely out of diapers), starting in El Segundo. Over the years, it has definitely been like a “family” to me. Some people will never experience anything like it. We worked hard together and played hard together. During the early years, someone asked me why I worked so much. I couldn’t really explain it, and it certainly wasn’t easy, but it just seemed like throwing your heart and soul into SAI was what we all did.

  15. 15 Richard D. Brunsell

    Hello,

    Our CEO, Bob Czajkowski, is also an alumni of the SAIC family. I met him at Space Electronics, Inc. where other former members of SAIC were working: David Czajkowski, David Strobel, etc. Space Electronics, Inc. was sold to Maxwell Technologies a few years ago. Bob and I are now are part of an exciting team at NxGen Electronics, Inc. developing and producing advanced electronic assemblies for a wide variety of clients.

    Richard D. Brunsell
    President & COO
    NxGen Electronics, Inc.
    9771-C Clairemont Mesa Blvd.
    San Diego, CA 92124
    (858) 309-6610 x 3029
    http://www.nxgenelect.com

  16. 16 Jeff Smith

    Bob,

    I read the article in Saturday’s paper and was pleased to see how you are approaching your book. I am an SAIC alum 1985-1991 and would like to say that it was the greatest experience of my professional career. What a great place to work. Not only the employee ownership benefts and the entreneurial culture; but the great minds that worked there. I learned something new almost everyday.

    I have an idea for a chapter in the book.

    “From lab rats to big time system integrators”. This chapter would cover the evolution started in the 1986 technology paln for the company that called for linking all of the offices together thru SAICnet and the SAIC VTC system. It also called for sharing information via systems such as the Proposal Information Exchange and sharing technolgy capital. I have always belived that once we implemented this “networking of SAIC” that we laid the foundation for SAIC’s expansion into the Systems Integration Business.

    It was truly a pleasure being part of this effort.

    Sincerely

    Jeff.

  17. 17 MaryLou Dunford

    Dr. Beyster,
    There is something I haven’t seen mentioned about the success of SAIC that I think was very important throughout the years — our sense of humor and ability to laugh at ourselves as we grew. There were many things about the company that “didn’t make sense” and were obviously not the most efficient way to run things — we all knew it, and we warmly made fun of ourselves like we do about other dysfunctional families to which we belong — but we were protective of that dysfunctionality, didn’t fix every quirk, and turned the tangles into opportunities, because overall it worked as part of a larger entrepreneurial business philosophy that proved to be successful and made employees happy and productive. Our drive, like our laughter, was from the inside out.

  18. 18 Raymond Parker

    Dr. Beyster:

    Long time since SAIC. As one of the early employees, I have some great memories of my years at SAIC. During the formative years SAIC became a “target of opportunity company” that very few people understood. However, JRB never forgot the technology and ‘significant individuals’!!!
    The success with “targets” transformed SAIC into a significant player in national issues.

    Regards,

    Ray

  19. 19 Dr. Beyster

    Ray: I think I know who you are, although if I’m wrong I would appreciate your telling me who you are and what you do. As I recall, you and I were very much involved in COMSYSTEMS. We worked hard together and went through some rather difficult experiences. Both of us survived it all and you made the decision later on that it would be best for you if you pursued career opportunities elsewhere, and as I recall you went to Houston. I really have wondered what’s happened to you, and I’m glad you established contact. Let me know if you’re ever in San Diego, I would like to see you again.

    Bob Beyster

  20. 20 Eric Heininger

    Hello Dr. Beyster

    Since your meeting at the MIT forum in San Diego, I decided to put some of your book to the test. I am happy to report that it works very well indeed. I am implementing/testing more aspects of the book and am courting “friendly banks” as well as Venture/Angel Investors to provide short term financing only to cover signed contracts. People are the key and many of the psychological aspects of providing a technologically interesting workspace coupled with ownership has proven powerful. Interest in Pyramid Space is growing and I would like to once again thank you for writing this cook book.

    Cheers,

    Eric Heininger

  21. 21 Dr. Beyster

    Eric: I’m pleased to know that you’re taking seriously my recommendations for structuring a start-up company that I presented both in The SAIC Solution and at the MIT Forum. The areas you’re working in, such as manned hypersonic flight largely sponsored by NASA, are very exciting. Your willingness to share the ownership of your organization on a performance basis will have long-lasting impact on your company’s growth, and on the caliber of the people you hire. You’ll never regret it. As for the financing, not knowing your business any better than I do, I assume the government is covering most of your costs, and you mostly need to have discretionary resources for developing future products and services. I don’t know what personal sources of money you have access to, but I would try as much as possible not to rely on venture capital and banks who you don’t know personally, and who are likely to have a short-term approach to your business. SAIC was fortunate in that most of our development costs were covered by the customers and we could use profit from the contracts to sponsor the IR&D. I would be careful about any long-term commitments for financing that you’re not able to rely on.

  22. 22 Kris Wise

    Bob: There are many variations, and in their own right they are all accurate, about what the SAIC “secret sauce” really is, where it comes from, and who originated it. My version comes to you, Bob, as if I can clearly hear a famous voice out of the past, Ralph Edwards of This Is Your Life fame that originally ran on NBC during a period between 1952 – 1961, saying, “J. Robert Beyster, This is your life!” Although I did not work for SAIC, I nevertheless feel a close affiliation to it, due to the fact that I worked for you during its precursor period when we were at General Atomic, a division of General Dynamics Corporation. I was witness to the SAIC “secret sauce”, when in my mind it was known to me in its formative period as the JRB “secret sauce”, a reflection of its inventor/originator. The recipe/formula for the SAIC “secret sauce” is: The state of being a totally unselfish friend to humankind. Yes, Bob, this is your life…. The “secret sauce” is a mirror reflection of who you are and what you represent. Almost fifty years have past since you hired me straight out of the United States Air Force, and you laid opportunities galore at my feet: first and foremost a good job operating and maintaining Linac (electron-linear-accelerator); college with paid tuition, books and work/shift accommodation for classes (your words were, “just go to school”), although respectfully declined; etc. Fifty years later, I still enjoy/delight in doing a good job for you, vis-à-vis, as I help you with some ideas under your Blog heading: Book Second Printing Update. Just a few names and places from that period might add to the color of those days: “the little red school house on Barnard Street” where HR was located; Evelyn “Eve” McFall and Robbie Cassidy who saw my face every morning for one month before being called by you, Bob, with an offer to operate Linac; Robert McGrath, the HR (Personnel, at that time) Director, with whom, thanks to Eve and Robbie, I got a very welcome job interview. To me the SAIC “secret sauce” will always be the JRB “secret sauce!” — Kris

  23. 23 Dr. Beyster

    Kris: I beg to differ with you slightly. I think the secret sauce was our rewards system where we gave out options and direct stock rewards based on performance. That approach motivated employees more than anything else I could have done, although the staff was certainly first rate and involved. Thank you anyway for giving me the credit. — Bob

  24. 24 Kris Wise

    Bob: You are certainly welcome, and from my perspective you entirely deserve all of the praise that I expressed. My only regret is the fact that I was not academically inspired and motivated. Had it been a different time and a different place, and had I been more thoroughly exposed to academics (which I was not) as I grew up, maybe… just maybe I could have responded in the affirmative to your most generous offer of college and working hours to accommodate the task. I will always appreciate you and what you stood for, which continues to this day. Very best wishes are extended to you in all your endeavors, challenges and pursuits. – Kris

  25. 25 Kris Wise

    Bob, we have not exchanged Blogs since Kevin Anderson did his first – unsuccessful – attempt at swimming the English Channel. I’ve kept it in mind that you were interested in his attempts/accomplishments. He is currently preparing to swim between Catalina Island and Rancho Palo Verde (LA) starting tomorrow night at midnight. Kevin’s full e-mail text follows below, which includes his plans for swimming the English Channel next summer. I removed his associated web site and placed it in the appropriate box included for “Leave a Reply”.

    Hi all,

    If you haven’t heard, I will be attempting to swim the 22 mile Channel between Catalina Island and Rancho Palo Verde (LA) starting tomorrow night at midnight. My plan is to swim the English Channel next summer.

    The Catalina Channel is the only major channel crossing on the American continent which compares to the English Channel in distance, conditions, difficulty, and challenge to the swimmer. It looks like I will have comparable temperature (62-63) as the English Channel with the added difficulty of 7 hours of night swimming and sea life (we call ‘em friends!).

    If you are interested in tracking the progress of my swim across the Catalina Channel beginning this Thursday night at midnight PST to around noon on Friday (depending on conditions), here is a link that will track me by satellite with updates every 10 minutes:

    Kevin Anderson

    Things are fine with us—good health for both; each staying busy. Speaking for myself, I’m getting closer to my goal in golf, as previously outlined many years ago. It is ironic, but immediately after writing this short note – with pertinent information enclosed about Dr. Kevin Anderson – I will proceed back to my shop this evening and finalize the last of my golf clubs, thus completing a project that has lasted 32 years. The data is in and soon I will return to writing the application for a patent. I pray that you and all of your family are still in good health.

  26. 26 Kris Wise

    Bob: The following e-mail arrived this morning from Kevin Anderson thanking me for the response to yesterday’s message. In this printing will be an update concerning Tommy, who was a key member of the English Channel Team, previously attempted.

    Hi Kris,

    Thank you for the well wishes. I am feeling highly confident with this swim as my training has gone particularly good with swims of Tampa Bay (24 miles) and Santa Barbara Channel (cold and 18 miles). I also have an incredible crew – something that I didn’t have in England.

    Everyone is doing great. Mary ran a marathon this year and four half marathons while also losing 40 lbs. Our daughter, Beth, is over in Hawaii at college and on a full tuition scholarship with the dance team. We will head over to visit her for Thanksgiving. Our son, Tommy, is an incredible pool swimmer – having attained an Olympic Trial Qualifying Cut at the age of 16. He now holds the fastest backstroke time of anyone in San Diego’s history – taking that record from Mike Stamm when he was the world record holder in 1972 and a gold medalist with Mark Spitz on the medley relay at Munich. Tommy works hard at everything – often in the water by 5 AM until school starts and back in again until 7 PM. His grades are great and we are already receiving contacts from elite colleges wanting him.

    I hope you are able to use the link to track my swim. It is a really neat way to follow things like this. Thanks for your prayers as well.

    Best to you, Lynn and family,

    Kevin

    Hope you enjoy the upcoming swims Kevin has planned. Let me know if there is any way I can help facilitate your participation. –Kris

  27. 27 Dr. Beyster

    Kris: Good to hear from you again. Thanks for keeping me up to date with your goings on along with Kevin Anderson’s swimming endeavors. If I get over to Catalina again, maybe I’ll see him swimming across the channel. — Bob

  28. 28 Kris Wise

    Bob: It’s good to hear from you again, as well. We tracked Kevin Anderson’s swim progress from Catalina by satellite, which somewhat made us feel that we were right there in his proximity. Shortly after I felt he had “landed-on-the-beach” (the satellite-icon terminated about 50 yards offshore, at which point I deduced that he had arrived) I e-mailed him with our congratulations. He responded with a short description of the crossing—I’ll include the messages in the next few paragraphs, as it may be interesting to you.

    Hi Kevin: “We’re glad to hear from you directly that the swim went “well. It’s too bad about the vomit-incident and dry-heaves. You’ve obviously kept a positive attitude, and have given due credit to your crew. You maintained your projected rate of speed, which is commendable considering the negative incident due to upset stomach. Prayers are with you and your crew, as you all begin to look forward to – next year – swimming the English Channel. May God speed, in all your future undertakings. –Lynn & Kris”

    Kevin responds right after his “landing” in Los Angeles: “Thank you for watching Kris from one tired, sore, jellyfish stung old dude! Had a horrible projectile vomit incident followed by the dry heaves – not a pretty site at my second hour of a 11:57 swim! Crew was fantastic and helped me get through it. –Kevin”

    Hi Kevin: “At this point it looks as though you’ve made it—there are 50 of 58 messages viewable and the latest icon shows you to be about 50 yards off shore. Well done to you and all of your crew. I know your mom and dad were happy to see you come ashore and receive you. We will be looking forward to next year for the English Channel Swim. –Lynn & Kris”

    Bob, I remember that you enjoy a good chuckle—here’s one for you! In all my years of working with golf I’ve had what seems like tens-of-thousands of false alarms—thinking and believing that I had found the final answer to an otherwise seemingly never-ending-search for answers within the golf swing itself and golf clubs in particular. In my last message to you I mentioned that I would be putting the finishing touch on the golf project. Not so…I found there was more to be learned. Now, here is the punch-line—I’ve since found “it” – in the meantime – and that will be that….

    I read recently in a book – “Glimpses of Eternity” by Raymond Moody, MD with Paul Perry – that, “…science is not based on faith.” With my work with golf – attempting to discover scientific principles pertinent to the golf swing and that of balancing golf clubs –faith and nothing else has been my guide. In order for faith to have guided me, I’ve allowed myself to make as many mistakes – and Lord knows I’ve made more that my share – in life as needed, and through those errant-attempts the final answer will someday become evident—and worthy of sharing. Once all the data is in, that will be the reason for a patent—to share the knowledge that I’ve found for present generations and for generations to come.

    With your work – and I don’t mean to be presumptuous – you have no doubt also proceeded in certain avenues on faith—and faith alone. Believing in oneself and our abilities is yet another way of expressing faith. However, it seems so true that simply getting out in traffic greatly helps the outcome. I recall reading about your early life – during the depression – and how you signed up to go into the Navy. It stands clearly to reason that you had literally done your “homework” before signing up. In all likelihood your family was a main encouraging factor – and by their contribution – you were inspired toward excellence. This still carries you pridefully from day to day—just as it always has. People around you know and appreciate this characteristic and delight in its longevity. Thank you for your response, and again I wish good health and happiness for you and your entire family. –Kris

  29. 29 Dr. Beyster

    Kris: Thanks for the updates as always. Your posts are very detailed and interesting. I wish you good luck with your golf swing. — Bob


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