in 1999, Toronto-based Redknee Inc. has grown quickly to
become a world leader in providing infrastructure software
and solutions to telecommunications operators globally.
With more than 300 employees in six offices around the
world, including an R&D centre in India, the
publicly traded company projects revenues approaching $50mm
in 2007. StoneWood’s Managing Partner Bob Hebert sat
down with Redknee’s 34 year old founder and CEO Lucas
Skoczkowski to discuss the human dimension of high growth
recently named one of the 50 fastest growing technology
firms in Canada. Can you
start by talking about the people side of building high
will say I am a technology guy. This is interesting because
my job is mostly about people. Technology issues tend to
be top of mind in the first 2 years of a business….will
the product work, does it work, do enough people know about
it, do people trust it to work and so on. You then move very
quickly to do we have the right people in the right positions?
I think when we last
met, it was about 2 yrs ago I was still in a primitive
stage of development and I thought to a degree that you
put the people in the right positions and you're set, this
is great! But I have come to understand that things are
not so simple because your business constantly changes
and so must you. By definition if you’re growing, you’re
changing and therefore your people and the issues around
them will change. It pushes you everyday, so either you embrace
it, or you get crushed by it. Managing change becomes the
biggest people issue for fast growing organizations.
I tell everybody who joins here that this is going to be
a very difficult environment... What do you mean difficult
they ask??? Are people mean??? No, actually the difficulty
is that change sneaks up on you. We are a supportive organization
not command and control. Everybody’s empowered, we
don’t tell them what to do. But we expect our organization
to grow and people must understand that they must be learning
continuously. Expectations evolve quickly... and for many
people it is hard to evolve in step.
Think about it…our superstars of two years ago are
now our baseline. Do you think it is easy for them to deal
with that? For some people it is a journey they relish while
for others it is one they cannot or will not take. They say, “this
company is too big for me. I liked it better when it was
smaller. It is not how it used to be”. But the company
today is better than its ever been... it is just different
and some people really embrace the differences, the positive
differences while others have rejected it.
When I say rejected,
I mean that they’ve really realized
that they prefer environments which maybe more chaotic or fluid….the
starving startup where things are flying all around and you
have a lot of creativity. While it is true that you have a
lot of creativity you don’t need as much consistency
but as you scale the business consistency becomes much more
important. The business has to change as the demands placed
on it change. People have to constantly retool. A lot of
times people go from success to a big failure. If possible
you want to do everything you can to prevent this because
the biggest cost of growth is the people cost.
As the leader of the company, you have the same
issues. How have you evolved your skills to avoid falling
behind the growth of your organization?
I am a type ‘A’ personality, highly ambitious,
highly aggressive. I want to be successful and I want others
to be successful. I know I can’t force anyone to be
successful or to change; they need to want it quite bad.
Similarly I cannot change the organization or impose my will
onto it. Instead I have to lead by example. I have to change
the organization by changing myself. Very simple, intuitive
and straightforward but very hard to achieve.
I do a number of things
all requiring a degree of heavy lifting. First, I hired
an executive coach two years ago and I meet with him once
every 2 weeks. We discuss leadership issues, problems and
how I can improve. I also joined a Young President’s Organization (YPO). This
is an excellent support group for other CEOs of varying
ages who are all really trying to learn. So I meet with
eight other CEOs every month for half a day.
I am also a big believer
in mentors. I have had mentors since university when I
was provided access to one as part of a scholarship I won.
I have had different mentors at different stages of my
life and have changed them as needed. In fact I had a great
mentor when I started Redknee who worked here and from
whom I learned a great deal. I have gone through a series
of mentor relationships each offering different things
at different times. I had lunch today with a CEO of a software
company which was just sold. As he embarks on the next
stage of his career I asked him what he would have done
differently knowing what he knows now. I have folks I talk
to who obviously who have done it before and are now in
their 50s - 60s – I look to them for life wisdom. I
try to pick their brains and I usually meet with them two
to three times a year.
I have also learned to
reflect. This is hard because we are so busy and it is
so easy to get sucked into the busy vacuum of what you
are doing today. Learning is a big commitment and you have
to be conscious of the learning you need. Some say that
the average age that men stop learning is 30. I
am 34 and I do not believe that. But you have to work at
it because it does not just happen. We do not all work in
a university setting where learning is in the forefront.
Finally, I read a lot. Two years ago I read twenty-six books,
last year I read thirty-seven books. You have to make the
time. I read books not associated with my industry as well
as books on change management, biographies, other organizational
acts such as the story of Oracle, Microsoft, SAP and how
they have done it. I also started listening to audio books
when I exercise.
You have referred to the need to retool. Can
This is important because the tools that get you to one
stage, might actually prevent you from getting to the next
stage. Retooling, both personally and organizationally, becomes
a constant imperative.
For example, last year I hired a consulting firm to implement
a new management system in our organization. The whole objective
was to do a cascading process of changes, to help us over
next 3 years, to develop a series of key result areas in
how we measure this organization and bring more clarity.
I did this because I felt our management system will either
help us accelerate or will block us from evolving into a
hundred million dollar company.
It wasn’t easy to bring a team of experts at a significant
cost to tackle something that really wasn’t broken
per se. But in just six months the new tool, the new
approach has really paid off. We have found very quick successes,
immediate successes which we can build on because it makes
us confident in what we want to do next. The new report cards
we generate are very different from the key performance indicators
which we had in the past. They are better and will allow
us to do much more with the business.
So yes, all tools need
to be continually retooled. What’s
interesting is that the one key theme, if I look at high
growth organizations, is they are all high change organizations.
And dealing effectively with that change is the key because
under stress we will always revert back to our old ways,
which will further compound the stress and the negative situation.
So as you are going up in a spiral of growth, you have all
these behaviours and tendencies that must be overcome.
And no one ever really gets trained on dealing with change.
If you look across our workforce at Redknee, we have a very
intelligent workforce with Masters degrees bright engineers,
and computer scientists everywhere. While all are well educated
few are trained to tackle the changes which our growth imposes
I read somewhere that
our internal change capacity is largely developed around
the ages of five to seven and never really upgraded afterwards.
So when changes come, of the magnitude found here at Redknee,
we get all kinds of coping mechanisms from denial to projection.
You know how it goes, “It’s
not my issue, it’s your issue” etc etc. I
used to wonder how stupid things happen in group environments
where everybody wants to do the right thing. I’m
convinced that it’s because each person deals with
change differently which in combination leads to strange
The other thing I have
learned is that under stress people reach their highest
level of ineffectiveness. I have seen and observed this
quite a bit. That doesn’t mean that
you fire them when they become stressed. Instead, I believe
you need to be enabling people, because if you enable, support,
and carry, you create the right climate to grow. That’s
also the only way you can foster innovation. And I don’t
just mean technological innovation but innovation in how
you run the company. So I always share every month with management
the books I have read, and we discuss lessons learned and
how to use them going forward. Getting better alleviates
stress and we must all strive to get better.
I don’t expect that our people know everything, actually
if they think they know everything, that’s probably
most dangerous. But I do expect them to understand that they
have to keep learning. I put it in front of the agenda, that
high growth means high change which means a learning organization.
As a young company, Redknee
made sales to world-class carriers that many would
say was impossible for an emerging firm. You
made many of those sales personally. As the firm grew
you had to start backing off on some of your responsibilities
and trusting other people to execute. Can you talk
about that transition?
I will give you two sides
of the story. First, nobody wants you to let go. I had
people say, continue selling and we will put everything
else in place, so you can continue what you are doing.
So nobody wants you to get off the train. And why would
they? In the second or third year, I brought in $10 million
in orders... its Great!! Keep doing what you are doing.
But this is not healthy for your ego because it’s
like steroids. And it sure isn’t good for the organization.
In our case, the board was very good in telling me that I
was doing too much, that I should pick what I want to do
and then commit to it.
It took me two years to do this, because the other issue
is that when you build the team that you believe can take
the keys to the house, or to your car, not everybody works
out. And anytime something bad happens your first instinct
is to step in to make it better. But you have to stick with
it, back off and focus yourself on the few things that will
make the biggest difference for the business.
The easiest thing is
to create a dependence that fulfils some of my secret desires
at the same time becoming a convenient crutch for the company.
But the crutch prevents you from being a high performance
organization. Some people don’t
You were an early experimenters
with doing R&D
in places like India, and you’ve had years of experience
in that now. What are your observations?
You have to do it for
the right reasons, everything you have to do for the right
reasons. People thought it was gong to be a panacea for
you have a high cost just move to India and all your headaches
go away. That is simply wrong.
We have gained from it,
but it can be very, very difficult and I know a lot of
people who have done it and retreated. A
couple of observations for Canadian companies... In Canada,
despite complaints of how productivity is low and so on,
my employees here are probably the most productive that I
have anywhere in the world. By this I mean productivity of
value creation per each dollar it costs us. Its not about
salaries, it’s the value you create. Cheap workers
don’t mean anything. I’ve got lowest churn here
and the highest engagement. You need to have a core base.
We’ve made our own share of mistakes. When
we began in India, people probably read too much into it
internally which created fear, which was not a positive
thing. But there has been a lot of good. We improved our
processes because we were forced to work at different times
in different regions. We matured as a company as a result
and we continue to benefit by having a dedicated team of
Redknee people over there.
What are the major people issues over there?
Churn is high and it’s bit of a bonanza mentality.
But it was the same case in 1999 in California. What’s
different probably, which to us was a shocker is the show-up
rate. As little as 25% of the people who accept a job actually
show up on the first day of work. Between the time they accept
and the time they are to start, they get two or three other
offers and guess what, it’s all the same to many of
the young workers so they go to the highest paying one. It
is definitely a metric we don’t have to measure over
here in the same way.
We also try to put Toronto
ex-pats into those facilities... this is important as a
bridge and linkage to continue to facilitate the development
of the Redknee culture over there. Culture doesn’t
happen by itself, you have to foster and tend to it. I
travel there regularly and try to make sure they feel they
are a core part of our organization.
What are your observations about hiring executives
who will live remote from the organization? Do you believe
in centralized or distributed management teams?
Ideally, I want my core team to be here in Toronto.
Teams have to gel and
they need face time to do that. The remoteness is challenging,
tiring even and it is hard to manage at the best of times.
Under pressure it puts a lot more strain in fact it’s
an amplifier for stress.
A distributed company
is an overhead for the business. And if you have a truly
global company, we have 6 offices globally, it puts a strain
on the company. I go and meet with everyone on a regular
basis and try to stay connected to them. If
the people in those offices don’t feel connected, the
office won’t last for very long. I also believe that
you should build as few offices as possible but make each
as big of an office as you can. People need to work in teams. That’s
what becomes the multiplier effect. Otherwise you get splinters
and it becomes difficult to create alignment, common methods,
common faith. I don’t believe in a centralized organization,
but I believe in teams that spend quality time with each
Going back to distributed
management, this is probably one of the biggest issues
Canadian tech firms deal with….can I put my
VP of Sales or Marketing in the US, or even my CEO?
What advice can you offer?
Yeah, it’s a huge
challenge. You often hire someone who is good but they
are partially in your team, partially not in your team
and partially working as they did in their previous organization.
That can tear your organization apart.
Also, how many people do you know who like to commute long-term?
It is fatiguing. What you end up doing is gradually building
that stress level, which is going to affect your main job.
To me keeping things simple is the most important aspect.
If you can get someone who can move, excellent. If you cannot
get the best person you can get here and then figure out
how they can build people underneath them regionally.
Can you talk about hiring
lived your future?
Too far into the future
is bad...because they cannot build the bridge to where
you are today. I have made these mistakes, I’ll admit. You simply cannot hire people too far into
your future. They are so many islands ahead of you they need
a plane to get to where you are, forget bridges. You know
the type. “I am a visionary, I visualize things, and
the rest is done for me”. That’s the danger.
There are benefits to it, but you have to be very careful.
Instead, you go a couple islands ahead at a time, and I
continue to listen, learn, and understand what and where
they are. Each one has a bridge but people have to be two
or three ahead not ten.
What are the key attributes you look for in
people for this organization?
The basic ones, saying
the obvious are integrity, trust and honesty. I’m
still trying to figure out how to test for those every
time but they are critical.
If you’re building a business you need high energy.
High energy is very important. Also, if people are
going to keep growing they better have curiosity, as well
as a hunger to learn.
I also look for people
with a need to be continuously challenged. Many times I
meet people in interviews who are excellent people but
they have the attitude, “I’ve been
there done that”, as opposed to “this is exciting
and we can make something really cool here”. So attitude
is very important.
Everything else can be learned. High energy and real commitment
to work and an attitude are the core.
Any final advice for the person who wants to
build the next Redknee?
Are you doing it for
the right reasons? To test for this ask yourself whether
you are willing to do this for the next five to ten years.
This is important because those reasons will get tested
daily for a very long time. If you are building a company
solely for things like money, power or ego, all very powerful
motivators, I am not sure this will sustain you for 5-10
years. I think they will get tested out and you won’t
be able to survive the quest.
Building a great company
takes time. Look at RIM, Cognos or Oracle. They all took
time to build and were driven by a vision. Many will tell
you it takes ten years to build a solid company. It takes
3 years to implement a proper management system alone and
you have to go through a few cycles along the way. Building
a solid business is not a sprint, it’s
Now I will admit there
are different quests. If you want to build something to
flip it that is fine and some people are very good at that.
But know whether you are in the business of growing trees
or growing corn because they are very different from each
other. People try to compress things, they try to grow
trees like they grow corn. But trees take time and you
cannot build great forests by continually clear-cutting
the saplings. Long term value gets built through commitment….
People have actually
asked me, how dare you to dream of building a big company?
I dare because I do not know any better. I have never known
better. I have never known what I wasn’t supposed
to be able to do. Now I am not so arrogant as to say it
will definitely happen but I can definitely tell you I
know I will spend the rest of my life trying.
The quest is the thing, and I am learning every step of the
way. I love it!!!