Tuesday, October 13, 2015
Interview With Big Data Pioneer -- And Author -- Charles Morgan
Corporations, marketers, and governments are exploring the practical and legal limits of collecting and utilizing Big Data. One man began thinking about its value decades before anyone else, and he’s revealing his professional insights, personal experiences, and career triumphs in recently released book, Matters of Life and Data: The Remarkable Journey of a Big Data Visionary Whose Work Impacted Millions --Including You.
“The man who opened your lives to Big Data finally bares his own,” reads the introduction to this most stirring memoir. Indeed, he has much to share, as Morgan, 72, should know a few things about Big Data. The company he helped grow into a technology and marketing powerhouse, Acxiom, is a world leader in data gathering and its accompanying technology, and has collected over 1,500 separate pieces of information on some half a billion people around the globe.
His book, which I have the honor of promoting to the news media, recounts and celebrates a journey from his modest upbringing in a small town on the Arkansas River to his role as one of America’s all-time Big Data visionaries. During his 36-year tenure, Morgan grew a small data processing firm of 25 employees into a global juggernaut by becoming one of the largest aggregators of data and consumer information in the world. He transformed the small data processing company into a publicly held, $1.4 billion corporation with 7,000 employees and offices throughout the world.
Morgan took the company public by age 40 and oversaw significant growth. Annual revenue grew from 7 million to 90 million dollars from 1982-1992 and then it grew to more than a billion by the end of the 1990s. Morgan retired from the firm in 2007 after a buyout deal with Value Act and another private equity firm fell through.
Here is a Q & A with Morgan:
1. How can we protect the privacy of individuals but still allow companies to benefit from the use of Big Data? Big Data has the potential to do a great deal of good in our world today and for many years to come. On the other hand, Big Data will create a lot privacy issues. Today, much more data is being recorded about each of us than you might imagine. In February 2015, for example, Samsung admitted that their new TVs will be collecting data about the people who watch them. That data will include voice data (what you say about what you are watching), picture data (your expressions as you watch), and viewing data. Samsung of course claims that this data will only be used to improve the quality of the overall experience of using their product. Do I believe them? I don’t doubt that this is what they intended these data-collection TVs to do, but it sure doesn't take much imagination to see a great potential for misuse of such data. We will never be able to write enough laws to totally solve this problem. We cannot stop companies from using data that improves the quality of products and services. However, we must somehow protect ourselves from misuse. At Acxiom, our motto was “consumer privacy is a state of mind.” It didn't matter if something was legal; the question should be posed, “Is this right? Is this the way we would want to have our data collected and used?” Companies have to have education programs for their employees and create that state of mind—that the security of people's personal data is important to our whole society.
2. If you were to advise an entrepreneur looking to launch a company today, what three things would you share? By their very nature most entrepreneurs are very optimistic people. When they have an idea, they believe that it can be developed and made commercial with much less effort than it generally takes. My executive summary is this: It’s going to be a lot harder and take a lot longer than they could ever imagine. First, entrepreneurs must be sure that the product they have is real and the plan they have is real. By that, I mean that the product and plan can be converted into a commercial success. It's very easy for people to fall in love with their own ideas and to want to ignore all the pitfalls and the downsides. A product plan and a marketing plan are essential to test the basics of whether this thing that they’ve come up with is even practical. Marketing is where most plans fail to be realistic. For example, be sure the cost of acquiring new customers is real. Second, I would say that when you’ve convinced yourself that this new idea of yours has potential, then try to enlist the support of others. No person by himself is going to be successful developing an entrepreneurial idea. It takes a lot of people, and all those people have got to believe strongly in the concept that is being developed. If enlisting others is impossible—or even very difficult—then examine once again the practicality of the whole business idea. Finally, and most importantly, the developer has to be sure that he or she has access to adequate capital to develop the business. All too often people think they'll be able to get more money after they show how cool their idea is. Most often that additional money is never found and the team just wasted a lot of their own money and some of their friends’ money. Best rule: Line up two times the money you need to get to phase 1—and you will be lucky to squeak by with that much.
3. You say that Acxiom Corporation, a world leader in data gathering and its accompanying technology, has obtained some 1,500 separate pieces of information on over a half-billion people worldwide. How do we make sure the information is not used wrongfully? I had great concerns about the possibility of data misuse at Acxiom. We had literally hundreds of thousands of data files with extraordinary amounts of in-depth information about everyone who lived in the United States and many in Europe. I developed a philosophy that we could not create enough rules at Acxiom to solve the problem. Eventually I came to believe that creating an atmosphere and culture of data protection was the best answer. We chose to educate our people and to create a simple set of rules. For example, the “do right rule” taught our employees to think about the data that they cared for as data about people just like themselves—in fact, it could even include their own family members. So treat that data like you would want your own data to be treated. Of course there were more complex rules that applied in all of our data practices. There were—and still are—laws that protect people’s credit data. Credit data could only be used for preapproved credit offers and not for other kinds of marketing. To help oversee all this process of education and oversight with our employees and our customers, in 1991 I appointed a chief privacy officer. Jennifer Barrett became the first chief privacy officer in the United States, and today she still holds that position at Acxiom. Jennifer has become a global leader in marketing data use and data protection.
4. You helped build your own race car, having won numerous races including the 24 Hours of Daytona and the 12 Hours of Sebring. What kind of rush did you get going 150-160 miles per hour? Did you ever crash? At the ripe old age of 58, I was driving at Daytona in my last event before retiring from professional racing. I was in a Ferrari 333 SP in the middle of the night, and on the front straight I was regularly hitting the rev limiter—a device designed to restrict the maximum speed of an engine. I came into the pits and asked the engineer how fast my car was going when it hit the rev limiter. His answer was about 205 miles an hour. Admittedly, that was quite a rush, but most of the time as a race car driver you’re totally unaware of the speed at which you’re traveling. Your goal is to go as fast as you can without crashing or tearing up the car. In my heart I’m a geek and an engineer. I liked designing and building cars as much as I liked driving. My son and I drove several races together, including a major race in Canada that we won in a car I designed. That was as big a rush as going 200+ miles an hour at Daytona. Other than the fact that I occasionally went 200 miles an hour, I was a pretty cautious driver. If I crashed I had to pay for it, and we might not have enough parts to fix the car at the racetrack, ending the weekend for me. As a result, I didn’t have all that many crashes. But you can’t drive race cars for 25 or 30 years and not be involved in accidents. I had my share of driver errors and mechanical failures that resulted in some pretty serious wrecks. I hit the guardrail at Watkins Glen racetrack doing nearly 150 miles an hour. Earlier in my career I hit the wall at Road Atlanta and was helicoptered off to the trauma center. Fortunately, in neither case was I seriously hurt. The Road Atlanta accident had an amusing sidebar. I was in the trauma center all by myself, plugged into all sorts of stuff. The door to the trauma center kept opening and closing with hospital personnel sticking their heads in the door—only to quickly turn around and leave. Finally, I heard one complain loudly, “That’s not Paul Newman.” Paul Newman was racing at road Atlanta and the rumor had gone around the hospital that he was in the trauma center, but to the staff’s disappointment they found only me.
5. You’ve also raced motorcycles and flown jets. How does the adventurous side link to your business life? Some amount of measured risk-taking occurs when you race cars, drive motorcycles, and fly jets. By the same token, most successful entrepreneurs are by their very nature risk-takers. They would never have started that business or risked their family fortune without being able to stand a certain amount of risk. Also in business, you have to believe that you’re going to be successful and overcome those risks. By the same token, you don’t enter a race and think, Oh goodness, I might crash and hurt myself. I always wanted to manage my risk to the greatest degree possible. I’ve never raced so hard that it was win or die, and I’ve never bet everything on a business venture. Well, almost never.
6. You are the CEO of your latest tech venture, PrivacyStar. It’s been seven years since you stepped down as chairman and CEO of Acxiom. What did you still find rewarding—and challenging—in trying to grow another company? Creating and building a small company is a lot more fun than trying to manage a much larger company. Sometimes at Acxiom I felt like I was trying to herd cats as I provided leadership on a multitude of fronts. Many parts of the public company CEO’s job are really not very enjoyable. You have to deal with lawyers and boards as well as many other distractions, like unfriendly press. I always wanted to spend as much time as possible on new product development and leadership activities at Acxiom. Down deep in my heart, I felt like life was being sucked out of me by activities that were beyond my control. There were things I just had to do and couldn’t get out of but I sure didn’t like them much. I felt like I didn’t have enough time to do the job that would contribute most to the growth and success of Acxiom. In a small company like PrivacyStar, I am able to spend much more of my time working on things like new product creation and development. We are doing things that no one else is doing in the mobile space. We built ourselves from a big money loser to a profitable company. That is fun. There’s still a lot of work and worry, but the overall satisfaction level is a lot higher for me when I feel more in control of my destiny and doing things that I enjoy. If we miss a quarter at PrivacyStar, it’s only us who are disappointed, and there are no newspaper headlines.
7. While working at your first job at IBM as a systems engineer, you were called back just a few days into your honeymoon due to an urgent office matter. Was this the beginning of your career consuming your life? I was shocked, only a few days into my honeymoon, to receive a call from my new boss who said, “Charles, we need you back in the office.” He knew where I was because he had come to the wedding in Fort Smith, all the way from Little Rock. Without too much protest, my wife of just a few days agreed that we could go back to Little Rock and I could start work. My first job at IBM was to get involved in a troubled installation of a computer on which I’d had absolutely no training. I had to teach myself what I needed to know in order to help get these problems resolved. I did that in a number of other situations that seemed to follow one after another. I was working all day and studying many nights to try to figure out how to achieve a good result for one customer or another. That was the story of my early experience with IBM. I was either working at a customer’s office—sometimes all night—or off on a trip to learn about some new machine or learn some new skills. In those early days, IBM sent new people off to school in the first two years for about 20 percent of the year. During that time, I recall having at least two one-week schools, two four-week schools, one six-week school,
and one seven-week school. Those first two years were a compressed
learning experience. And my job was far from purely technical. Besides learning about programming and
design, I became very involved in the selling process, as well as in the
organizational process of being sure customers were properly prepared for their
new computers. The downside of all this
is that I became quite one-dimensional. It was all work and I had little time
for family or other activities. I was very successful at my job but not nearly
as successful at home and with my kids.
8. Early on your company was in debt and couldn’t make payroll. You asked people to cut their pay in half for a period of time in exchange for paying them a more once you got past the dark period. How did that turn out? We got to a point in 1976 when we were losing money and were in danger of not being able to make payroll. Our principal owners, the Wards of school bus fame, were in terrible financial shape and they had no ability to help us out. There was no one to fire and no way to cut expenses that I could see. So I came up with the crazy idea that if we could make our payroll a third smaller, we could survive. All we had to do was to get the top six most highly paid people, including myself, to take a 50 percent pay cut. I can’t imagine going to a management team today with such a scheme. We were working on some new very promising opportunities that would make the company profitable if we successfully completed them. I told everyone that they would get two dollars back for every dollar of pay they gave up, should we succeed. I must’ve been very convincing because they bought it and no one left. And not only did they double their money, but through this crisis we also developed increased levels of trust and a stronger bond within the top leadership team.
9. To what do you attribute your success in becoming a dominant force in the market database world? Several things. We had a number of principles guiding our business strategy and execution. One was to hire outstanding people—we recruited intensely at area colleges and universities and were able to attract the best and brightest young graduates. Another was to provide world-class service to our customers, which helped us both acquire and keep customers. Take Citibank—it became a customer in 1983 and is still a major customer of Acxiom’s today. From our earliest days we also put a premium on designing and creating leading edge software, and that gave us a leg up in the marketplace. In the mid-1970’s, for example, we created a revolutionary way to manage and deliver mailing lists for the Direct Marketing industry. The List Order Fulfillment System (LOFS) was faster, better, and cheaper than existing mostly manual systems were at the time; more importantly, LOFS was more accurate. Another game-changer was called AbiliTec, introduced around the year 2000. AbiliTec made large-scale name and address data far more accurate than ever before, and to this day it remains a key component of Acxiom’s technology arsenal. We created a business culture and an organizational strategy that helped us be more nimble—and more efficient—than most other companies our size. We instituted formal initiatives that emphasized leadership, and we provided our people with training in the qualities of effective leaders. We also did some pretty radical things, such as doing away with corporate titles. When I gave up the title of CEO and introduced myself simply as Acxiom’s “Company Leader,” I got more than a few puzzled stares. All of these concepts worked together to create an effective leadership team and to achieve solid results for our customers, over many years. But satisfaction wasn’t limited to customers—employees liked the atmosphere at Acxiom as well, and the company is full of people who have stayed for decades.
10. You struggled with time management. What advice do you have for those consumed by any distractions and desires but who seek to manage and grow a company? Being leader of a large organization is a study in frustration for the top executive. Much of the CEO’s time is commanded by the corporation and the duties of his position. Boards of directors, top customers, and the company’s leadership team can eat up a significant number of hours in a CEO’s day. Over my 35-year career at Acxiom, I struggled to learn to be more effective. In my early years, I thought I had to be involved, at least to some degree, in virtually everything. But I knew I wasn’t very good at things like accounting and administrative work, and in time I figured out that there were people who could do these things better. At first I was worried that they would screw it up and maybe I should stay more involved. And of course I was right—they did screw up many times. Finally, though, I figured out that if I delegated things to the right people and showed them that I trusted them even though they occasionally failed, they would end up doing a better job overall than I could in those areas. That was one half of the equation—to shed the tasks where I could provide limited value to the corporation. The other half was to develop techniques to allow me to spend more time on the activities in which I could create the most value, such as research and development.
11. What challenges did you need to overcome as a leader during the number of acquisitions and mergers your company participated in? Acquisitions are always very difficult. When you finally get the deal done, which often takes months or even years, the work is just beginning. Every situation is different and none of them are without their challenges. A small one can be every bit as hard as a big one. Technology integration, cultural differences, and distance are all barriers to the smooth successful merging of two companies. I really don’t think we ever got it truly right. I know that my being involved always helped. Leaving small deals to others was often a bad idea. If a deal is worth doing at all, the CEO should take an active role to be sure that the integration of the two companies is accomplished successfully. With smaller acquisitions, probably the biggest challenge was forcing myself to spend enough time with the management teams in these acquired companies to make them feel part of Acxiom as a whole. The leaders of acquired companies are always nervous in the best of cases. They’re not sure how they’re going to be accepted by their new bosses. They’re not sure what to expect or even how to act and respond to various things that they are told or asked to do. They need to know that they’re considered important and that they’re being listened to, especially by the top guy. I found I couldn’t just move on to the next deal until enough nurturing had gone on to ensure the long-term success of the previous acquisition. Some of that nurturing could only be done by me.
12. When you took your company public, what opportunities and dangers did this open up to you? When Acxiom went public in 1983, it opened up many new opportunities for us. For example, it helped give us the credibility that we needed to be able to deal with large banks and other companies on the East Coast. The money created by the initial offering gave us financial freedom and the ability to build buildings and buy computers that were critically needed. On the downside for me, I now had shareholders and a public company board looking over my shoulder. For the first 20 years of being public, that was never a terrible burden for me or for Acxiom senior leadership. But when Sarbanes-Oxley was passed and the new activism by shareholders began, our lives changed forever. Ever-increasing amounts of my time were devoted to board matters and dealing with shareholders. Sarbanes-Oxley wasted a tremendous amount of time for us and created a great deal of unnecessary expense.
13. What is your hiring and firing philosophy? My philosophy was very simple—hire the very best people you can find. That philosophy extended to the concept that you hire people when you can hire them, not necessarily when you need them. Over the years I’ve hired a number of people that I really didn’t have a job for at the time, but I knew they were so good that we would eventually find a great spot for them. They were generally some of the very best hires and made the biggest difference. Another key component of my hiring philosophy is that the senior leadership of any company needs to be very involved in the hiring process. Stars hire stars and duds hire duds. People doing the hiring have to be sure they’re putting good people in the right places. If you hire a superstar and put him or her in a dull and boring job, it usually ends in failure both for the company and the individual. Really good executives don’t like to fire people. If they hire a person, then they feel invested in him and want to see him succeed. When a hire isn’t succeeding, the tendency is to give that person numerous chances before resorting to the pink slip. And then the most common first statement after that firing is, “I should’ve fired him six months ago.” So my philosophy, often not followed by me, is that you know when it’s time for someone to move on. Take action, make your decision now, and realize it’s the best for the person and for you. Generally, you’re both in misery over it and know it’s coming, but you keep putting off the inevitable while hoping for a miracle. I have to admit I still do that. The upside of that is that you get a reputation for not making snap decisions about people who work for you. I guess it’s a good thing, and something that others respect you for, because you give a person multiple chances. At the same time, others will say, “Charles took too long to make that decision. I wish he was more decisive.”
14. At one point you eliminated everyone’s office title. How did that go? Eliminating titles came about at Acxiom through a complex set of circumstances. We had multitudes of titles just like most companies do today. We had directors, senior directors, and associate directors. We had levels within levels. Acxiom in the early 90’s was in desperate need of simplification. We had way too many bosses in our organization, and management structure was getting in the way of getting work done. It was just too hard and took too long to get anything accomplished. So we had to get rid of all those titles and layers of management. We redefined the company into three layers and replaced titles with roles and responsibilities for each person in the company. At the highest level you had me—I was now the “company leader.” Working for me were division leaders, and working for them were business unit leaders. That’s about as simple as you can get, but it left an awful lot of people that once had management titles, such as director, possibly with no title and nobody working for them. As you can imagine, that was not an easy transition. We lost a few people. All I can say is, we got through it and we became better for it. It gave us a great deal more flexibility to move people around in the company where they were needed. Things got done faster because there weren’t so many signatures required.
15. Is this a good time for database marketers? Now is the best time ever to be in database marketing. Today all successful marketing programs have a significant component built around the database and database marketing. Companies have access to much more data than ever and a myriad of wonderful tools to help them analyze that data and create successful programs. Still, it’s not magic. Database marketers have to be sure they have the right software for their needs and have to apply that software properly. That software must have access to accurate and relevant data for the kinds of problems being solved. The old adage still applies—garbage in, garbage out. Most people don’t realize that Acxiom’s true value-add during all those years was just getting the data right so that marketers had good data to work with. Many of our large customers employed some of the brightest database marketers and analytic specialists money could buy, but before Acxiom their results were spotty, at best, because of bad data. There’s a great deal of opportunity in today’s world for people who possess a good blend of the skills to get the data right and to apply the right tools to database marketing. As more specialized skills are required, a number of subspecialties have grown out of database marketing. For example, today you can have an entire career in just getting the data right. To that end, the University of Arkansas at Little Rock now offers a PhD in Data Quality.
16. Do you think the laws will change with technology as it relates to what information is gathered, shared, and used? Controlling the gathering and use of data has always been a complex problem to administer. The Internet is making this problem almost too big to comprehend. Certainly laws will have to be written and old laws amended to give basic protection to citizens of the world. On the one hand, people say, “I don’t want anyone using any data about me without my permission”—even as those same people post everything about their private lives on Facebook. On the other hand, companies say, “We’re going to protect the consumer and their information”—even as those same companies are putting cameras and listening devices in their TVs to collect information about viewing habits. Much of the data that companies collect for a specific reason is used to benefit consumers. The problem is that the quantity of the data that is being collected, by electronic devices and over the Internet, is growing exponentially today. Access to the data that companies collect is usually carefully protected, but not always. There have been a number of widely publicized situations in which well-respected companies have gotten in hot water for collecting and using data improperly. Additional laws are going to be complex to write, but are certainly needed to cover potential Big Data abuses. We do have examples of successful laws, such as the Fair Credit Reporting Act—25 years and counting, and that law is still serving us well. The best way to solve these problems is not to rush to a conclusion, but to get industry involved in making recommendations in new areas like the Internet. All I can say is, I’m glad I’m not a legislator or a lawyer, because I really don’t have great answers in this area.
For more information, please consult: http://www.mattersoflifeanddata.com/
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Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer. You can follow him on Twitter @theprexpert and email him at email@example.com. He feels more important when discussed in the third-person. This is copyrighted by BookMarketingBuzzBlog © 2015