CEO's Notebook

CEOs discuss getting employees to act like CEOs; taking advantage of aggregate buying services; finding Web developers in unconventional places; and benching the company culture. Plus: What Mitch Kapor learned as a disc jockey before founding Lotus.

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Hands On

Everyone's a CEO

You might think that you give your employees a lot. But would you give them your title?

By Anne Marie Borrego

If Gilbert van Cutsem's customers mistakenly assume that he's the CEO of Pervasive Software Inc., he isn't going to correct them. Then again, neither will Pervasive Software's official CEO, Ron Harris. In fact, Harris would rather watch multiple "chief executives" take charge of the $59-million Web-development and database company than have to shoulder the entire responsibility himself.

Even though van Cutsem isn't actually a CEO, he functions very much like one. At Pervasive, Harris taps a number of employees to become "CEOs" of individual projects and products. Designated CEOs are responsible for everything from crafting annual business plans to overseeing all the daily activities for their projects or business areas.

For example, van Cutsem is the appointed CEO of Pervasive's northern European division. His responsibilities include developing the company's northern European sales projections, business-development plans, and marketing strategies, as well as the resources -- namely, the cash and the people -- necessary to meet those goals. Harris appoints the internal CEOs on an as-needed basis, according to employees' leadership abilities. He also expects his CEOs to take big risks in their departments -- without seeking his approval or that of other top executives. Harris does, of course, expect results and accountability from his charges.

"When we started the company, we wanted to have a progressive culture that went further than 'empowering' people," he says. "That word is tired and overused. We wanted to go beyond that." So he gives his CEOs the ability to act autonomously. He believes the internal CEOs inspire the rest of the staff to take initiative in their own roles and therefore make the whole company more productive.

Harris appoints CEOs not only for geographic divisions but also for key projects and even product launches. When Pervasive outgrew its original Austin headquarters, he appointed Sandy Rios, then the director of operations, CEO of the move and trusted her to handle everything -- from the $21-million cost of operations over a 10-year lease period to IT connections and possible moving days. When Rios presented her plan to move to a larger space in Austin, Harris and the board accepted it right away. "Because Sandy was the CEO, I don't think I spent five minutes on the plan," Harris says.

He admits that handing over the reins isn't always easy. "But I'm sharp enough to know what I don't know, and I have to surround myself with people who are better at certain things than I am," he says. He believes that once he's selected the right people, all that's needed is a little fine-tuning -- like tailoring compensation incentives to the individual CEOs -- before setting those employees out on their own.

Van Cutsem was such a success as the northern European division's CEO that Harris awarded him with the company's 1999 Entrepreneur of the Year award. Not every internal CEO achieves that level of merit, but Harris still thinks delegating is worth the risk. And with more responsibility distributed throughout the company, individual snafus carry less weight. "There's nothing any one person could do that would result in the catastrophic failure of the company -- that's pretty far-fetched," Harris says.

The program appears to be a success -- at least for employee retention. "That's the main reason why I'm still at the company," van Cutsem says. "This is how I like to operate. You can do anything you like as long as you bring in the results."

David + David + David = Goliath

Small companies are now banding together on the Web for volume discounts on everything from pencils to office chairs to phone service. Here's a sampling of some Web-based aggregate-buying services that can stretch your company's dollar.

What: LONG-DISTANCE SERVICE
Where: www.essential.com
The Goods: Qwest, $0.047 a minute, plus $4.95 a month
The Good News: That's cheaper than the standard Qwest deal of $0.052 a minute, plus $4.95 a month
Secret Weapon: Negotiated discounts

What: 401(K) PLANS
Where: www.demandline.com
The Goods: T. Rowe Price, setup fee of $2,500, plus $20 per employee; $28 per employee annually
The Good News: Demandline customers save as much as 15% on annual administrative costs
Secret Weapon: Reverse auction

What: VEHICLES
Where: www.shop2gether.com
The Goods: Dodge Caravan, $25,986
The Good News: The same car lists for $28,105
Secret Weapon: Negotiated discounts

What: WEB BANNER ADS
Where: www.bcentral.com
The Goods: Major-site banner ads ranging from $50 to $2,000
The Good News: Major sites usually require a minimum purchase of $2,000
Secret Weapon: Bulk buying

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