Profile of a successful software company that capitalizes on its customer client list and its employees.
Every company knows it needs to keep tabs on -- and sell more to -- its old customers. But nobody capitalizes on a client list like Great Plains Software
Think of software and you might think of Silicon Valley or Boston's high-tech highway. But Fargo, N. Dak.?
Oddly enough, in that windswept farm country, Doug Burgum has built a thriving software house that's the envy of many a big-city competitor. Thousands of companies run their PC-based accounting systems on products that roll out of his Great Plains Software. And while the software itself is top-notch, nothing has been more instrumental to the company's success than Burgum's long-horizon management style. Step by step, it has made Great Plains a powerhouse in an intensely competitive field.
The story opens in 1981, when a few Fargo businessmen started an Apple computer store. With applications software rare in those pioneering days of personal computing, they hired programmers to create a basic accounting package. The software venture was such a hit that by 1983 it was operating as a separate company. What it needed was marketing talent to move it to the next stage. The owners called Burgum, who at the time was a McKinsey & Co. consultant in Chicago.
Although he was living a heady life in the Fortune 500 fast lane, Burgum was intrigued. For one thing, he wanted to return to North Dakota. He felt confined in the buttoned-down world of high-priced consulting; his style ran more to jeans and sneakers. But mainly he wanted a shot at running a company of his own instead of serving as a hired gun for others. So in the spring of 1983 Burgum joined Great Plains, and in 1984 he and his family bought out the founders.
Burgum brought to the helm of his then $3-million-a-year, 20-person software company some strong convictions about business management -- ideas that dated back to his youth. He'd grown up in Arthur, N. Dak., a tiny town where his grandfather had homesteaded and later started the Arthur Farmers Elevator Co. It's still owned by the Burgum clan, and working there during the summers, young Doug internalized its long-term outlook.
"When you've got a grain elevator, the people you serve are landowners, and they move the ownership of that land from father to son," he explains. "My cousins are serving the grandsons of the people my grandfather served. That was the only business example I grew up with. You served customers for a lifetime. There was no such thing as a quick buck."
Those homespun values shaped Burgum's thinking. Superb customer service, long-term partnerships with people -- those were the keys to a viable enterprise. He held on to those values throughout his education at Stanford, where he earned an M.B.A., and refined them during his three-year stint with McKinsey. "I saw large companies struggling to meet quarterly earnings and lots of pressure on the short term," he says. "Japan, meanwhile, with its long-term approach, was building excellent companies. When we bought Great Plains I was 27, and I figured we had a great opportunity to build something where we'd instill in people that long-term mentality."
That was the management plan Burgum designed, a kind of tortoise-versus-hare strategy of patience. He wanted to gather momentum and market share slowly but steadily; by cementing that attitude into the Great Plains culture, he reasoned, he could begin to differentiate his company from its competitors.
It would help, he knew, that the market for accounting software was one his philosophy fit. "Accounting is not a fad," he explains. "Nobody says, 'Gee, business is off, I think I'll stop keeping my books.' It's a fundamental thing you do in good times and bad. Our customers use this stuff for years and years. If you treat them right, you have them as long as they are doing accounting, so long as you listen to their needs and meet them."
It would also help, he was convinced, that he had just the tool for listening to and meeting those needs -- and that he had figured out how to use it. Great Plains would compile a state-of-the-art customer list and turn it into the company's major marketing advantage.
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By now it's safe to say Great Plains has done that in spades. The engine powering the software company past competitors has been a near-fanatical commitment to customer service and satisfaction. And by customers, Burgum means the legions of small and midsize businesses, in more than 400 industries, running their accounting systems on Great Plains products. And he means the company's "partners" -- the 1,500 resellers, the 1,000 installers, and the 345 software developers who represent and work with Great Plains across the country.
Many people talk about good customer service, but at Great Plains it's an all-out crusade that starts with getting the right employees. In some ways, recruiting high-caliber people is easy at Great Plains. As one of the state's premier employers, it draws some 2,000 applicants a year and might hire 50 during a big growth phase. But Great Plains brings a special zeal to the way it selects employees. For instance, because 80% of new hires start in technical support, fielding phoned-in questions from Great Plains users, they are required to have degrees in math, business, or computer science. Résumés, transcripts, and references are carefully checked. Those who make it to the interview stage confront not individuals but teams of managers and supervisors, all trained in interviewing. Some candidates face as many as four teams.
"We believe in getting multiple perspectives of candidates," says Howard Hansen, head of the human-resources department. "We look for potential. We want people who can do well in the job we're hiring them into, but who also have the dynamics and capacity to push out the parameters of their job descriptions, to make change occur. And we place a high priority on people who demonstrate the values that are important to us, who understand what it means to take care of customers who have high need levels."
The focus on customer service permeates the whole company. Raises hinge on attention to customer needs. Quarterly goals quantify it. Programmers get bonuses for speedy responses to customer questions that can't be handled by the technical-support specialists. In annual reviews, 30% of the total evaluation is based on values and attitudes.
