It used to be that we were organized feudally, and general managers in each country would set their own prices for the local market. So all of a sudden we were able to also set support policies and marketing strategies globally and make accounting, purchasing, and legal functions international, instead of regional. It was a reorganization from being lots of little national businesses to one set of products and processes for the whole world supported in a uniform way. The result was that we achieved huge efficiencies, saving a billion dollars the first year.
American Way: What were other concrete benefits?
ELLISON: Now managers only focus on one thing: how our technol-ogy can be applied to solve specific customer problems, or discover where our products need further development. Interdependence is fundamentally different from independence, so we've not only had an organizational change, but a huge cultural change. Those who loved being generalists thought this was awful, so we lost a few managers in the transition, but those who valued their knowledge as specialists thought this was great.
One of the biggest gains has been uniform support everywhere. The way you get quality is to define a set of processes and procedures and make sure they are implemented everywhere. The quality of support is now much higher.