The Story Behind Papows' Resignation

When Lotus Development Corp. President

and Chief Executive Officer Jeff Papows announced earlier this month that he

would resign Lotus as of February 1, industry speculation was rife about the

reasons for his decision and the impact his leaving will have on the IBM

subsidiary.

Yesterday, on the opening day of the annual Lotusphere conference here, Papows met with Computerworld Hong Kong Editor Don Tennant for an in-depth discussion of his decision to leave Lotus; his feelings about his designated successor, IBM veteran Al Zollar; and his plans for the future.

COMPUTERWORLD HONG KONG: Let's start with a behind-the-scenes look at how your resignation came about. When did you decide to leave, and what tipped the scales to make you reach that decision?

JEFF PAPOWS: I didn't decide until probably sometime in the early to middle part of December, so it's all pretty recent. I thought about it at different times kind of fleetingly over the course of the last couple years. When the IBM acquisition was made (in 1995), I agreed to stay four years, or to reach a set of objectives which included the 30 million users (of Notes), which was IBM's vision for where this would go -- kind of whichever came first. So at different points in the course of the last almost five years post the merger, as those milestones were reached, I had the opportunity to sort of sit back and say, "Do I want to keep doing this?" So I asked myself the question, in all honesty, more than once.

There were always, however, enough challenges about the condition of the business, either financially or from a share perspective, or something else that gave me enough cause for concern, that I never got myself comfortable with the notion of leaving. I always felt responsible for the next problem. This year was such a phenomenally successful year in both market-share and financial terms, and the company had so much business momentum, and I had seen so much of my own visions of this whole knowledge-management thing play out in product terms, that for the first time I could step back and say, "Wow, we've really accomplished principally all of the things that were envisioned early on that I sort of consciously signed up for."

So for the first time I could ask myself that question without the weight of the guilt that would have been associated with leaving prematurely.

That said, in all honesty, it was then and is still now a very tough decision, and I to this minute am not sure that I made the right one. I can quantitatively express all the reasons and feel really good about it. The thing that makes it so hard is I just love the people in this company like a family. Time after time I've asked things of them that were completely unreasonable and beyond what you ought to have a right as a CEO to ask of any group of people. And time after time they've responded in ways that are almost beyond imagination. So leaving them is extraordinarily hard.

The truth is that the village idiots are getting rich in the dot-com space.

There are a reasonably modest number of executives that have had the breadth of experiences that I've had in this business, and I can't imagine that I can't find something to do that will have all of the tests of an independent pre- or post-publicly traded company, and all the independence that goes along with that, that will be equally invigorating.

CW: I asked you in March of 1997 whether there was a part of you that was attracted to doing something different or taking on a new challenge, and this was your response: "Lotus is enough of a center-stage company and enough of a challenge in that your competition is typically Microsoft, that I can't imagine being more invigorated than competing with Bill (Gates). So why would I ever leave? Unless I felt I was personally failing and the company needed a different manager, I can't imagine there would be a lot of impetus." So what changed?

JP: It's actually still a pretty accurate statement. What's changed since then is we've completed some of the elements of the integration (with IBM) that I think allows for a different manager, where perhaps some more of the synergy that might be valuable for both Lotus and IBM might be better harvested by somebody else. I think Al (Zollar, general manager of IBM's network computing software division) is a great choice, and I think that's part of the answer.

That said, I have enormous personal respect for Gates. I like him individually, beyond just respecting what he's done from an industry or business perspective.

I think some of the things that I feel proudest about in my tenure relative to Lotus' history were reaching out and having the foresight to bite our tongue a little bit here and there and to develop relationships with Microsoft that have ended up being tremendously productive to both sets of customers, and to Microsoft as well as Lotus.

CW: As an aside, what's your reaction to Gates stepping down and Steve Ballmer taking over as CEO of Microsoft? Do you expect any change over there?

JP: I have no first-hand knowledge; I haven't talked to him since he announced it. My bet will be that Bill (Gates) is enough of a personality and enough of a force that he'll always have a consequential impact on the company, whether he's CEO or chairman of something else by another label. And Steve's been there for forever, so I don't think they'll miss a heartbeat. I'm sure Bill is doing exactly what he said he's going to be doing -- getting more deeply involved in a lot of the technology stuff, which I think has been part of what has made that company so successful, is to have a CEO with that much technical acumen.

CW: OK, back to the behind-the-scenes look at how your resignation came about.

When and how and to whom did you break the news of your resignation?

JP: To (IBM Senior Vice President and Software Group General Manager) John Thompson in the middle part of December. It was a telephone call -- given the way the fourth quarter runs, it was a couple weeks later before we could actually get together. He spent some number of days trying to talk me out of it -- I like John Thompson personally very much, so he was pretty persuasive. But I decided that I was never going to have a better opportunity to make that kind of decision.

And to be honest, I need to refresh the batteries a little bit. I've been on hundreds of airplanes this year; I've spent an enormous amount of time away from home. So I was probably a little bit spent. I will tell you that while John made an effort to talk me out of it, when we had a conversation face-to-face and he understood why, he supported it completely. Both he and (IBM CEO) Lou (Gerstner) and the company made it extraordinarily easy, administratively and otherwise, for me to do it exactly the way I would want to do it -- to have as long as I want to participate in the transition; to stick around long enough to make sure that Al has got a reference book sitting in the corner office that he can go to.

CW: Have you spoken with Gerstner?

JP: No, not face-to-face as yet. I'm going to meet with him as early as next week or the week after. He actually had wanted to get together earlier, but because of the death march to Lotusphere, truthfully I've been so tied up that I just couldn't get down to Armonk. But I will shortly.

CW: Was there any debate about the timing of the announcement out of concern that it might be a distraction at Lotusphere?

JP: There was a discussion. My sense is that if we had waited and announced it afterward, it would have felt incredibly dishonest. Imagine what it would have been like to get on a stage and have the kind of passion and dialogue that I have with this audience every year and then blind side them 60 days later.

There was a lot of angst about announcing it when we announced it. One, I wanted to finish the year; and secondly I wanted to get it out a couple of weeks before Lotusphere so the news would be pervasive enough that nobody would come down here confused. So I had a very small window, actually.

I don't know whether it was the right thing or the wrong thing. I think my cautious critics would say I should have been less personal about it and I should have waited till mid-year or something. It wouldn't have felt as direct to me, and I don't think I could have done it as comfortably. We'll never know exactly what the right time is, and it's never easy. But I'm pretty comfortable with the timing.

CW: You've made it very clear in speaking to the press here at Lotusphere that there was absolutely no connection between your resignation and the negative reporting about your personal history that appeared in the Wall Street Journal last year. That said, have you had any reason to believe that there were concerns in the Lotus business partner community about your effectiveness in the wake of that negative reporting?

JP: I will tell you yesterday, Sunday morning, the day before the opening (of Lotusphere) I always have habitually come out and talked to the 3,000 business partners (ahead of time). I walked out on the stage Sunday morning and they applauded for 10 minutes before I could quiet them down and get on with it. So based on that one metric, which admittedly isn't much, I don't sense any lack of support in the business partner community.

CW: You told the press here that you considered the Wall Street Journal reporting a "minor annoyance." I'll be honest with you and tell you, I don't believe that.

JP: It's a minor annoyance in the grand scheme of all of the things that I feel have been challenges or accomplishments in my 20-odd years in this business. It was incredibly hurtful when it happened, and to this day I am amused and befuddled as to why it's such a damn story. But it is what it is, and there's no point in being defensive about it, because if you're going to be successful and work hard and get a certain amount of prominence, then I guess what I've learned is "Katie, bar the door, you're all of a sudden interesting."

I still don't think I'm that interesting.

CW: You've stated publicly that you're leaving Lotus because you want to lead an independent organization again. Do you feel Lotus is any less independent now than it was at any other time since IBM acquired it?

JP: It is less independent than it was pre the acquisition; it is also exactly the right thing. By the way, all of the integration that's happened at IBM has been at my urging as much as IBM's. It would have been economically stupid not to have integrated things like human resources or legal or finance or other things. At no time have I gotten pressure from IBM to integrate anything that affected the direct contact with the customer, the brand, or any of the things that I thought were culturally unique about Lotus.

And there's been no pressure to this point. So I'm not leaving because I'm angry or disturbed about any of the IBM integration. I will tell you that I don't think I get to exercise the full breadth of skills that a public company CEO does. That's kind of understandable and logical to me, and that's one of the things appealing about going and doing something new.

CW: So there has been a change in the status of Lotus' independence?

JP: It's changed progressively, from the point of the acquisition until now, just exactly as you would expect that it would. So it's not a source of any kind of irritation, either at IBM or at Lotus, from my perspective. But I think it makes it understandable why I would (consider a change). There have been progressive points of integration that have made parts of the business more IBM-centric, as there should have. I think it was the right thing to do; I think I would have done it all again pretty much exactly the same way. In fact, I think we lost some early opportunities to do some of it quicker, and missed some leverage that we might have gained had we been less of an arms-length dance in the first couple years of the merger. I really don't want people to invent tension that doesn't exist there. Yeah, integration is part of why I'm doing something new. But it's not a bad thing, and there's no argument.

CW: What's your response to the suggestion that bringing in Al Zollar, given that he is a veteran IBMer, to head Lotus will somehow weaken Lotus' identity?

JP: I think it's an understandable question; it has raised a certain degree of anxiety, as it logically would. My response is judge the guy by his performance, not by his badge color. Let's give him a chance to see what he can do. He should be lauded for what he accomplishes and criticized for what he doesn't get done. And it shouldn't have any bearing one way or the other whether he's from IBM or from Lotus. He's a person. And by the way, on a personal level, I'm very, very comfortable with him -- I like him immensely. I promise I'll haunt him to his dying day if he messes anything up, but it won't have anything to do with whether he was an IBMer or a Lotus person.

CW: If it had been up to you to pick a replacement, whom would you have picked?

JP: I honestly haven't thought much about it. Having spent a few weeks now educating Al, I'm very comfortable with him as the choice. There is so much bench strength at IBM -- there are a number of people I absolutely admire:

Irving Wladawsky-Berger (the executive in charge of IBM's Linux initiative, formerly the general manager of IBM's Internet business), Bill Zeitler (general manager of sales and marketing in IBM's software group); I think any of those people in addition to Al, not to exclude Al in any way, shape or form, would have been very logical choices. One of the wonderful things about IBM is that there's so much talent.

CW: What about somebody from Lotus, like Executive Vice President Mike Zisman who you've been paired up with in running Lotus all along?

JP: I don't think Mike wanted the job, in all honesty. Mike certainly has the skills, but I doubt very much that you could have put a gun to Mike's head and gotten him to do this, and I think for a lot of reasons the guy ought to be applauded for it.

CW: Do you think you're more likely to do a startup or run an established software company now?

JP: I'm very likely to run some sort of dot-com company.

CW: That exists today or that doesn't yet exist?

JP: Probably that exists. I would probably be frustrated starting with a completely clean sheet of paper because I think my skills are managing people, attacking and building complex go-to-market recipes. If there were no product, if there weren't some reasonably advanced amount of capacity to attack a problem, I think I'd be frustrated by noon.

That said, it will probably be a smaller company than Lotus, and maybe a pre-public company. But to be honest about it, I've been so heads-down on the transition that I've not had 10 minutes to think about it.

CW: Have you been contacted by anybody yet?

JP: I've had a number of phone calls post the announcement, but I'm still very anxious for the phone to continue to ring so I can kind of sort out all of the opportunities. I've done nothing at all proactively up to this point.

CW: What will you miss most when you leave?

JP: The people -- the employees, the customers, the business partners. There have been moments in my tenure here when I have been so taken with the lengths to which people are willing to go here to accomplish things that it's breathtaking.

CW: And what will you miss the least?

JP: That's a tough question. Probably, to some degree, the extraordinary amount of travel. I think for most CEOs of companies the size of Lotus, I probably spent an uncharacteristic amount of time out in the field. I think it was exactly the right thing to do -- I'd do it all over again, and I'll do it for the next company. But the scale of the place made for some extraordinary times. I mean, I've gone on swings through Asia where I would do Hong Kong, Singapore, Kuala Lumpur, Beijing, Korea and the Philippines in a week. I'd charter planes and literally go four or five days where I'd never see a hotel room. That's a grind.

I loved it, because I have as much affinity for a lot of the customers in some respects as I do for the employees. But there were times when I'd realize I had a collective 12 hours of sleep in a week, and I'd physically get to the point where I'd start to do stupid things. It happened so naturally that it was never work. Still, there were times when I'd get to the end of the month and I'd go home and sleep for 24 hours. That, at least for a couple of months, I'd rather give up on a bit, because the reality is I just turned 46, and I tire a little more quickly.

I would hope that I'd get a month off in between, but somehow I doubt it -- I had four or five days when I left Cognos before I started at Lotus. My bet is, based on the phone calls to this point, I'm probably going to do something incredibly stupid and move reasonably early. But I'll get to scale it back a little bit during the transition period between now and May, because at some point I've got to let it be Al's company.

Part of the hard thing here is stepping back into the shadows and letting the guy have his own spotlight and take things on without being kind of constantly in his way. That will be hard -- I don't do that well. I don't have a lot of experience in that either. So we'll see.

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