President and chief executive officer, SAS Institute
Born: January 1943, in Salisbury, North Carolina.
Education: North Carolina State University, BS, 1965; MS, 1968; PhD, 1972.
Family: Son of Albert Goodnight and Dorothy Patterson Goodnight (hardware store owners); married Ann Baggett, 1966; children: three.
Career: NASA Apollo space program, 1966, computer programmer; North Carolina State University, 1966–1971, graduate student; North Carolina State University, 1971–1976, faculty member; SAS Institute 1976–, president, CEO, computer programmer.
Awards: Influential Leaders Award, CRM , 2003; Business Leader of the Decade, Business Leader , 1999.
Address: 100 SAS Campus Drive, Cary, North Carolina 27513; http://www.sas.com.
■ After founding SAS Institute with a university colleague in 1976, Jim Goodnight built the organization into the largest private software company in the world. By 2004, 98 percent of Fortune 500 companies were using SAS programs to perform a variety of tasks in data mining, warehousing, and analysis. In 2004 Goodnight, with a fortune estimated at $2.9 billion, was ranked number 170 on the Forbes list of the richest people in the world. Goodnight achieved success mainly by ignoring mainstream business ideology and following his own distinctive philosophy about how to run a company. Goodnight's unconventional methods inspired fierce loyalty in his employees and customers.
From the age of 12, Goodnight worked after school and on weekends in his parents' hardware store in Wilmington, North Carolina. At a height of six feet, four inches, Goodnight
was a keen basketball player and cited his high school basketball coach as an important early influence. Software and computer programming, however, became Goodnight's passions. In his sophomore year at North Carolina State University, as part of a major in applied mathematics, Goodnight took the only class available in computing at the time. This first encounter with a computer was a moment of revelation for Goodnight, and he found programming work over the summer break. In an article in the New York Times , Goodnight wrote that his destiny seemed assured: "After that summer, I was absolutely sold that I wanted to be in software" (October 20, 2002).
Midway through his graduate studies in statistics, Goodnight went to Florida to work on the Apollo space program, developing engineering programs for the GE Company. Goodnight's experience at his first full-time job had a profound effect on how he later ran his company. While the work was exciting, the working conditions were demoralizing. Discipline was extremely tight, and the employees were treated with little respect. As Goodnight wrote in the New York Times , "You could be questioned about being five minutes late arriving in the morning. I resented that, since I often came back at night to work. They didn't treat programming like a creative activity" (October 20, 2002).
After a year in Florida, Goodnight and his wife, Ann, moved back to North Carolina because of a family illness, and Goodnight returned to his graduate studies at North Carolina State. On completion of his doctorate, Goodnight became employed as a member of faculty. During his doctoral research, Goodnight joined forces with Anthony Barr, a fellow North Carolina State graduate who had recently returned from working at IBM. By this time, the department of statistics had become a focal point for incoming agricultural data from universities all over the Southeast. Rather than writing a new program each time analysis was required, Goodnight and Barr thought it would make sense to write one program that could be applied again and again. From this, Statistical Analysis Software (SAS) was developed. By 1972, with federal funding for the project running out, Barr and Goodnight persuaded the schools using SAS to fund their salaries so that they could continue to develop the software. The partners then were approached by pharmaceutical and insurance companies who recognized the applications of the software for their industries.
By 1976 Goodnight and Barr had 120 clients and a growing group of SAS fans. It became apparent that SAS had out-grown its initial status as a research project and needed to move out of the confines of the university. With their business partners John Sall and Jane Helwig, Goodnight and Barr established the SAS Institute. Because it had an existing customer base, the company made a profit from the beginning. In 1979 Barr sold his share of the business to Goodnight. A few years later Helwig also sold out, leaving Goodnight with two-thirds of SAS. While he retained his one-third share, Sall left the running of SAS largely to Goodnight. Goodnight recruited more programmers to work on creating and perfecting a range of SAS products. In 1980 the company headquarters was moved to Cary, North Carolina, where Goodnight bought large amounts of real estate, forming the basis of what would become a 200-acre campus. From 1976 to 2001 the SAS growth figures were in double digits every year, and in 1999 the company broke the $1 billion revenue mark.
SAS attracted attention not only because of its phenomenal growth but also for some of Goodnight's unorthodox business methods. From the beginning SAS software was sold on a subscription-billing basis with yearly renewals as opposed to the perpetual-license billing that was the norm in the industry. The SAS billing system had major consequences for the way the company was run. To maintain its income, the business had to establish strong relationships with its customers to keep them renewing their subscriptions. Goodnight created an environment in which customer needs were rated highly, to the extent Goodnight claimed he let customer needs determine the direction of the company. As a result, the company boasted a 98 percent customer retention rate in 2004. One of the benefits of the policy was that the company spent less on sales and marketing. Instead, 25–30 percent of revenue was spent on research and development when the industry average was 10–18 percent. Goodnight's commitment to developing and perfecting the software products he offered to customers was the reason SAS Institute rose to the top of the data-analysis industry.
The attention paid to the needs of the customers was more than matched by the benefits that Goodnight provided to his employees. Keeping in mind his experiences on his first job, Goodnight was determined to build a company in which the demands of work and family were carefully balanced in a stimulating and enjoyable working environment. With a wide range of employee benefits and flexible working hours, SAS gained a reputation as one of the best places to work in the United States. Goodnight steadfastly maintained that looking after his employees made good business sense and pointed to the money saved by the company's staff turnover rate of less than 5 percent as opposed to the 20 percent that was the industry norm. Charles Fishman, in an article in Fast Company , quoted one SAS employee as saying, "You're given the freedom, the flexibility, and the resources to do your job. Because you're treated well, you treat the company well." In a 60 Minutes interview with Morley Safer in 2002, Goodnight said that "95 percent of my assets drive out the front gate every evening. It's my job to bring them back."
A key aspect of Goodnight's management style was his involvement with his employees. As the company expanded, Goodnight continued writing computer code for several important SAS products. Even by the late 1990s he estimated that programming took up approximately 50 percent of his time at work. Goodnight continued to consider himself a software programmer even as his fortune climbed and the company grew. Goodnight remained in touch with his employees, who believed their CEO had a real understanding of what they needed to do their jobs well. Goodnight's management values resulted in a company with a flat organizational structure, only four layers between the bottom and the top. The lack of hierarchy was expressed in a number of ways. The CEO and senior executives did not have their own parking spaces or a separate eating space, and Goodnight could often be seen lining up for lunch in the cafeteria with everyone else. Goodnight's low-key style meant that while he was almost unknown outside the company, his employees regarded him as approachable and down-to-earth. Although some observers derided the SAS campus as a theme park and criticized Goodnight's style as overly paternalistic, others regarded Goodnight as a model for an alternative approach to business leadership.
With the changing business environment of the late 1990s, some observers predicted that Goodnight would be forced into overhauling some of his business philosophies. Despite its success, SAS remained invisible in terms of its public profile. In large part, this lack of visibility stemmed from Goodnight's restrained personality and his distaste for the limelight. In a highly competitive market, however, and with giants such as Microsoft eyeing the industry, SAS needed to increase its visibility if it was to continue to grow. Goodnight himself admitted the need for the company to sell itself to executives rather than relying on its reputation among technical staff. This effort required a change in role for the publicity-shy CEO. Goodnight's public profile became more prominent from the late 1990s onward. Media interviews, public-speaking engagements, and conferences increasingly took him away from SAS headquarters.
The desire to increase the profile of SAS was part of the reason behind the proposed move to take the company public. The company was considered to have more chance of recruiting and retaining the best people if it could match the lucrative share options with which other companies lured staff. In 2000 the former Oracle executive Andre Boisert was hired to help take the company public. However, Goodnight, who often pointed out the advantages of being a private company, appeared to withdraw from the idea. The abrupt departure of Boisert in 2001 meant the flotation plans were put off indefinitely. As of early 2004 SAS Institute remained a private company. Some observers accused Goodnight of not wanting to relinquish control and questioned the future direction and stability of the company. SAS Institute continued to perform strongly, however. Revenue from software sales in 2003 increased more than 14 percent over the previous year. Goodnight's decision not to go public seemed to be generally well received by staff and customers, especially given the poor performance of the U.S. stock market. As of early 2004 Goodnight showed no signs of tiring in his role as head of SAS. He aimed to extend the reach of the company into the area of anti–money laundering software and development of products that would help companies to meet the requirements of new financial compliance legislation.
See also entry on SAS Institute Inc. in International Directory of Company Histories .
"Business Leader of the Decade: Jim Goodnight," Business Leader 11, no. 5 (November 1999).
Fishman, Charles, "Sanity Inc," Fast Company no. 21 (January 1999), p. 84.
Goodnight, Jim, "A Selectric Made Me Do It," New York Times , October 20, 2002.
Kirk, Phil, "Practical Visionary," North Carolina Magazine , December 2000, p. 27.
Morphis, Rebecca, "Forecasting the Future," NC State 75, no. 4 (Fall 2003), p. 9.
Safer, Morley, "Working the Good Life," CBSnews.com , April 20, 2003, http://www.cbsnews.com/stories/2003/04/18/60minutes/main550102.shtml .
Turchin, Brian, "SAS Profile: Going Its Own Way," Software Business , January/February 2004, http://www.softwarebusinessonline.com/images/SAS.pdf .