Steve Mills is the most important software executive you never heard of. He's so important that I've sometimes wondered whether I should write a book about him. Steve Mills retired in December 2015 as the executive vice president of IBM Software & Systems after 43 years. He invented IBM Software. You can read Fortune's story here.
In 1995, Steve saw something important: Software was becoming more important than hardware. He convinced Lou Gerstner, CEO of IBM, to launch a Software business. That might sound obvious now, but at the time it was radical. Hardware companies had tons of software (still do). But they didn't sell software; they gave it away to sell hardware.
Steve's the guy that convinced a business machines company it could still dance even as software was eating the world. To do it had to wrestle lots of code and control away from the hardware and independent businesses and get it marching in lockstep. He was the right guy for the job.
Steve was also a unique personality. He was as Big Blue as any IBMer I've ever met, and he fiercely protected IBM's interests. But he did it using software. Here are some Steve-isms that shine light on the things he believed in most about software:
- Software is a high-growth, high-margin business. That's why Steve left his cozy sales job to convince the firm that Software should be its own busniness. When I first met him in 1998, he astounded me by marching a room of hard-boiled industry analysts through a three-hour tour de force of his entire software portfolio. He knew all the facts, numbers, and code releases. I think even his leadership team sat in awe. It was impressive, especially for the only history major in a room full of engineers.
- Standards and open source raise all ships, and "IBM brings code." Steve understood early and often that IBM didn't make money on commodity software. So he donated it for the good of all. That's why he engineered massive code dumps into the Linux and Apache communities and created the Eclipse SDK community. It's why he bet the business on Java with major contributions to that standard. It's why he stood on stage alongside Bill Gates in New York to announce and develop Web Services. It's why he was fond of saying that lots of people have ideas, but IBM brings code. He gave away a lot of it. In doing so, he earned IBM a leadership position in the software industry.
- Buy lots of software technology and integrate people fully. Steve built an acquisition machine, empowering his team to buy the software they needed to compete. His contributions were using New York-style return on assets to make the pricing decision and an integration competency that's best in the industry. New staff had an IBM badge and email account on day one. Developers, executives, and customers stayed with IBM. That machine is alive and well as IBM's recent digestion of The Weather Company shows.
- "I'm the only dictator in the room." Steve said this almost every time I saw him present to industry analysts. I don't think any IBM software executive was ever confused about who was in charge. But Steve herded a massive group of intensely creative people over some rocky shoals in the transition from client/server software to the Internet. I don't know if his team loved or feared him. But they stayed with him for decades.
- "Why will they take your second call?" This was Steve's favorite question when someone brought him a cool new piece of software. His point was that everybody will want to find out about the technology, so they'll take your first sales call. But if you don't have a clear story about where the business benefit lies and a clear path to help your customer achieve it, they won't bother to take your second call. It's become my favorite question to ask startups.
Steve was also a pitbull businessman. I think people miss just how brutal the software industry is. Executives in the software industry are as tough and fearless as any gladiator or emperor. Steve competed mano a mano with Bill Gates, Scott McNealy, Larry Ellison, Eric Schmidt, and countless other industry giants. "Why do they get an entitlement?" "They're a rabid dog in the meat locker." are just a few of the quotes I'll never forget.
Yes, the last year was tough for IBM Software as the cloud and SaaS continue to reprice software. But Steve was all over that, too, engineeing IBM's SaaS shift. And maybe after 43 years, Steve deserves some time in his wood shop and wine cellar. But I'll miss him. He united the forces of customer-first and software-eats-the-world at massive scale. He made things happen through sheer force of will. When the history of business software is written, I hope some future historian is careful to understand just how important Steve Mills was to making the whole thing happen.
Bye, Steve. Be well. I'll always take your second call.