Chapter 11 ♦ Power and Political Behavior 1

Oracle Oracle’s Larry Ellison—A Profile of Power, Influence, and Dominance “Risk is something that comes naturally to Larry Ellison, Chairman and CEO of Oracle Corp. Since 1977, when he and cofounders Bob Miner and Ed Oates started the company, which harnessed the power of relational database technology and, ultimately, paved the way for enterprise computing, Ellison has been making wavesin the industry and with rivals. For him, nothing is off limits, and corporate America, particularly the financial services sector, has benefited as a result. Oracle is the first software company to develop and deploy 100 percent internet-enabled enterprise software across its database, business applications, and application development and decision-support tools.”i Over the years, Larry Ellison has used his power and influence to grow Oracle and have a profound impact on the computer software industry and beyond. Ellison wants to extend Oracle’s reach wherever possible. In a conference call with stock analysts in mid-2007, Ellison said that “Oracle wants to be the leader in such areas as communications billing, utility billing, and core banking. ‘We’re going to expand the number of vertical industries where we have industry-specific applications and we’re going to do that via acquisition’.”ii Ellison’s penchant for growth through acquisition is powerfully captured in the nickname The Pirate, which was bestowed upon him by independent consultant and Network World newsletter author Dave Kearns. This moniker is rooted in the 2006 rumor that Oracle was trying to acquire Novelle and that Ellison was “muscling into Red Hats action by undercutting the company’s support prices, in an offering called Unbreakable Linux.”iii “Ellison … has been changing the tech industry for years. Though skeptics doubted he could build a good tech giant through roll-ups, Ellison has kept rolling and rolling, making Oracle the world’s largest provider of corporate software.”iv All of these acquisitions contributed to Oracle’s considerable successes in databases, applications, and middleware. However, “the software stage simply wasn’t expansive enough for Ellison. Not that he grew bored with software and went off looking for some new diversion to soak up his vast levels of energy and curiosity. Rather, the software-only toolbox possessed by Oracle before it acquired Sun … was simply becoming insufficient to drive the profound computing industry changes and disruptions envisioned by Ellison and demanded by some cutting-edge customers.”v Ellison’s efforts to exercise power and influence extend far beyond acquiringoften through hostile takeoverother business. For instance, Ellison’s combative actions subsequent to the forced resignation of Mark Hurd as Hewlett-Packard’s CEO in August 2010 after an investigation into allegations of sexual harassment by Hurdvi shows how Ellison uses his power and influence in other ways. Ellison publicly blasted HP’s board for forcing Hurd’s resignationand then he hired Hurd to work at Oracle.vii Leo Apotheker, Hurd’s successor as Hewlett-Packard’s CEO, quickly became the target of Ellison’s wrath. Apotheker was immediately accused by Larry Ellison “of overseeing intellectual-property theft in his previous job at software maker SAP AG,” but Apotheker maintained that Ellison’s allegations were propaganda and patently untrue.viii Subsequent to his initial accusation about Apotheker, Ellison “blasted the HP board and Apotheker several times, questioning their competence, intelligence, and integrity.”ix Although Ellison carefully confined his earlier tongue lashings to HP’s board and to Apotheker, he just as

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carefully avoided criticizing longtime strategic partner HP itself. Then in December 2010, when Ellison announced that “Oracle had achieved a new world record in database speed, Ellison hammered HP’s hardware products in general and its servers in particular, ridiculing them as being pitifully slow.”x According to Ellison, the best that HP’s equipment was capable of was 4 million transactions per minute, whereas Oracle-Sun’s new system would be capable of 30 million transactions per minute.xi Continuing, Ellison asserts: “We’re gonna (sic) go after them [HP] in the marketplace with better software, better hardware, and better people, and we’re gonna (sic) win market share against those guys in the database business, in the middleware business, in the server business, and in the storage business because we have better products.”xii Bob Evans, writing in InformationWeek in August 2010, observed: “Whether you admire Oracle and its celebrity CEO or wish he’d go for a 10-year sail in the South Pacific, his ability to influence competitors and customers is profoundand, in my opinion, is on the verge of expanding dramatically.”xiii Larry Ellison’s lust for dominance goes further still. Writing in Forbes Magazine in March 2011, Victoria Barrett observed that “Ellison has long desired to undo Microsoft and become, as he has put it, the ‘number one’ software company in the world. He’s not there yet, despite having spent some $40 billion to buy up 75 hardware and software companies over the years.”xiv Will Larry Ellison continue to be successful in his quest for Oracle’s dominance? Andrew Bary, reporting in Barron’s in March 2011 may provide an important clue regarding what the future holdsBary says that Ellison “remains as combative as ever.”xv Discussion Questions 1. What forms of interpersonal power does Larry Ellison use, and how does he use them? 2. How do the two faces of power relate to Larry Ellison’s actions? 3. Does Larry Ellison use power ethically? Explain your answer. 4. What influence tactics does Larry Ellison use? How does he use these influence tactics? 5. Does Larry Ellison use power effectively? Explain your answer. 6. In your own future career, would you be willing to emulate Larry Ellison’s behavior? Why or

why not? SOURCE: This case was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal Chair of Christian Business Ethics and Professor of Management, College of Business Administration, Valparaiso University.

i Anonymous, “The Risk Takers,” USBanker 116(5) (May 2006): 41 (2 pages). ii M.H. Weier, “Oracle’s Change Agent,” InformationWeek (1148) (July 30, 2007): 36 (6 pages). iii J. Bort and B. Schultz, “The 50 Most Powerful People in Networking,” Network World 23(50) (January 2, 2001): 12 (6 pages). iv A. Bary, “30 Best CEOs,” Barron’s 91(13) (March 28, 2011): 31 (7 pages). v B. Evans, “Larry Ellison Rocks the Tech World,” InformationWeek (1275) (August 9, 2010): 6 (5 pages). vi B. Worthen, “Boss Talk: Chief Reboots H-P after Scandal,” The Wall Street Journal (Eastern edition) (February 18, 2011): B1. vii Bary, “30 Best CEOs.” viii Worthen, “Boss Talk: Chief Reboots H-P after Scandal.” ix B. Evans, “Is the Oracle-HP Alliance Dead?” InformationWeek (1287) (December 20, 2010): 6 (2 pages).

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x Ibid. xi Ibid. xii Ibid. xiii B. Evans, “Larry Ellison Rocks the Tech World” InformationWeek (1275) (August 9, 2010): 6 (5 pages). xiv V. Barrett, “Larry’s Long Reach,” Forbes Magazine (March 14, 2011), http://www.forbes.com/forbes/2011/0314/focus-oracle-microsoft-sap-larry-ellison-long-reach.html (accessed on February 4, 2014). xv Bary, “30 Best CEOs.”