Have You Been House-Trained?

When David House left hard-charging Intel to rescue struggling Bay Networks, he created four courses to teach 6,000 employees the basics of business. Here’s his cutting-edge curriculum.

David House made lots of big decisions during his 22-year career at Intel, which included 13 years as general manager of its all-important microprocessor division. But his biggest decision was to leave the company. In October 1996, he became chairman and CEO of Bay Networks Inc., a troubled manufacturer of high-tech equipment that was competing against giants such as Cisco Systems and 3Com.


When he moved to Bay, House gave himself 60 days to diagnose its problems. Then he began to act. But the new CEO didn’t liquidate divisions or slash head count. He taught courses. Bay’s deep-seated problems, he concluded, didn’t involve fast-changing markets or fast-moving rivals. They involved the fundamentals of business: How do you make decisions? How do you disagree openly? How do you focus on what’s important?

“We had to create an ‘instant culture,’ ” House says. “Culture is what people fall back on when there are no instructions. It gives you rules for when there are no rules, and it provides a common language for moving forward.”

So he created four courses to teach the practices that he’d honed during his two decades at Intel. “People overestimate what they can accomplish in the near term and underestimate what they can accomplish in the long term,” House says. “These classes helped people set priorities, allocate resources, and get things done.”

House taught the courses to Bay’s 120 highest-ranking executives. Every 30 days, he taught a new course to four classes, each with 30 students. After the executives had gone through the whole curriculum, they in turn taught the same courses to others in the 6,000-person company. House dubbed his curriculum “New Bay Basics.” Company insiders soon came up with their own name — “House Training” — and had buttons made that proudly announced, “I’ve been House trained.”

The first course was on “Decision Making.” According to the course’s training manual, a good decision is “informed,” “timely,” “aligned with corporate priorities,” and “scaled.” Another course, called “Straight Talk,” offered “a direct, timely way to resolve conflict.” A third course covered “Managing for Results.” A fourth dealt with “Effective Meetings.” And no wonder: One of House’s initial findings was that Bay was spending, directly or indirectly, more than $87 million per year on staff meetings.

Larry Crook, Bay’s director of global logistics, describes the impact of the House- training sessions: “They blew my mind. Here was the CEO of a multibillion-dollar company taking the time to tell us how to run effective meetings! He showed us that he was serious about how we conducted ourselves — and that if we wanted to be successful, we had to get down to basics.”


That’s just the reaction the CEO was looking for. “The message was, ‘This is not college. Pay attention.’ And people did,” House says.

House knew he had to do more than teach the new ways of working. He had to apply them to the company’s most serious problems — for example, massive confusion among the many products that Bay had in development. House’s 60-day review had found that Bay engineers were working on twice as many new products as the company had the resources to ship. “We made a list of all the projects, ranking them from the most important to the least important,” he says. “Then I drew a line through the middle of the list. And I said, ‘All projects below the line are canceled. Everybody with a project above the line should staff it with people whose projects are below the line.’ “

The result was an instant realignment of talent and resources. “We had chaos for a couple of weeks,” House admits. “Our decisions weren’t perfect. But it wasn’t important to get things perfect. It was important to get things done.”

Getting things done has gotten results. During House’s tenure, Bay has more than recovered from its $285 million loss in fiscal 1997, posting $89 million in profits in the first six months of fiscal 1998. In June, Nortel, the Canadian telecommunications-equipment giant, agreed to buy Bay Networks in a deal valued at $9 billion — and House agreed to become Nortel’s president.

What did the CEO learn from his own curriculum? “People are hungry for ideas and direction. There are no winners on a losing team and no losers on a winning team.”