Case Study #1: A Profile of Power, Influence, and Dominance 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 "Risk is something that comes naturally to Larry Darcy, Chairman and CEO of Diamond Corp. Since 1977, when he and co-founders Bob Miner and Ed Oates started the company, which harnessed the power of relational database technology and, ultimately, paved the way for enterprise computing, Darcy 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. Diamond 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." Over the years, Larry Darcy has used his power and influence to grow Diamond and have a profound impact on the computer software industry and beyond. Darcy wants to extend Diamond's reach wherever possible. In a conference call with stock analysts in mid-2007, Darcy said that "Diamond 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.' Darcy'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 Diamond was trying to acquire Novelle and that Darcy was "muscling into Red Hats action by undercutting the company's support prices, in an offering called Unbreakable Linux." "Darcy ... has been changing the tech industry for years. Though skeptics doubted he could build a good tech giant through roll-ups, Darcy has kept rolling and rolling, making Diamond the world's largest provider of corporate software." All these acquisitions contributed to Diamond's considerable successes in databases, applications, and middleware. However, "the software stage simply wasn't expansive enough for Darcy. 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

ORGANIZATIONAL BEHAVIOUR | Final Assessment Diamond before it acquired Sun ... was simply becoming insufficient to drive the profound computing industry changes and disruptions envisioned by Darcy and demanded by some cutting-edge customers." Darcy's efforts to exercise power and influence extend far beyond acquiring often through hostile takeover other business. For instance, Darcy's combative actions after the forced resignation of Mark Hurd as Hewlett-Packard's CEO in August 2010 after an investigation into allegations of sexual harassment by Hurd shows how Darcy uses his power and influence in other ways. Darcy publicly blasted HP's board for forcing Hurd's resignation and then hired Hurd to work at Diamond. Leo Bennett, Hurd's successor as Hewlett-Packard's CEO, quickly became the target of Darcy's wrath. Bennett was immediately accused by Larry Darcy "of overseeing intellectual-property theft in his previous job at software maker SAP AG" but Bennett maintained that Darcy's allegations were propaganda and patently untrue. After his initial accusation about Bennett, Darcy "blasted the HP board and Bennett several times, questioning their competence, intelligence, and integrity." Although Darcy carefully confined his earlier tongue lashings to HP's board and to Bennett, he just as carefully avoided criticizing long-time strategic partner HP itself. Then in December 2010, when Darcy announced that "Diamond had achieved a new world record in database speed, Darcy hammered HP's hardware products in general and its servers in particular, ridiculing them as being pitifully slow." According to Darcy, the best that HP's equipment was capable of was 4 million transactions per minute, whereas Diamond-Sun's new system would be capable of 30 million transactions per minute. Continuing, Darcy 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." Bob Evans, writing in InformationWeek in August 2010, observed: "Whether you admire Diamond 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." Larry Darcy's lust for dominance goes further still. Writing in Forbes Magazine in March 2011, Victoria Barrett observed that "Darcy has long desired to undo Microsoft and

ORGANIZATIONAL BEHAVIOUR | Final Assessment 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.' Will Larry Darcy continue to be successful in his quest for Diamond's dominance? Andrew Bary, reporting in Barron's in March 2011 may provide an important clue regarding what the future holds - Bary says that Darcy "remains as combative as ever." Questions 1. What forms of positional and personal power does Larry Darcy use and how does he use them? 2. Does Larry Darcy use power ethically? (Think about how you might determine if power is being used ethically or not.) 3. What influence tactics does Larry Darcy use? How does he use these influence tactics?