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Management Strategies

02:11 PM
Tony Kontzer, InformationWeek
Tony Kontzer, InformationWeek
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Telling It Like It Is

MasterCard's Jerry McElhatton pulled off a $160 million tech overhaul with a leadership style that's direct and incisive, yet encourages team input.

Jerry McElhatton, MasterCard International Inc.'s senior executive VP of global technology and operations, produces snippets of home-spun wisdom so regularly that they've earned a special moniker at the company: Jerryisms.

There's a Jerryism for just about every situation. When McElhatton believes his staff is overlooking a major problem to solve a minor one, he says, "The house is on fire, and we're out waxing the car." To illustrate the value of team consensus, McElhatton might offer up, "If 10 doctors tell you you're dead, lay down." And if a staff member suggests fancy features for a technology project before all the core issues have been worked out, he'll let loose with, "You can put lipstick on a pig, but that doesn't make it pretty."

McElhatton's folksy yet direct manner is a trademark of his leadership style and helped build commitment and teamwork among his staff of 2,500 regular and contract employees during a five-year, $160 million IT overhaul that transformed MasterCard into a technological leader in the financial-services industry. That feat, completed last year, required managing a 400-person project involving an estimated 10 million lines of new code while maintaining global operations.

Many accomplishments came from the effort. One McElhatton is particularly proud of is online delivery of information important to merchants, including instruction manuals, authorization requests, and billing data. "We're the only credit-card company that has something with that level of sophistication," McElhatton says. The result has been fewer phone calls from merchants coming into MasterCard's customer-service center. "Now that we have fewer calls, we take those [customer reps] and move them to other areas."

Colleagues say McElhatton, 65, may appear intimidating, but he's always willing to listen. And while he's incisive when assessing MasterCard's technology needs, he makes his employees feel valued and appreciated. About once a month, McElhatton holds "Java with Jerry" meetings that include a circulating group of 10 or so IT staffers. "He's a big, tall guy, and he's loud and funny and charismatic, and he can be perceived at times as a little scary," says Dana Lorberg, MasterCard's senior VP of technology business and McElhatton's former chief of staff. "But the reality is he's such a teddy bear."

Still, McElhatton leaves little doubt about his expectations. "You never have to wonder what Jerry's thinking," Lorberg says. "He lays it all right out there for you, whether you want to hear it or not."

Jay Gardner, CIO of BMC Software Inc., says McElhatton mentored him in the art of applying business-process alignment philosophies to the CIO role. The best lesson, Gardner says, was to understand the needs of business executives, then work with them to extract value from IT investments and drive change across an organization. After meeting McElhatton several years ago--when Gardner was still VP of sales at BMC and McElhatton was a member of the company's CIO advisory council--McElhatton made such a strong impression that Gardner sought him out when he was tapped for the CIO role. "He assured me that this whole job of being a CIO is about a lot more than understanding technology," Gardner says.

The skill of sizing up technology's ability to solve business problems--and then articulating the road map to make it happen--has been the cornerstone of McElhatton's career, and it's one of the reasons he was picked to lead an IT modernization effort at MasterCard. Avivah Litan, a Gartner analyst specializing in systems and technology issues for the financial-services industry, says McElhatton exhibits the perfect combination of business and technology expertise. "He speaks both languages," Litan says. "He can tell you about messaging protocols and how they're going to foster business improvements and impact marketing programs. He sees the connection between automation and business requirements."

McElhatton dabbled in technology-enabled business-process optimization decades before the terminology had worked its way into the business lexicon. In his first job as computer operator at Westinghouse Electric while attending Franklin University in his hometown of Columbus, Ohio, McElhatton figured out a way to convert punch-card tasks for payroll and inventory so they could run on the company's early computers, reducing the time it took to perform manual data processing. While employed at Cleveland Trust and Republic National Bank in the 1970s and '80s, McElhatton was called upon to develop cash-management applications to speed up account transactions and foster customer loyalty. He then was recruited in the late 1980s by the United Kingdom's struggling Midland Bank and headed a project that involved moving over all account operations from Midland's 1,800-branch system into a more centralized network of eight regional service centers at a cost of about $350 million.

McElhatton convinced the bank's board to back the massive project despite the company's financial woes, says Brendan Cook, who was a senior member of Midland's IT staff at the time and now serves as managing director of HSBC Group's global credit-card business. The board's faith was rewarded when Midland returned to health. "He's got a combination of an understanding of the technology with excellent project-management capabilities, but also--and this is the key thing--knows how to sell that into an organization," Cook says.

Former MasterCard CEO Eugene Lockhart, who worked with McElhatton at Midland, tapped him for the CIO job in 1994. Under McElhatton's leadership, MasterCard's IT organization has updated every one of its major systems to improve flexibility, migrating legacy apps to a Unix environment backed by Oracle and IBM databases. McElhatton's team redesigned existing applications, including MasterCard's core system for authorizing, clearing, and settling credit-card transactions. It then established links between those apps and an updated security and risk-management system and a new data warehouse built to supply better visibility into transactional data.

McElhatton expects his team to deliver projects on time and on budget and is an expert at encouraging accountability without blame, says Lowell Mattox, VP of internal technology at MasterCard since 1997. "When you're working with Jerry, it's never about who's fault something was," Mattox says. "It's about what went wrong and how we avoid it again."

Because so much of the business revolves around customer satisfaction, McElhatton admits he's hesitant about taking risks with unproven technologies. "When you go to use your credit card, if it doesn't work, then your card goes to what we call the 'back of the wallet,'" he says. "We never want that to happen." Yet he still sees the value of adopting leading-edge technologies in some cases. MasterCard is preparing to go live with credit cards equipped with radio-frequency identification chips that can be waved in front of registers equipped with readers to speed up the checkout process.

McElhatton's technology expertise spills into his personal life. A model-train buff, he goes to trade shows to learn about software for automating model-train operations and managing his collection inventory. He uses computer-aided design tools for building complex displays. And he plans to devote a room to his model trains in the Dallas-area home he and his wife, Jane, are building to live in after his expected retirement next year.

His staff is already bracing for the retirement. Says Mattox: "He's going to be a hard act to follow." A cliche, for sure, but as true as a Jerryism.

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