by: Hall, William; Lee, Moses
Source: Center for Entrepreneurship at the University of Michigan
Dr. Beyster started SAIC with $50,000 of his own savings and two small government contracts, one from Los Alamos and one from Brookhaven National Labs.
At the start, Dr. Beyster made the decision that SAIC would be employee owned and that ownership would be based on merit and contribution to the company, not tenure. 'This company is not for everybody. We're going to try to share awards in an equitable manner. Working here might be better than working in a large company, but it won't be as good as starting a successful new venture,' said Dr. Beyster. Using employee ownership as a selling point to prospective hires, Dr. Beyster was able to recruit talented employees, including several from his previous employer, GAC.
However, SAIC still needed funding and turned to a seasoned entrepreneur for advice. This particular advisor was not an avid supporter of widespread employee ownership. Instead, he encouraged granting ownership to a small number of people, using venture capital financing, and eventually taking the company public.
Dr. Beyster considered these suggestions, but knew that opening up a company to significant outside funding could destroy it, and leave only a few senior employees well off...
The B case considers SAIC after Dr. Beyster stepped down as President and CEO. On Nov 3, 2003, Kenneth Dahlberg was elected as his successor. In announcing the appointment of Mr. Dahlberg, Dr. Beyster commented:
SAIC employee-owners have shared in the company's growth and success since I founded the company more than 34 years ago. I am confident Ken will work with the management team to ensure the company's continued success, and strengthen SAIC's business strategies and employee-ownership culture.
Dr. Beyster was unaware of the implications of his departure for the SAIC company culture.
Publication Date: 2011-01-01