I recently went one-on-one with Anil Singhal, co-founder and CEO of NETSCOUT. Anil is also the author of the new book The 5% Rule of Leadership: Using Lean Decision-Making to Drive Trust, Ownership, and Team Productivity.

Adam: Thanks again for taking the time to share your advice. First things first, though, I am sure readers would love to learn more about you. How did you get here? What experiences, failures, setbacks, or challenges have been most instrumental to your growth?

Anil: I grew up in Delhi, India, and came to the United States in 1976 after completing my undergraduate studies in Electrical engineering to pursue graduate studies in computer science at the University of Illinois Urbana-Champaign. 

I moved to the Boston area in 1979 after getting my first job out of school at Wang Labs. At the time, Wang Labs was a mini-computer startup trying to compete with big players like IBM, DEC, and others through its unique technology and products. I enjoyed it, but I had an entrepreneurial bent and a strong sense of how a company should be run—something I didn’t see at the place where I was employed. So, in June 1984, a fellow employee and I quit and founded NetScout. We knew from the start that we didn’t want to create a quick “pump and dump” type company – the kind that captures enough market attention to lure a buyer, make the founders rich, and then disappear. Instead, my co-founder and I wanted to build a great company that could last for generations. One that would produce high-quality products, attract customer loyalty, and give its employees the kind of secure employment that would allow them to start families and enjoy stable lives. For the past 40 years, I have proudly worn the hat of founding CEO and president, as well as a member of the board. A few years ago, I also became Chairman of the Board.

As with most start-ups, NetScout's early years were very tough. In those early months, the odds of the company surviving were relatively low. It often felt that we were making it just by the skin of our teeth—and a lot of luck. I was only 30 when we founded the company, with little business experience or management training. My business partner and I had to learn on the job.

In later years, the challenges changed. For one thing, I learned that good economic times are often much more dangerous than bad times. When things are going well, there’s a tendency to overextend your business, chasing seemingly endless opportunities and bloating expenses. Also, your best talent can get lured away – something they wouldn’t do when times are tough. You can resist lay-offs during the hard times if you have the character, but you can’t retain good people who want to leave for new opportunities.

The biggest challenge I’ve faced – and I hope I have learned from it – is that you need to identify when your business is about to change and then have the courage to bet everything on adapting to that change. NetScout started as a consulting company and first transitioned into a hardware company and now a software company. Each of those transformations was grinding and potentially fatal. As CEO, you must fall out of love with your old business and lead the company into a fundamentally different universe. And, given the pace of technology, you must do it fast.

Adam: How did you come up with your business idea and know your business idea was worth pursuing? What advice do you have for others on how to come up with and test business ideas?

Anil: I tried to stress in 5 Percent that the philosophy of business we’ve developed at NetScout didn’t happen overnight. I had no single epiphany. Instead, it grew over time. That said, it helped that I am a natural contrarian. I read some business books and studied the latest business organization and management theories. Then I looked around at all the companies implementing those ideas – and thought: If these ideas are so enlightened and effective, why are so many companies dying? Why are they having regular layoffs and throwing their loyal employees on the street? Why are so-called “lean” companies so mean to their employees and customers?  

That’s when I began formulating a “lean but not mean” philosophy.  I wanted to create the most efficient and dynamic enterprise while maintaining happy employees, customers, and shareholders.  Over time, I learned that the Lean but not Mean (LBNM) philosophy also needed a powerful operating tool to realize and maintain the philosophy. In the last decade, we formulated and implemented the “5 Percent Rule.”  It manifests LBNM by shifting decision-making to the beginning of all company functions. That’s how we achieve the “lean” part of LBNM and drive trust, ownership, and team productivity throughout the organization.

It’s become a bit cliché, but “fail fast” is my advice. And I agree with that attitude—indeed, that’s the essence of the 5 Percent Rule. It saves a tremendous amount of time, money, and resources and doesn’t waste valuable personnel. The difference is that I think most companies use failing fast, that is, killing initiatives or getting into new ones too quickly for new products or markets.

However, I would argue that “fail fast” is just as important for an enterprise's soft operations: personnel policies, negotiations, employee benefits, promotions, and all the things that affect employee quality of life and morale. Nothing is worse than spending months or years on a company initiative and then having it killed at the eleventh hour, leaving you thinking you’ve wasted your time.

Adam: What are the key steps you have taken to grow your business? What advice do you have for others on how to take their businesses to the next level?  

Anil: The first is adaptability. Again, we have changed our business model multiple times to deal with a rapidly changing world, industry, and technology. To do that, you need open minds throughout the organization. At the same time, you must be “different” first, then “better” – this often allows us to create a “Blue Ocean Strategy,” which makes the competition somewhat irrelevant! You need to learn from your customers their changing needs and provide career pathways for your employees that won’t punish them for their new jobs.  Most of all, you cannot become attached to the status quo. That’s hard to do when you’ve succeeded or as the company grows older. Instead, you must move on and not look back.

Your company’s core philosophy, attitude, mores, and ethics are created on day one. You can’t start with an unscrupulous modus operandi that is focused on short-term success and doing anything it takes to make the next dollar, even if it means cutting corners that are bad for employees, customers, and shareholders in the long run and then, after a few years, magically change into a company focused on ethics and long-term value generation for the company and all of its stakeholders. Once that becomes ‘who you are,’ there’s no way back to decency and fairness. You wear that reputation, that badge of dishonor, as long as the company exists – no matter how much you try to wash out the stain. 

Adam: What is your best advice on building, leading, and managing teams? 

Anil: Trust and fairness. You hired your team because they were the best; why now second guess them? In my experience, most managers who are prone to micro-management may be that way out of arrogance (“no one is as competent as me”) or fear (“if they screw up, I’ll get the blame”). One of the great strengths of the 5 Percent Rule is that you, as a manager, only actively participate at the beginning of an initiative, making all the critical decisions – and then leaving everything to your team – until the very end. This makes the need to “micro-manage” unnecessary. That’s real trust, not just lip service. When this becomes a company's culture, it not only results in a more productive management tier but also makes competent and proud teams throughout the organization.

Adam: What do you hope readers take away from your new book? 

Anil: Decide before doing. At its core, the 5% Rule is a principle espousing that you must strategize before you move into execution. At face value, the idea of having a strategy-driven execution plan could be more novel. In fact, it is a well-known and widely accepted approach in business and life. For example, if you have plans to meet someone on the other side of town, you kick into strategy mode often without even realizing it. You may check online maps, ride-share apps, and public transportation schedules to understand the distance, traffic conditions, and timing of your route. Once you have this information, you can act by electing to drive, take the train, or schedule a ride. And yet, I constantly find, both in business and life, that people engage in execution-driven strategy, not strategy-driven execution. The 5% Rule is my attempt to raise this phenomenon to the surface and instill a sense of intentionality towards overcoming execution-driven strategy with strategy-driven execution. People don’t just fail to “decide before doing” because they want to – they fail because they get so caught up in the solution that they don’t take the time to understand the problem. It requires actual technique, practice, and patience to truly imbue a company with the notion that all decisions of consequence, at any level, require an upfront plan before leaping into action. It is much more complicated than it sounds. I can’t guarantee that reading my book will make it any easier, but if nothing else, I hope it will raise awareness.  

Adam: What are the most important trends in technology that leaders should be aware of and understand? What should they understand about them?

Anil: Everyone is talking about “AI,” Generative AI, Machine Learning, etc., as the way to make their company more efficient and automate tasks.  What they don’t always understand is how they get there. They believe they need more and more data to fill their systems with everything they could ever possibly want to know.

However, the phrase “garbage in, garbage out” is well known to anyone who has worked in a data management role. Observability and AIOps initiatives are no exceptions. Simply having more bad data is not the answer; neither is having more data that goes unused. 

Every data point collected must have high quality and a clear purpose. Otherwise, it’s just ineffective noise that will cause problems and increase operating costs.

The right data – clean, curated, and precise, can fuel AI /ML initiatives and predictive analytics and enables organizations to anticipate disruptions by analyzing data trends and thereby forecasting potential risks.

Adam: In your experience, what are the defining qualities of an effective leader? How can leaders and aspiring leaders take their leadership skills to the next level? 

Anil: Decisiveness, objectivity, perspective, trust, curiosity, perpetual self-education, honesty, and empathy.

Learn to delegate responsibility.  Not just shame responsibility, where you parachute back in when there is the slightest difficulty, but the kind of delegation derived from trust, where you give your subordinates their marching orders and walk away.  In doing so, you are training your successors.  

Also, recognize that your employees are human beings with real lives – families, friends, a social life, goals, and dreams.  Make the demands of their work congruent with those other needs and commitments.  They will stay with you forever.

Don’t reward one employee over their peers in the same position.  Give the same bonuses for the same job title and pay new employees the same as veterans in the same position.  If someone does a superior job, promote them, and don’t cultivate resentment in their peers.  That’s how you wreck morale and lose people.

Adam: What are your three best tips for entrepreneurs, executives, and civic leaders?

Anil: Recognize that you work for everyone you employ, and your job is to make their careers fulfilling and productive.  

Don’t be afraid of change; try to maintain the status quo.  Change is coming, and it is inexorable.  Kill the past and move forward.  And once you again succeed, start preparing for the next change.

Finally, with the right core values, loyal people, and the courage to constantly adapt, a company can be great – and live for centuries.

Adam: What is the single best piece of advice you have ever received? 

Anil: Be skeptical of every new business fad.  The great business leaders of the past weren’t fools; they knew what they were doing.

Adam: Is there anything else you would like to share? 

Anil: Before everything else, don’t be mean or unfair in your business dealings; always strive for a win-win for both sides. No matter how bad things get, you can be better than that.


Adam Mendler is an entrepreneur, writer, speaker, educator, and nationally recognized authority on leadership. Adam is the creator and host of the business and leadership podcast Thirty Minute Mentors, where he goes one-on-one with America's most successful people - Fortune 500 CEOs, founders of household name companies, Hall of Fame and Olympic gold medal-winning athletes, political and military leaders - for intimate half-hour conversations each week. A top leadership speaker, Adam draws upon his insights building and leading businesses and interviewing hundreds of America's top leaders as a top keynote speaker to businesses, universities, and non-profit organizations. Adam has written extensively on leadership and related topics, having authored over 70 articles published in major media outlets including Forbes, Inc. and HuffPost, and has conducted more than 500 one on one interviews with America’s top leaders through his collective media projects. Adam teaches graduate-level courses on leadership at UCLA and is an advisor to numerous companies and leaders. A Los Angeles native, Adam is a lifelong Angels fan and an avid backgammon player.

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