Fixing the Tech Industry's Management Problem
By Steve Tobak, BNET
Work in the technology industry? Think management is dysfunctional or lacks the basic skills to scale its business, support its growing customer base, or fend off competitors? CEO never heard of strategic planning or SOPs? More people feel your pain than you realize.
The corporate garbage dumps are overflowing with technology companies that somehow managed to make a product and a name for themselves and then inexplicably flamed out or faded into oblivion. There’s no other industry on the planet like it.
All told, I’m betting there have been more failed tech companies than in all other industries combined. So why is that? What’s so special about tech that it produces more business failures than any other industry? The pace of technology, right? Competition, of course.
Well, that may be true, and it was a convenient excuse for a while. You know, when technology was so new that if you designed it, they really would come. But today, things are different. The industry has reached maturity and some segments have even reached commodity status. Today, global competition is brutal. And tech management teams and boards can no longer get away with the excuses of the past.
It’s time for the tech industry to grow up and fix its management problem.
Look, don’t get me wrong, we all owe a lot to the tech industry. That’s precisely why I’m putting major brain cycles into this problem. Because I want to live to see the industry that gave me such a long, rewarding career, and helped American’s standard of living for so many decades, continue to grow and thrive.
And frankly, this problem is so ingrained in the way the whole industry operates that we sort of take it for granted. Well, that’s just not going to cut it anymore.
The basic problem is this: Just because a startup makes it and goes public doesn’t mean the CEO knows how to take the company to the next level or that the VCs on the board know how to guide him. Moreover, the VPs are learning from the novice CEO who just happened to have founded the company or come up with some wiz-bang technology or gadget.
Look, we’re not born with the management gene, that incredibly challenging skill-set, but tech boards act as if their entrepreneurs are born with it. Sometimes I think executive management teams of tech companies are like giant Petrie dishes for the Peter Principle.
But hey, lots of tech companies have stood the test of time, right? Microsoft, Apple, Cisco, Oracle, Intel, IBM, HP, and plenty of others are some of America’s greatest companies. But for every one of them, there are a thousand that flamed out along the way, and not just because their technology or product couldn’t cut it. Their management couldn’t cut it.
Want some examples? To this day, some of the most talented and brilliant engineers and technologists hale from once-great companies that flopped like Digital Equipment, Wang Laboratories, Sun Microsystems, Fairchild Semiconductor, Zilog, LSI Logic, Motorola, Netscape, Silicon Graphics, National Semiconductor, I can go on and on.
Now, let’s look at Digital Equipment and Sun. The PC killed Digital and Sun, right? It was technology, right? Wrong. They failed because their management teams, specifically their leadership, their CEOs, didn’t have the capability to adapt to change and their boards stood by and watched it happen. It’s a case of natural selection, survival of the fittest. But not the fittest technology, the fittest management team.
After all, IBM adapted. Big Blue was on the fences until Lou Gerstner came along. The same goes for HP and Mark Hurd. They adapted, but it had nothing to do with technology and everything to do with mature management, highly capable leadership.
So, rather than go on and on about the problem, how about a solution?
5 Lessons for Solving the Tech Industry’s Management Problem
1. Somewhere along the line, boards stop governing and start rubber stamping. They stop mentoring and start coddling. Unfortunately, past performance is no guarantee of future results. Ego doesn’t pass for management skill. And the same goes for directors. Tech does a terrible job of mentoring executives and ensuring they develop even the most basic management skills and processes.
2. Intel’s Andy Grove was one of our greatest managers. He taught us to confront problems head on, challenge the status quo, and never, ever stop being paranoid. And yet, even he was only CEO for just over a decade and went out on a high note. Intel has real succession planning, rare among tech companies. Most boards keep founding CEOs around long past the point of their ability to grow the business.
3. Lou Gerstner taught us that a great leader can get an elephant to dance. Because of the pace of technology, because of the brutal competition, all tech companies face major hurdles where growth begins to flatline. Just look at once venerable Sony, Dell, Motorola, Yahoo. When that happens, or better still, when the signs are first visible, boards need to be proactive and far more aggressive in their expectations of management when it comes to strategy change.
4. With rare exception, technology marketing has never grown up. Tech has more bad marketers than there are security holes in Microsoft’s software. Why is that? Somehow, and for some inexplicable reason, most tech CEOs think marketing intelligence comes from an engineering degree. Well it doesn’t. In fact, most tech CEOs don’t have a clue what marketing really is or what constitutes marketing aptitude. In a mature market, that’s a death sentence.
5. And finally, precisely because the tech industry is so fast-paced, because it’s so competitive, for the tech industry in particular: Incestuous, good-ole-boy networks are toxic. Lack of perspective, objectivity, external insight, direct customer feedback, is toxic. The status quo is toxic. Lack of active governance from the board is toxic. And lack of basic management skills and practices is toxic. And by toxic, I mean the company will fail before long. Period.