Great CEOs Must be Either Technical or Financial(forbes.com)
forbes.com
Great CEOs Must be Either Technical or Financial
http://www.forbes.com/sites/venkateshrao/2012/03/09/great-ceos-must-be-either-technical-or-financial/
26 comments
I think it could be argued though that Jobs probably had a good idea of what is feasible with current technology, and this allowed him to push his team to deliver something that is just slightly beyond the envelope.
I'd consider this similar to how he was said to have very good taste in design, even though he may not have been able to design things all by himself.
I'd consider this similar to how he was said to have very good taste in design, even though he may not have been able to design things all by himself.
That's a fair point.
If we're defining "technical" as having a deep understanding of where technology is headed, and what its implications on various markets will be, then yes, being technical seems to convey a pretty distinct advantage in the C-suite. Conversely, lacking such an understanding dooms your company's fate to chance. You could get lucky and avoid disruption, or stumble into evolution. But, just as likely, you could miss major upside or fall into major downside. In this sense, to be technical is to have the ability to steer your own ship (for better or for worse). Not to be technical is to allow the currents to carry you where they may (often for worse).
If we're defining "technical" as having a deep understanding of where technology is headed, and what its implications on various markets will be, then yes, being technical seems to convey a pretty distinct advantage in the C-suite. Conversely, lacking such an understanding dooms your company's fate to chance. You could get lucky and avoid disruption, or stumble into evolution. But, just as likely, you could miss major upside or fall into major downside. In this sense, to be technical is to have the ability to steer your own ship (for better or for worse). Not to be technical is to allow the currents to carry you where they may (often for worse).
He is also specific about what he means:
"Technology skills do not necessarily mean hands-on skills, though they can arise from hands-on experience. It means simply understanding the technological state of play in the environment in a way that you can make exceptional decisions.
But the skills do have to be exceptional, even if they are not hands-on."
"Technology skills do not necessarily mean hands-on skills, though they can arise from hands-on experience. It means simply understanding the technological state of play in the environment in a way that you can make exceptional decisions.
But the skills do have to be exceptional, even if they are not hands-on."
But in using "exceptional" in the definition, the author basically gets a free pass. You cannot make predictions based on his definition of technical. You only know a decision was exceptional with hind sight.
Ergo, the best CEOs are the "technical" ones, but not in the classic sense where technical means provided ingenious solutions to problems.
Ergo, the best CEOs are the "technical" ones, but not in the classic sense where technical means provided ingenious solutions to problems.
I think that the article's still interesting, but I agree that there's a lot of room for the author to move the goalposts, which makes the article read as fluff.
I'd be far more interested in it if Mr. Rao had said "and now that I've said that, here's what my theory predicts about Steve Ballmer and Tim Cook, who are definitely both finance-oriented CEOs."
Also I'm fairly surprised to see this in Forbes: "In general CEOs are in an adversarial relationship with the investment community. If they are sincere about their jobs, they are in it to build long-term value in enduring companies that create real, as opposed to paper wealth. Investors generally want to simply create preferentially-predictable-to-them stock movements that they can take advantage of on their own personal wealth-building schedule, which has nothing to do with the fundamental time constants or market tempo of the company."
Did Forbes just notice that the financier class are parasites who are in an 'adversarial relationship' with people who actually create value? Pinch me!
I'd be far more interested in it if Mr. Rao had said "and now that I've said that, here's what my theory predicts about Steve Ballmer and Tim Cook, who are definitely both finance-oriented CEOs."
Also I'm fairly surprised to see this in Forbes: "In general CEOs are in an adversarial relationship with the investment community. If they are sincere about their jobs, they are in it to build long-term value in enduring companies that create real, as opposed to paper wealth. Investors generally want to simply create preferentially-predictable-to-them stock movements that they can take advantage of on their own personal wealth-building schedule, which has nothing to do with the fundamental time constants or market tempo of the company."
Did Forbes just notice that the financier class are parasites who are in an 'adversarial relationship' with people who actually create value? Pinch me!
Jobs was a video game programmer in the mid 70s. From what I've read, it was he who brought Woz in on the hardware project for Breakout.
Of course there was a gulf between his technical skills and those of Woz, but few people in that era had any programming or hardware design knowledge at all.
Of course there was a gulf between his technical skills and those of Woz, but few people in that era had any programming or hardware design knowledge at all.
Did jobs actually complete any projects at Atari other than the Breakout one (which Woz did singlehandedly)?
The author of this article (Venkatesh Rao) also is the person behind the highly entertaining "gervais principle" series: http://www.ribbonfarm.com/2009/10/07/the-gervais-principle-o...
This might have been a good article if there were any data at all to back up any assertion. There are just a couple mildly amusing anecdotes (Bill Gates was technical!) where real data might actually be possible.
Being a jerk CEO could be a high variance strategy: a few very visible big winners and lots of less visible losers.
I'm sure we can all list a dozen great CEOs off the tops of our heads who are neither -- unless we do as the author has done and redefine each to be so broad they are meaningless. Really dumb article.
I remember Scott McNealy saying he (and presumably his team) underestimated the impact and importance of 32 bit computing and concentrated on 64 bit. That'd be a strategic technical oversight. Maybe they wanted people to go to thin-clients. I suppose the key when you're that big is to work out when you do or can shape trends, and when you can and must follow them. Not sure Jonathan Schwartz corrected course, or by then too late.
That's not the reason I stopped using Suns. They annoyed me by switching to an aesthetically ugly unix. They priced their machines for their finance industry customers, then Intel + open source unix boxes caught up in performance for 1/4 the price.
Sun was huge on thin clients around the turn of the century, the last great battle between thin and thick clients. In the first dotcom bubble, Sun sold a zillion Enterprise-series (E400/E4000/etc. big boxes) servers and wanted to keep that flow going. The market evidently did not agree with their plans.
The perspective that is lost to time is that back then Sun was kind of like AWS nowadays WRT mindshare, with the addition of hardware business, which is key to my point: likely when McNealy said that they underestimated 32bit he was eliding the problematic future they saw in the UltraSparc 3, that it was an engineering dead-end (which begat the T series), and, well...capitalists profit from externalizing their liabilities. "We're still awesome, it was 32bit's fault."
The perspective that is lost to time is that back then Sun was kind of like AWS nowadays WRT mindshare, with the addition of hardware business, which is key to my point: likely when McNealy said that they underestimated 32bit he was eliding the problematic future they saw in the UltraSparc 3, that it was an engineering dead-end (which begat the T series), and, well...capitalists profit from externalizing their liabilities. "We're still awesome, it was 32bit's fault."
Good old Forbes, providing a forum for their preferred business configurations. The author bases the entire article on a strawman of "CEOs," but monolithic stereotypes help no one.
For a moment I thought that said "Great CEOs Must be Ethical..." Of course, that's false.
"Fast forward to today, and as a recent insightful post pointed out, even the "non-technical" members of famous founding pairs like Gates/Allen or Jobs/Wozniak have been extremely technical."
So, uhm, when were either Gates or Allen ever considered non-technical? (even relatively speaking) Which of the pair is supposedly the less technical founder? Both were extraordinarily technical. Hey Rao, your ignorance is showing.
So, uhm, when were either Gates or Allen ever considered non-technical? (even relatively speaking) Which of the pair is supposedly the less technical founder? Both were extraordinarily technical. Hey Rao, your ignorance is showing.
Kind of disagree, CEO - Should be from more from Sales than Tech/Finance.
As CEO's main job is to get more money, get new partnerships in place, etc.
founders/products architects can be Tech/Finance.
As CEO's main job is to get more money, get new partnerships in place, etc.
founders/products architects can be Tech/Finance.
I have a soft spot for sales after spending nearly 5 years in commercial real estate brokerage.
Sales is tough, very valuable and absolutely crucial to almost every organization.
But...
If a CEO doesn't present a technical advantage or cannot model their own company financially, they can probably only grow it so big.
That being said, some sales CEOs are great for maintaining a business:
Intel's CEO, http://en.wikipedia.org/wiki/Paul_Otellini Otellini is one of the few CEO's in America that came from a sales background. I would argue that he is also very strong in finance and strong technically in the sense that he understands how the pieces go together.
My point is that it is always dangerous to generalize, but I don't see how someone can grow a business successfully and not have a deep understanding of finance. Understanding how decisions impact profitability and balance sheets is crucial to making good decisions.
Not having that background is like trying to win a game without knowing the rules.
Sales is tough, very valuable and absolutely crucial to almost every organization.
But...
If a CEO doesn't present a technical advantage or cannot model their own company financially, they can probably only grow it so big.
That being said, some sales CEOs are great for maintaining a business:
Intel's CEO, http://en.wikipedia.org/wiki/Paul_Otellini Otellini is one of the few CEO's in America that came from a sales background. I would argue that he is also very strong in finance and strong technically in the sense that he understands how the pieces go together.
My point is that it is always dangerous to generalize, but I don't see how someone can grow a business successfully and not have a deep understanding of finance. Understanding how decisions impact profitability and balance sheets is crucial to making good decisions.
Not having that background is like trying to win a game without knowing the rules.
Otellini has done a fine job of selling Intel's existing products, but they haven't won in any new categories in his tenure. Intel may have missed the boat on tablets and phones by not developing anything competitive with ARM-based SoCs, which may replace 90% of desktops in the next 10 years. It's too early to say, and there may be something big around the corner. But if Intel stays the course and doesn't expand beyond the shrinking desktop market, Otellini will exemplify the problem the article cites with salesguy CEOs : failure to chart a winning course through the next technological disruption.
Intel hasn't missed the boat on tablets or phones, they will be there shortly.
It takes years to design and tool a fab to build a new chip. Intel started the R&D process years ago to maximize battery life. But, soon they will be in lots of phones and tablets.
The part of Intel/SoC/iPad/Tablet/Phone world that people don't understand is that there is almost no profit in making low end phone chips. At $35-$45 gross per chip, they only make a few dollars in profit.
A high end i7 processor probably achieves profitability in the $700+ per chip sold range.
That means they need to sell roughly (round numbers) $700/$5 = 140 smart phone chips to make the profitability from one high end computer chip.
No one is going to try to compete with AMD/Intel on the high end since there just isn't room for a competitor and the R&D risk is too high.
For Intel, they need to get in phones and tablets for the extra profit because they can, but there isn't that much there.
Whether Otellini has done the right thing or not is yet to be seen, but I would bet that Intel will start getting design wins in the next few years and will eventually become the dominate phone processor seller.
It takes years to design and tool a fab to build a new chip. Intel started the R&D process years ago to maximize battery life. But, soon they will be in lots of phones and tablets.
The part of Intel/SoC/iPad/Tablet/Phone world that people don't understand is that there is almost no profit in making low end phone chips. At $35-$45 gross per chip, they only make a few dollars in profit.
A high end i7 processor probably achieves profitability in the $700+ per chip sold range.
That means they need to sell roughly (round numbers) $700/$5 = 140 smart phone chips to make the profitability from one high end computer chip.
No one is going to try to compete with AMD/Intel on the high end since there just isn't room for a competitor and the R&D risk is too high.
For Intel, they need to get in phones and tablets for the extra profit because they can, but there isn't that much there.
Whether Otellini has done the right thing or not is yet to be seen, but I would bet that Intel will start getting design wins in the next few years and will eventually become the dominate phone processor seller.
You have just stated the Innovator's Dilema, and nothing Intel is doing appears to be any different than anybody else who has been displaced has done. Waiting for the profits to get "large enough" simply gives the entrant time to solidify their base.
Intel isn't going away, but it's going to have some rough times.
Intel isn't going away, but it's going to have some rough times.
Another good sales CEO:
http://www.sap.com/corporate-en/our-company/executives/mcder...
http://www.sap.com/corporate-en/our-company/executives/mcder...
Larry Ellison seems like the epitome of a sales CEO at a long term technical organization. People like Mark Cuban also count, but that was more of a flip.
Steve Ballmer is an example of a sales guy as ceo of a tech company. Perhaps he is a victim of bad timing, but I wouldn't call his tenure as successful. He will ultimately leave the company in a worse position than when he took the ceo reigns, partially because his sales-oriented view.
Furthermore, Rao's assertion that Jobs lacked "people skills" is demonstrably false. It's true that Jobs was an unrelenting perfectionist, an introvert, at times a genuine asshole, and probably narcissistic. But to say he lacked "people skills" is to ignore his profound understanding of how to communicate with people. How to inspire people, be they co-founders, employees, or customers. How to move people. These skills had to be quite strong, indeed, in order to overcome the barriers his difficult personality erected around him. When we speak of "people skills," we really need to define what we're talking about. If we're simply talking about being an affable guy, then no, most CEOs probably don't pass the test. But if we're talking about the ability to understand, speak to, lead, organize, and often downright manipulate people, then yes, "people skills" are pretty crucial.