What's the Right Stuff for the CEO of the Future?
What will it take to be the CEO of a next-generation company? Will the CEO of the future need a superior technical education? Will he need to be a wizard at wrangling venture capital? Can a CEO candidate risk having a business failure on his resume?
Eric Bolland has spent quite a bit of time studying the future of businesses and the people who run them. He is currently the manager of strategic marketing information for a national telecom company and a consultant to high tech businesses in the prediction and optimization of business performance. He also coauthored the book Future Firms with Charles Hofer, and their research on 100 high tech ventures and 200 established technology companies produced surprising answers to these questions.
Bolland says the CEO of the future will need:
- A significant science and engineering knowledge base. But the education may be either formal or informal: "In the companies we looked at, there was no correlation between the success of the company and the education level of the CEO."
- Experience, including even experience in failed ventures. "The more experience you have the more your potential for success increases. And even experience in a failure indicates your potential for taking risks, your willingness to fight the good fight," says Bolland.
- The ability to motivate other people by leading generously -- by collaborating with others; by sharing your vision, your own desire to take risks, and the rewards of that risk-taking. "Most venture leaders have trouble finding people. The most successful are those who are able to identify potential in people and make them part of a collaborative arrangement," he says.
Future Firms looks at the inner workings of high tech companies, focusing on factors that account for relatively better or worse performance. Companies were ranked on such criteria as sales growth, return on investment, market share and employee growth. Bolland visited high tech companies in a variety of industries, not just New Economy companies, but a broad range that included electronics, biotechnology and aerospace. The authors found that their "future firms" had a set of characteristics in common:
- They replaced other older technology firms. "This happens across the board," says Bolland. Some leading-edge companies evolve quicker, adapt faster. "They make the leap. They saw something other companies didn't see in their field. The Internet companies did that; they could have made money running Wide Area Networks, but some companies departed from old business models to create a new one as service providers, hosting providers."
- They grew out of established industries. "Successful entrepreneurs are people who identify something in themselves and outside their companies that they're willing to hitch their wagons to," says Bolland. "That's why you see so much of a generational effect -- companies like Fairchild on the West Coast that spin out successful entrepreneurs who build successful companies, and then these companies produce others."
- They had a wide variety of ways they organized work. "They had more collaborative approaches to setting the company's vision, and to sharing the wealth as well," he says.
You must have a strategic orientation.
You must take a collaborative approach to managing the business.
You must be courageous, ready to take the risk of trying something new.
1. Strategic Orientation
This is the only yardstick a CEO can depend on in an environment where change is the norm: "Virtually all companies are growing, so it's hard to keep track of your company against others," says Bolland. "You need a future orientation, a vision of what your company should be in 10 years. Only if you have long-term vision can you make the small adjustments."
2. Collaborative Approach
"This is important in several dimensions," says Bolland. "First of all, it's important in respect to the people in the firm themselves. Not having formal structures, sharing information, that's natural for small companies. But when companies get bigger, they tend to ossify in respect to innovation. Some become heavily structured, very top-down, like Microsoft. Others don't. Oracle is an example of a company that puts a great deal of emphasis on the innovation potential of collaborative work and cross-disciplinary teams."
CEOs also need to take a collaborative approach to their industry as a whole, he says -- where it's going, what its common interests are.
3. Courage to Take Risks
"You must be prepared to depart from a stream of thinking that has paid other companies well, to make a leap into something new," says Bolland. He retells a story from Richard Foster's book, Innovation, The Attacker's Advantage:
"Foster talks about high technology in the past, and describes the clipper ships on the Atlantic. The clippers set speed records for the crossing, and they got more and more efficient as they added sails. At the same time, steam technology came along, and for a long time the two technologies competed. You still made more money if you invested in clippers, but at some point you couldn't add more sails; you couldn't land in some harbors. In the end, steamships won out. Foster's point is that the people who prospered didn't wait until the end to make the leap to new technology."
Preparing Yourself for the Future
Bolland says there have been some fads and fancies associated with managing in high tech: "There's nothing special or spooky about how to manage a high tech company. But it does require a considerably higher degree of monitoring, and the ability to make adjustments to the environment because things change so fast."
The good news, says Bolland, is that there are no advanced degrees in how to take risks in high tech companies. The CEO of the future will have to make sound business decisions about technology, to take risks when necessary, and to share decision-making while exercising leadership. If that's something you can prepare yourself for, the job can be yours.