by Charles Plant | Nov 16, 2012 | Innovation
I promise I’ll get off this Passion soapbox next week. Meanwhile, just one last post in the series.
For a long time, I’ve been trying to figure out reasons why Canada’s innovation economy may be under performing that of the US. Someday someone smarter than me will figure it out. Meanwhile it just forms part of our national angst and I’ll keep chipping away at the subject.
This week, I’ve determined that business passion and its dampening of product passion may be contributing to Canada’s weak performance. Bear with me here.
One thing that bothers many in the innovation economy is our inability to grow large public (or private) companies that dominate markets, are category busters, star performers. RIM was one of those and still may be again. Nortel was one. What typically happens is that good fast growing Canadian companies are bought out early in their development, before going public. While they may leave a development team in Canada, for the most part, the growth of the enterprise occurs elsewhere.
Here’s what I think is happening to cause these premature exits. The rising stars are funded by, for the most part, the canadian venture capital community. Most Canadian VCs have backgrounds in finance, not in technology or entrepreneurship whereas in the US, there is a more even mix. In Canada, I suspect that VCs are replacing the founder earlier in the company’s evolution with adult supervision, those MBA types that have been though the startup tech war and got an exit or two.
The problem with replacing a founder with a “business professional” is that the company loses the passion that brought it into being in the first place. The passion for people or product is replaced by a passion for process. The “professional” CEO doesn’t care so much about changing the world but about getting the job done for the VC. That means reducing risk and getting out early. That way the CEO can earn a few bucks and go on to doing it again. One more tick for the resume. The founder might have stayed the course a little longer as the founder was not so much interested in the money but changing the world.
Thus a passion for business is trumping a passion for product and stunting the company’s potential. Going back to RIM and Nortel. It is interesting to note that neither of these two got early VC backing, RIM getting it just before going public. In RIM’s case, this allowed the founders to stay at the helm until very recently. In Nortel’s case, it had a parent that was more interested in building a business than an exit.
We are replacing product passion with business passion, going for quick exits, and stunting our innovation economy.
by Charles Plant | Nov 15, 2012 | Research
I was preparing for a speech on Monday and looking for examples of great leaders who founded great companies. To do this I looked for the largest technology companies I could find figuring that would be the path to finding great leaders. The thing that jumped out at me was that for the most part, the largest technology companies overall and in their sectors had been led for a long time by their founders, not by so-called experienced managers. (Jobs, Gates, Dell, Bezos, Ellison, Zuckerberg, Page, Moore, Hewlett etc)
When I looked some more I found that in a few cases (Jobs and Dell) the founder had to come back in as CEO to rescue the company. It made me ask the question:
Do companies do better with their founder than with professional managers?
Funny thing is the answer is yes. The private equity industry has a habit of investing in companies doing poorly with bad management. In those cases, replacing the CEO is usually a good idea and the reason the firm invested.
Unfortunately, the venture capital industry has followed this practice. In the name of adult supervision, the CEO is usually gone within 3 rounds of VC investment.
According to this blog: “When I analyzed 212 American start-ups that sprang up in the late 1990s and early 2000s, I discovered that most founders surrendered management control long before their companies went public. By the time the ventures were three years old, 50% of founders were no longer the CEO; in year four, only 40% were still in the corner office; and fewer than 25% led their companies’ initial public offerings.”
However, other research shows that on average “Shares of companies that retain their founders as CEOs, even after they become large corporations, have enjoyed gains that top the market by four times on average, according to a USA TODAY database study.”
You Can’t Buy Passion
The moral of the story is that the founder brings a passion for people or a passion for product that is priceless. The company often loses this passion when the founder is replaced by a professional manager. (Think Sculley) Unfortunately these often MBA trained technocrats have a passion for process and this isn’t what makes great companies. (Although perhaps it makes great banks, insurance companies and conglomerates.)
Companies need these professional managers to complement a founder’s skill set but they should be in roles such as COO or CFO. You can’t buy passion and you can’t create great companies without it.
by Charles Plant | Nov 14, 2012 | Leaders
Take a look at the three leaders featured above, Richard Branson, Steve Jobs, and Jack Welsh. Each of them was successful but each seems to have had a different passion in business.
Richard Branson entered multiple businesses because he was fed up with the poor customer service that was a standard in the industry for each business. He sought to change the customer experience in each business because he cared about people and figured they deserved better.
Steve Jobs built multiple products in a variety of sectors because he cared deeply about the beauty and simplicity of product design, a passion for product.
Jack Welsh had a passion for the business process and was able to make GE a consistent world leader in multiple indistry sectors because of this basic passion for process.
Each one of them was exactly what was needed for each style of business and each would have failed in the others’ business. In fact when you put someone who has a passion for process like Sculley in a product business like Apple he fails when he can succeed in a business that needs process.
Leadership is complex and multidimensional but passion plays a large part in determining what leader is suited for what type of business.
by Charles Plant | Nov 13, 2012 | Emotional Intelligence
I’m playing with this idea of passion in business so please bear with me while I figure it out.
The way I figure it, you can have a passion for three things in business; people, products and process. (Please notice that all these words start with a P.)
People
If you have a passion for people, you’re someone who wants to make things better for other people. You want to change the world and make other peoples’ lives better. You’re likely to have strong feelings of empathy and good emotional intelligence.
Products
A passion for products means that you’re innovative, like the way products work, keen about gadgets, feeds and speeds and trying new things out. You’re probably more logical than emotional but you can get emotional about products.
Process
To have a passion about process it means that you like the way business works. You probably have a business degree, like getting things done, like plans, charts and numbers.
Your passion has a lot to do with where you end up in business, whether it is operations, marketing, finance. How far you get in business will depend on how much passion you have in multiple areas but more about that tomorrow.
by Charles Plant | Nov 9, 2012 | Leadership Development
If there is one thing that the knowledge economy and the increase in ambiguity has foisted on us is the rise of the douchebag. You know the type, an individual who sounds great when talking but the knowledge is only surface deep and there is no ability to execute.
The problem is, with all of the technological complexity and change out there, it is hard to tell the douchebag from the expert. Suddenly, everyone is an expert. The net makes this possible and there are even all sorts of books on how to hold yourself out as an expert, even without being one.
So, here’s a guide to spotting a douchebag and separate him or her from the real expert. A Douchebag:
- Uses complex words you can’t understand in order to make himself seem more intelligent than you. An expert will use simple words so that you can understand.
- Is likely to be running around like a chicken with its head cut off, disorganized and unfocussed where an expert knows where to put the focus and doesn’t waste time.
- Is always onto the next great thing while the expert is more selective about moving on.
- Talks about concepts where an expert talks about applicability.
- Creates a flurry of activity where an expert creates results.
I promise I’ll get off this Passion soapbox next week. Meanwhile, just one last post in the series.