New Tech Leaders: 5 Pointers to Keep a Company Great

 @DavidZie on August 26 2011 11:54 AM

There are two givens in the technology sector. One is that there will be constant change, disruptive technologies that create new products and markets. The second is that there will be new leaders to make it happen.

Now that Apple appears headed to report its first-ever year with sales exceeding $100 billion, how will new CEO Tim Cook fare after inheriting the job from Steve Jobs, who co-founded the company?

Opinions are mixed. For sure, Cook, 50, enjoys the endorsement of Jobs, 56, whose health is failing. And he enjoys a decent record as Apple's COO, especially after joining the Cupertino, Calif., electronics giant from Compaq in 1998.

But Cook is Cook, and not Jobs. He has a B.A. in industrial engineering from Auburn University as well as an M.B.A. from Duke. Everything about him indicates he's an excellent manager. But is there any creative genius that will keep Apple, Apple?

Time will tell. For now, the market is keeping Apple shares relatively buoyant. The market capitalization remains around $345 billion, only $30 billion below its record.

Here are some guidelines and lessons from past transitions:

The new CEO may not have the old one's magic. Consider Microsoft. Under Steve Ballmer, the company remains enormously profitable and retains market share. But where are its revolutionary new products? Its attempts to get into music and smartphones haven't gone anywhere, its Bing search engine is nowhere as popular as Google and Yahoo. Microsoft has scored with the Xbox360, but has not tickled consumer fancy.

How about tech companies like Advanced Micro Devices, which has shrunk since founding CEO Jerry Sanders left and Dell, which lost its way under an M.B.A., Kevin Rollins, then foundered until Michael Dell returned. This week, AMD named a new CEO, Rory Read, an information engineer, who had been a success as President of Lenovo Group.

There are loads of others, including Eastman Kodak, National Semiconductor, NCR and Unisys, which have lost prominence as innovators.

Good tech people tend to be good tech CEOs. Look at HP, now under Leo Apotheker, a software expert from SAP, who's trying to steer the company towards more services. Prior CEO Mark Hurd, an M.B.A., likely saved it financially after its disaster under Carly Fiorina, another M.B.A., whose experience at Lucent Technologies had been in marketing.

Other tech companies run by tech people have had consistently solid performance such as Texas Instruments, led by Rick Templeton, its latest electrical engineer to become CEO; Applied Materials, led by Michael Splinter, ditto; Adobe, led by Shantanu Narayen, ditto; and Altera, led by John Daane, a computer scientist.

The successor CEO lacks the founder's imagination. Think of Walt Disney Co., which foundered under Disney's successors, until his nephew Roy helped shake up the company and restore some of its verve. Part of that was by acquiring Steve Jobs' company Pixar, which completely refreshed its animation business  --- and left Jobs as its No. 1 individual shareholder. He remains a Disney director.

Other tech companies haven't been so lucky. Xerox nearly collapsed in the mid-1990s and has now been turned around by two successive CEOs, first Ann Mulcahy and now Ursula Burns, a mechanical engineer. But Gould, Digital Equipment, Wang Laboratories, Nortel Networks and others all vanished, with their remnants absorbed into great companies.

Youth helps and is worth watching. Jeff Yang and David Filo were computer science students when they devised Yahoo as were Sergey Brin and Larry Page with Google; Adobe's John Warnock came up with algorithms for computer graphics in his doctoral dissertation written at 29 and Nvidia's Jen-Sun Huang helped co-found that company at 30 after first working at LSI Logic and AMD.

Sometimes, the young CEOs need management help. Jobs reached out to hire John Sculley from PepsiCo, in a move that ultimately got him fired but may have saved Apple at that time. Filo and Yang needed people like Tim Koogel and Carol Bartz to manage the company. And Brin and Page needed Eric Schmidt, a computer scientist with experience at Novell and Sun Microsystems to help them grow.  

That's why venture capital firms watch young people. Smart ones, like Kleiner Perkins Caufield & Byers seeded an iFund when Jobs unveiled the iPhone. Its $300 million total investment will multiply many times as companies like Zynga and MakeMyIndia go public or get acquired.

The new CEOs must keep some of the old hands around. At Apple, Cook would be crazy to dismantle the team Jobs has assembled, as well as a board of directors that includes CEOs who created companies like Intuit's Bill Campbell or Genentech's Arthur Levinson, who joined that much smaller company after finishing post-doctoral work in microbiology.

At Intel, for example, long-time directors such as Andy Bryant has been with the company 30 years. CEO Paul Otellini has been with Intel 37 years. Their institutional memory plus help from outside directors can keep the company creative. It can also help if the new CEO needs to be shoved aside.

After all, Jobs is Apple's first-ever Chairman.

Join the Discussion