F|R: The Top 5 Reasons Tech Execs Fail

28 Comments

Regardless of the title your company’s top technology executive uses — CTO, CIO, Chief Product Officer or VP of Engineering — your company will ultimately look to this person to produce the software and technical products upon which your business success depends. Through our earlier career experiences (at Quigo, eBay and PayPal), and now through our consulting practice (AKF Partners), we’ve noticed that there are five consistent reasons why a tech executive fails.

Perhaps the most commonly assumed “failure scenario” is that the CTO is simply not technical enough to inspire confidence in the engineering team. This is not the case. In fact, it is actually rare that a CTO is removed because he or she lacks technical acumen. The truth is that your senior technology officer does not need to be the brightest technical mind in the business, except, potentially, during the startup phase of your company. Over time, he or she need only be geeky enough to challenge the strongest technical minds in your company to add value to technical decision-making. Most often, we find that senior executives come to a bad end when they spend too much time relying on their technical brilliance and not enough time cultivating other important aspects of their job.

The Top 5 Tech Exec Failure Scenarios we list below are not mutually inclusive, but they all support one very important conclusion: when technology executives fail, it is not because they lack an individual skill. It is because they lack an an adequate balance of the many technical, operational and leadership skills necessary to make them a complete manager.

5. Failure to Build World Class Team

As important as any other aspect of your job is the need to cultivate the best team possible given the limitations of your budget, mission and headcount. Rather than spending time on improving the capabilities of their teams, we find that many chief tech execs spend a great deal of time attempting to compensate for deficiencies within their teams. A very typical example of this is a CTO personally taking responsibility for every technology decision within a company. While this is a necessary practice when the team is very small, it does not scale into organizations of hundreds or thousands of engineers. All managers must be able to delegate to succeed.

4. Failure to Execute

At the end of the day, our jobs are all about creating and maximizing shareholder value. Failing to bring products to market in a timely fashion, releasing products with unacceptable levels of defects, and failing to meet contracted delivery dates are all examples of failing to execute to the expectations of your customers, partners and, ultimately, your shareholders.

3. Failure to Lead/Motivate/Inspire

Leadership has to do with those things that inspire an organization to achieve remarkable and extraordinary results. Painting a vivid description of the ideal future of your organization and setting aggressive but achievable goals are some of the aspects of leadership most often missing within the office of the chief technology executive.

2. Failure to Manage Operationally
Often, performance lapses by technology executives root to a lack of planning, communication or measurement — the very building blocks of operational management, as taught in business school. But you cannot improve what you do not measure, and you cannot guarantee maximum shareholder value without showing how you are improving results. Planning is an essential management activity as it helps align your team with your vision, mission and goals and helps ensure the efficient use of resources. Communication between and within organizations as well as to your shareholder base helps keep everyone in sync with your progress, needs, accomplishments and corrective actions.

1. Lack of Financial Acumen
In our experience, this is the top failure scenario among technology executives. Most technology curricula do not teach the basics of how businesses operate in financial terms, such as: capital markets, equity or debt finance, sales accounting, cash flow management, or even business strategy (such as Michael Porter’s 5 Forces). By the time most technologists have become executives, they’ve spent a lot of time learning their engineering trade, but they’ve had precious little opportunity to really learn about the mechanics of how a company runs.

Cartoon courtesy of www.philadelphia-reflections.com.

Marty Abbott and Michael Fisher are partners with AKF Partners.

28 Comments

Rodney Brim

Thanks for the blog. Lots of interest in this one. Actually three issues most commonly emerge in our experience working in this area:

1. The first is an addition to your list. It’s Emotional EQ. Perhaps its included in your failure to lead section, but frankly, not displaying savvy interpersonal skills and understanding and being able to navigate around the power of politics, is the one of the first things that get’s technology exec’s discounted in our book.

2. The ability to not use technology effectively to manage their own deparment’s tasks and projects is another primary face plant we see. It contributes to your point about managing operationally, but again we see it much more basic and directly impacting credibility for a technology exec.

3. The 3rd issue is the perception that IT is controlling the organization, e.g. not realizing that technology services is a service organization, not the controlling arm. That creates lots of ill will, and yet is very common.

Rodney Brim
http://www.managepro.com/blog/index.php/category/strategic-manager

Pavan K

Excellent article. Achieving this balance of leadership vs. management skills, and technical vs. business acumen will be a great challenge for a new generation of startups. We hope to deeply embed this, along with a lot of thinking from the Giga Om network, into a startup we are planning and prototyping right now. Thank you Marty & Michael, there is no way we could have afforded your fees, so absorbing this access to your insight, along with the comments from the community are at the top of our list.

Christian Sanz

Great article!

I believe CTO’s need to adapt to the company whether it is a startup or a large well established institution. All companies are different and will require different types of commitments, skill set and or experience.

J Dagless

I’d also push the lack of understanding of how the organisation works at the sharp end. I remember taking my IT Director down to one of the local branches to sit with staff that actually dealt with customers (motor claims) all day to see how their IT worked for them.

As we left I said to him “now you see how those wonderful executive strategic Powerpoints you churn out mean absolutely jack down here!”

He had to agree.

This lack of understanding leads to dreadful assumptions being made.

Bob

I would add anti-social personality disorders to the list. I’ve encountered more than a few tech execs whose ability to interact with other human beings was seriously deficient. One rule of thumb I find especially useful is self-advertised MENSA membership, almost surely an indicator of unpleasant personality traits.

Phileosophos

Interesting post, but I have to wonder about the number one reason, a lack of financial acumen. I can’t think of a single case I’ve seen where a CEO, CFO, COO, or any other C-level officer for that matter, has been identified as the point of failure for having too little technical acumen. I’ve heard plenty of jokes about how tech-stupid those folks are, but I’ve never heard it suggested that they need to be technically astute for a company to succeed. That’s why companies also hire a CIO/CTO, after all. So I wonder: why is it reasonable to expect the CIO/CTO to be a jack of all trades, but not the other officers?

Nadine North

THIS IS AN EXCELLENT POST! I’m a headhunter in Silicon Valley, and deal with this daily. In my humble opinion, every executive, especially in a start-up, should have as many leadership skills as possible. The more leadership, team-building, financial, etc. skills the tech leaders possess, the less other execs will have to support the technology functions. Saying that, the stronger that the business execs are in technology, the easier it is for the tech execs to convey and implement their tech strtegies. Win, win, win all around.

Jeff

I think reason 5 and 4 are also created in the sense that executing earns the respect of the team. What is especially true at engineering startups is that engineers often wonder what the biz dev people do all day. To be able to truly drive products forward motivates engineers and lets them know that they are not just wasting their time and passion.

Vectorpedia

This is an excellent list of why executives fail but I would place the failure to pick a world class team a little higher on the list.

Paul

Nowhere in the top 5 is “Not understanding or caring about product quality and customer experience” – John Sculley must have been more naive about finance than we thought.

mike whatley

During the Vietnam War, the army was running out of “buck sergeants”. That is 3 stripers. A line supervisor. In the Infantry everything is about leadership. The Army opened a “Shake and Bake school at Ft. Benning Ga.” and turned out “90 Day Wonders”…… 3 striped cherry Segeants and sent them into the line in Vietnam. 12 weeks of Non-Stop leadership training.

We have a society that knows little of the military and an entire business segment of the economy (Silicon Valley) that is also ignorant of military practices. None of these “reasons” are new. I and thousands of other 20 year olds were introduced to these principles decades ago. And it remains the finest education I ever received. No university, seminar or online course has ever impacted my life like that 12 weeks.

Running an IT shop or technical facility isn’t much different than leading a squad of GI’s humping through the jungle. And the stakes are MUCH lower.

Ram Iyer

Absolutely on the mark. The pity is that many a boards, CEOs and Presidents do not look for these skills and abilities during the hiring process. Instead they focus on technical expertise and hands-on ability. The five reasons above point to strategic, tactical and management competence.

larry freeman

Great post. I completely agree. I’ve been a manager for 7+ years and watched some of the most incompetent leaders maintain their position because of their technical acumen and political skills even as they lack what I consider “true” management skills (leadership, openness to great ideas coming from others, understanding the importance of project management, respect for the people who work for them, etc.)

Hopefully, the ideas you write here will become better embedded in tech companies.

-Larry

Mike

This is all fine and super – but you have to take into account that the CTO forms part of an organization, and this organization may place limits or burdens on what he/she can actually do. Can I fire my development team subcontracted in an eastern company and hire a new local team that will cost 10x more, but maybe perform much better, thus allowing the company to reach its goals?

There are also cases when the CEO doesn’t want to involve the CTO in business decisions, or does not take his views into consideration. Many times we are accused of thinking in too far-reaching analytical terms, focusing on minute details and problems, rather than seeing the big picture about the goals and the benefits they can bring to the company. The reverse could be the same – pure business analysis leads many times to unachievable targets, and “told you so” situations. The views of pure business people tend to be too flowery, without paying attention to the down side, while technical people pay too much attention to the problems rather than the bigger picture. Both visions complement and balance each other, and are the basis of a strong team. Asking CTOs to think more like CEOs would upset this balance.

The CTO must of course know how the company operates, and how his decisions affect its course – but asking them to be able to read a balance sheet, when there are plenty of CEOs out there that cannot do it and rely on the accountant, is going a bit too far. If the CTO has time and willingness to learn, or even get an MBA, then better for him, but his success should not be tied to his ability to perform a CEO’s job too.

To comment on each of your five points:

1. Building an excellent team is not only the CTO’s responsibility. The CEO and board are also responsible in setting the limits on what can be had. I as the CTO may not be so free as you imply to hire and fire, based on the company’s previous hiring strategy, actual team when the CTO arrives, and financial conditions.

2. Too generic wording, but it is of course the ultimate responsibility of the CTO to have a technically sound product, which meets the requirements set by the business development and marketing people, who in the end are the ones that are going to sell it. There are also cases when the execution targets shift every two weeks, and in this case, it is very hard for the CTO to keep everyone on the same page. When the CEO/bizdev/marketing guy tells you there’s no need for market research, what do you say? We build our product on a hunch?

3. This is a personal issue, and one that can happen at any executive level. I have met with executives that -suck- at motivating the team, but may be very proficient in their field of expertise. Same goes for teaching – not everyone can do it.

2. Agreed, planning is needed at any level. Even the developers need to plan their share of the workload.

1. I would ask you to write an article about the reverse – CEOs of technical companies with lack of technical acumen. Since you are talking about CTOs this time, I agree – there needs to be an understanding on how technical decisions affect the business, but this doesn’t mean having to spend months learning about the intricacies of the capital markets – you are supposed to have someone on board who is an expert on those matters, and who usually takes the CEO title, for a reason.

Nice article, thanks!

Josh Chandler

The 5 reasons could be related to people in the tech world too

5- Biz Stone of Twitter
4- Steve Balmer and the Windows Vista team
3- John Miller of AOL
2-Jerry Yang of Yahoo
1- Steven Chen and Chad Hurley of Youtube

What do you think, am I horribly off the mark or do you agree with any of them?

nic mitham

pretty obvious conclusions here. these 5 reasons can be applied to any company at any stage in any sector

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