Posts Tagged ‘CEO’

Are Public Companies Owned by the Public?

October 6, 2012
Board of Directors Keeping a Low Profile Cartoon

Board of Directors Keeping a Low Profile Cartoon

Is the entire governance model of public companies broken?

In theory, public companies are owned by the public shareholders and the goal of the company is to increase the long-term value for them.

In practice , many companies are managed by minority shareholders or ineffective board members , that can not be replaced by the majority public shareholders.

Lets assume I own HP stock. Assume I think the board is not doing a remarkable  job. Since four CEO were changed in recent years, it is unlikely that all CEO’s are to blame.

How can I change the HP board of directors? This is quite impossible as I have a very tiny share of HP shares. But the largest owner has only 7%.

The classic capitalist answer is that I could sell my HP share, and if many people follow my footprints, the board would “Get the message”.  However, there are some very nice incentives for being a board member ($381,000 per year in this case) , so there is no reason for board members to resign. For example John H. Hammergren is a director of HP since 2005 and despite of the stock decline he did not “get it”.

Maybe he is an amazing director ,I don’t have  any data, but the stock does not reflect it.

HP (HPQ) Stock Price 2007 To 2012

HP (HPQ) Stock Price 2007 To 2012

In theory, I can send a fax a nominate my own director , but I have the feeling it would be challenging, as the process is complex.

In 2012, for example, only 20 such proposals were submitted and only 8 actually got to the voting stage.

In other companies, in which the CEO has 10%+ of the share, things might get even worst, as a minority shareholder (10% is smaller than 90% 🙂 ) is running the show, and effectively selects the board members on his own. There are many conflicts as a result. It is very hard to believe that his own compensation as an employee is not highly biased because of his shareholder position.

The current practice in which the CEO’s have large influence on board selection seems extremely problematic.

One possible solution is to move to a more direct, democratic, online model elections model.

Each shareholder would be able to suggest a director ,electronically and vote, proportionally to his shares on the best directors to run the company.

As a result, the directors would also have to convince the public on their achievements, independence and value to the shareholders.

It would also help eliminate some of the nepotism , which is often seen in Israeli stock exchange, and in a more subtle ways in NYSE and NASDAQ.

Such a model would be modern, effective and representative of the public interest.

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Is the new CEO a Chief Product Manager?

March 5, 2011

If you can be a product manager, you can acquire the experience of acting as a CEO. The skills gained in product roadmapping, prioritizing tasks, interoffice communications, customer understanding, and product marketing are absolute necessities for being an effective enterprise lead.
Mark Pincus(video on Product Management as CEO Training), CEO and Founder of Zynga,

Is the new successful Hi-Tech CEO actually a chief product manager?

While this may be an over simplistic view, I do believe we are seeing a trend in the industry.

Google recently decided to appoint its president of products as the new CEO. Steve Jobs is known to design Apple’s product features down to the smallest detail. But maybe he is just a Chief Product Manager ?

Looking at ten leading CEOs background, this might be a a sign of a new trend.

Company Name Previous Title Formal Education
1 Apple Steve Jobs GM Macintosh Division None
2 Google Larry Page President Products Ms. in Computer Sc.
3 NetFlix Reed Hastings CTO Ms. in Computer Sc.
4 Oracle Larry Ellison ? None
5 Twitter Dick Costolo Group Product Manager BSc Computer Sc.
6 Microsoft Steve Ballmer Assistant product manager (P&G) BA in Math and Economics
7 VMWARE Paul Maritz VP  of the Platform Strategy and Developer Group Math and Computer Sc.
8 Cisco John Chambers Senior VP,Worldwide Sales and Operations MBA
9 NetApp Tom Georgens VP Product Operations MBA and Computer Sc.
10 DataDomain Frank Slootman Senior VP of Products(Borland) Economics

In the past, CEOs came from a legal or a financial background. Later on they came from a scientific or engineering technical background.

Promoting the sales executive was  the key trend in the 90’s and in many more modern organizations the marketing leaders were “moved” upward.

Steve Jobs shows off iPhone 4 at the 2010 Worl...

Image via Wikipedia

But some of the 20th century reasoning and basic  assumptions are no longer valid, at least in the technology sector.

Lets assume that the new tech and consumer markets are frictionless and all information is publicly available.

As a result we can observe that:

  • Sales people are less important  since products are sold directly of the web and personal relationships are less relevant
  • Finance is less critical as the standard financing options are pretty well understood and commoditized
  • Marketing is still important, but traditional outbound “tricks are less important. The “Gartner” marketing that does not say anything about the product, is much less effective. Product marketing, pricing  and daily analytics are much more critical. If everyone loves your product, marketing is easy, channel management is easy and awareness is easy. Nowadays the customers can try the product immediately and they are the ones who create most content about it.
  • Technical innovation is still relevant, but in many cases the big companies are not the ones inventing algorithms or new chips. Ask yourself who invented the iPAD battery,GPS or screen or compass and what’s their stock quote.

In these markets, the best product has a good chance to win everything. There are plenty of examples how a great product makes the rest of the company functions much easier and successful. Of course, there is no first degree in “Product management” and a strong technological  is definitely an advantage. However, it does seem that great product leaders, are able to drive few of the most successful  companies in the world (even, in some cases,  with a lack of great people skills:) ).

A Comment on Israeli Startups

January 22, 2010

This blog is just a re-post with minor changes of my comment on Steve Duplessie thought-provoking blog post on Why Israeli Startups Die.

It is best that you read Steve’s full post, but the main argument presented is that startups have will succeed only if they are  based in the valley. The second assumption is that  Israeli managers fail because they lack market, customer and product understanding due to their background as fighters.

Steve, the writing is very amusing and interesting, but I think it has some clichés which might have been true in the past but are no longer valid.

I definitely agree on the importance of marketing, product management and customer awareness , but don’t agree on some other points.
As an Israeli\American born in Atlanta,Georgia and living in Tel-Aviv I feel I have the right to criticize both sides 🙂

Let me challenge few assumptions that you are making in the post and others follow in their comments.
The Israeli entrepreneurs in the last years grew up under heavy American cultural influence. American television, movies, songs, food and culture from day one (no dubbing 🙂 ). Most of them have an  MBA as a their second degree and not a degree in computer science. Many chose to become experts  in marketing or finance and in usually in some of the leading business schools in the world.
The question if an MBA is a good idea or not is another topic …

The myth of a sweaty army commander leading his developers to die in the C++ fields is mostly a creature of the wild American imagination.
Most Israeli developers spent their army career in air-conditioned computer rooms, and the hierarchy there is much weaker than in corporate America, Japan or even a cub-scout group in Texas. Trust me, I tried both roles.

The other misconception is that you can’t run a really big company out of Israel. Having worked in Check Point for five years, I see no reason this can’t happen in other places. It actually worked in many cases – Mercury, Nice,DSPC, Teva, Gilat,Amdocs, Comverse, M-Systems, Precise, Memco and so on.

The fact is there aren’t many big new companies in IT in last years due to many reasons, which are not related to the origin of the CEO.
HP, Cisco, IBM,EMC,Microsoft and the likes are buying any enterprise software\technology vendor once it hits a certain maturity and size. With their size and the lack of  an IPO market it is no wonder many prefer the fast exit route.

Having many employees in the valley it might be true in the early days of the company, but  it becomes less critical when the company gets really big and global.

I’m not sure that Israeli companies that failed had a great technology but lacked market understanding. I think many of them had lousy products that had bad scalability, many crashes, memory leaks, bad user interface and slow performance. I probably interviewed some 400 engineers in the last years and not one of them admitted the technology didn’t work.  It was always the management fault. I feel quite differently.

BTW,it is extremely hard to get excellent product managers anywhere in the world. Moreover, amazing VP’s marketing are not easy to find in San Mateo or San Francisco as well.

On a side note to American CEOs and analysts, the assumption that all technologies come out of USA and the rest of the world just follows, is not going to hold for much longer,IMHO.  Israel would always be a miniature market, but the common American CEO mistake is to ignore the small nations of Germany,France, China, Japan and India because they keep insisting on having their own culture and language. Not only they think differently, but they refuse to follow the same marketing, sales and product assumptions that work “at home”.