Avoid these 6 ways to hurt your reputation in a new job

There are many ways you can inadvertently damage your reputation in a new job. As my former client found out, showing up late on your first day of work is one of those ways. Here are six ways you can sabotage your reputation that you should avoid at all costs:

#1 – Show up late on your first day of work: This is my number one “no-no” when it comes to starting a new job. Showing up late may damage your reputation because it can make you look unreliable and unable to plan for potential obstacles. If you can’t even make it to work on time, do you think your manager will trust you to finish a project on time? Always give yourself plenty of extra time to get to work for the first few weeks so you can get a feel for traffic patterns and how much time you’ll need. Bring a book or magazine to read in case you get there early.

#2 – Wear inappropriate attire, based on the company culture: Wearing a dark suit is not a good idea if you’ve been hired by a start-up company where everyone wears jeans and shorts to work. Similarly, wearing too casual attire to a company where most employees wear suits five days a week won’t work either. Take the time (before your first day on the job) to understand the company’s culture and find out from your new manager or HR representative as to what attire is appropriate. Never wear perfume or cologne to work – leave these for evenings and weekends. There’s almost nothing more annoying as a manager than having to hold a discussion with a new employee because their over-powering

#3 – Refer constantly to how your previous company did things: When you keep referring to things saying, “That’s not how we did it at ABC company,” or “Where I came from, this is how we did it and it worked much better,” you will severely damage your reputation. Why? Because nobody likes an arrogant know-it-all who thinks they are better than other employees or who believes their previous company did things better. I once led a department after the parent company had purchased and merged five companies into one. Ego-bragging about former companies was so prevalent I implemented a fun way of calling attention to this negative practice. Whenever anyone used the name of his or her former company and someone pointed this out, the person had to add $1 to an empty shoebox in my office. When the shoebox was filled with money I used it for a pizza lunch for the team and to talk about the ego-bragging and why it was so detrimental to our newly combined company. After that, the negative practice almost immediately ceased.

#4 – Question the way (and why) things are done: Like I mentioned in item #3, no one likes an arrogant know-it-all. Before espousing your opinions in your new job, take the time to identify all angles of a situation. This means understanding the stakeholders, inputs, resources, processes, and outcomes/results. Once you have this information, you can dig deeper into certain circumstances using terminology such as, “Help me understand how…” and “How does department ABC then use this information to…?” How you word things is just as important as the questions you ask, so think before you speak.

#5 – Ask for time off: You’d think this would be a no-brainer “no-no”, but you’d be surprised at how often hiring managers express their frustration to me about new employees blindsiding them with time off requests. If you receive a job offer in June and your family already has vacation plans scheduled for mid-July, let the hiring manager know immediately (before you begin your new job) and proactively work with them to ensure your vacation will not disrupt the productivity of the department. Surprising your new manager with a personal time off request can damage your reputation because it can make you seem like a deceitful and immature person.

#6 – Spend time “water cooler gossiping” to get the “dirt” on people in the department: Everyone wants to get to know the people in their new company as quickly as possible – but don’t spend time finding out through the gossip “grape vine” around the water cooler or break room. Take the time to get to know colleagues first hand and form your own opinions. Don’t let other’s nasty gossip cloud your thinking when it comes to co-workers.

As my former career-coaching client found out, it can be fairly easy to damage your reputation in a new job. Once damaged, it can take time and effort to repair your work reputation. To avoid having to go through this situation yourself, be aware of the six key ways you can harm your reputation when starting a new job – and wisely avoid them!

Lisa Quast, Contributor

 

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From Idea to Business: Persistence is Critical

In honor of Entrepreneur Month, today’s column is an excerpt from my newest eBook, The Characteristics of a Successful Entrepreneur, premiering on Amazon this week.

There is no impediment that seems too great for a successful entrepreneur

Persistence is a vital characteristic of successful entrepreneurs. Driven by an indomitable spirit, successful entrepreneurs never give up on their dreams of building a viable business. There is no impediment too great. This unflagging attribute is a key characteristic of triumphant business builders.

Entrepreneurs face and tackle bewildering and potentially catastrophic situations. They possess courage, hope and a deeply held belief that they can survive the moment and continue to prosper. Personal strength, greatness, self-confidence, maturity and wisdom are by-products gained through unfathomable adversity. It has been said that men become great mariners when sailing on troubled waters, not calm seas. The same axiom applies in the business world.

Serious hardships may be financial in nature. They might also be employee-, client-, vendor-
 or investor-based. They may arise through human error or market conditions. I can see, in
 my mind’s eye, the depressed face of an entrepreneur who can’t make payroll or has just lost a substantial client. I can sense an owner’s profound frustration upon learning a product has failed and there is a lawsuit to manage. We can empathize with a founder’s pain when there has been a fire, theft or betrayal. Consider the emotions felt with the death of a spouse or key employee. These occurrences are severe, somewhat common, and require a powerful and thoughtful response.

During my forty years in business, I have experienced several situations that elevated my blood pressure and caused sleepless nights. They were emergencies that had to be resolved or the business would fail. I can recall with clarity, in the early days of MarketStar, a small technology client in Canada that would not send payment for the services we had rendered. Cash from the client was critical to our continuance as a startup company. We had to have the money the client owed us to survive. I repeatedly called the client’s president. I sent multiple messages via fax. He would not respond to my pleas. I was desperate. I wondered what I should do.

I decided to fly to Vancouver to meet him at his office, unannounced. He was startled to see me. “I’m here to collect payment,” I said. “I won’t leave until I have a cashable check for $50,000 in my hand. I will sit in your office as long as it takes.”

A few minutes later, I had what I had come to obtain and returned home satisfied with my actions and the results. Gratefully, MarketStar would not be added to a long list of defunct businesses. A treasured personal motto learned in my youth served me well: when the going gets tough, the tough get going.

For some heavy-laden founders, the obstacles are insurmountable and they quit. The dream they pursued comes to an inglorious end. As I visit with former entrepreneurs I have learned that immobilizing doubt and fear rule their thinking. They become paralyzed and unable to act. Disheartened, they feel helpless. They can see no good options, no appropriate answers to their state of affairs.

Having started and failed at four startup businesses myself, I can authentically sympathize with their dilemma. In many cases, the best decision is to turn out the lights and close the doors. For dedicated and persistent entrepreneurs, business failure teaches invaluable lessons — lessons that can be applied in the next venture. Entrepreneurship is a lifestyle; it’s an everlasting journey.

Most successful entrepreneurs have started and stopped several ill-conceived enterprises. I know of only a few lucky executives who have launched an award-winning business in their first try. Most of us need multiple attempts. We are, by nature, persistent souls.

If you plan to start your own business or you run one now, may I provide a few suggestions to help you when the going gets tough?

1) Don’t panic. Don’t give up. Be at peace. Have faith. Know you will develop an answer.

2) Take time to ponder and understand the situation. Obtain all the facts. Find out what happened and why.


3) Consider every option and every possibility to solve the problem.

4) Invite a trusted mentor to advise you on the matter.


5) Engage employees who can help.


6) Make a decision, then act.


7) Evaluate the results. If they are unsatisfactory, try something else.

Great leaders are survivors. They have weathered life’s stormy seas. They have moved heaven and earth to accomplish their business goals. They will never give up.

Alan Hall, Forbes Contributor

Speaker, author, investor and catalyst for entrepreneurial growth.  

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Is venture capital model no longer working?

The money manager mentality also meant that VCs became risk averse

KUALA LUMPUR: An expert on venture capitalism is of the opinion that the venture capitalist model is broken.

NOT BEYOND REPAIR: Green believes that the VC model is broken but it can still be fixed.
 
Jordan Green, chairman of the Australian Association of Angel Investors, said the latest generation of VCs has not been delivering results.

"Up until the mid-90s, VCs could reap a double digit return on investment on the companies they invested in," he told Bytz on the sidelines of the Asian Business Angel Forum (ABAF) 2012 here.

Green said today's VCs fail to do better than their predecessors because of their money manager mentality, and they aren't capable of advising entrepreneurs on how to viably commercialise their products.

"Venture capitalism predicated on the idea that people in the VC firm would be able to help the startups they invest in to grow effectively. But you need to have business experience to do this, " he said.

According to Green, many of today's VCs have the academic qualifications but not the experience of having run a business.

This situation arose when VC firms started to institutionalise, to give themselves bigger funds to work with, he said.

However, as the establishments got bigger, there was not enough qualified people with the right business experience to hire.

"As a result, those without any entrepreneurial skills could not properly help the startups move forward," Green said.

"And the money manager mentality also meant that VCs became risk adverse and would only fund startups when they started being profitable. This created the 'VC gap.'"

The gap is where entrepreneurs have difficulty getting funding between starting up and starting to show profitability - the period when VCs are most needed.

Green believes investing in a business requires empathy, and is not merely an intellectual exercise.

Malaysia is moving in the right direction by starting angel investor networks because this will give startups here an alternative to VCs when they need funding for their fledgling products and services, he said.

"Angels are actually replacing the VCs of yore. They are the experienced business people who can advise entrepreneurs on how to bring their products to greater heights," Green said.

The Malaysian angel investor network is still young, with two known agencies - the Virtuous Investment Circle and Pikom Angel network. Another is set to emerge later this year and is called the Malaysian Angel Business Network.

However, Green said, the VC model can still be saved if venture capitalism returns to its original investment model.

He said this will require braver institutional investors and a better understanding of how VCs should work.

"With the original intent and model, they can make better decisions and better help startups grow faster," he said.

ABAF is organised by Cradle Fund Sdn Bhd, which manages an investment programme that funds technology startups in the country.

The forum is aimed at bringing the best of Asia's angel investors, venture capitalists, decision makers, policy leaders and entrepreneurs to one location. Some 500 delegates gathered to hear 30 speakers at this year's event.


By JO TIMBUONG bytz@thestar.com.my

Startups Are All About the Execution, So Tell Me How ?

When entrepreneurs come to me with that “million dollar idea,” I have to tell them that an idea alone is really worth nothing. It’s all about the execution, and investors invest in the people who can execute, or even better, have a history of successful execution. Execution is making things happen, and for startups it usually means making change happen, which is even more difficult.

Sean Covey image via FranklinCovey >>

For most people, execution is one of those things that seems obvious after the fact when done correctly, but is hard to specify for those trying to learn to do it better. Recently, I finished a new book on this subject, “The 4 Disciplines of Execution,” by Chris McChesney, Sean Covey, and Jim Huling, which seems to talk to startups as well as the corporate world it was written for.

These authors argue effectively that the hard part of executing most strategies is changing human behavior – first the people on your team, then partners, vendors, and most importantly, customers. No startup founder or leader can just order these changes to happen, because it isn’t that easy to get other people to change their ways. Changing yourself is tough enough.

Here are four key disciplines that I believe the best business leaders follow to expedite the change and forward progress implicit in the successful execution of a million dollar idea:

1. Focus always on one or two top priority goals. We all live with the stark reality that the more we try to do, the less well we do on any of the elements. Thus focus is a natural principle. Narrow you and your team’s focus to one or two wildly important goals, and don’t let these get lost in the whirlwind of daily urgent tasks and communications.
2. Identify and act on leading measures first. Some actions have more impact than others when reaching for a goal. Hold the lag measures for later (results available after the fact), and focus on lead measures first (predictive of achieving a goal). For example, more customer leads is predictive of more sales revenue later.
3. Define a compelling scoreboard. People on your team play differently when someone is keeping score, and even better when they are keeping score, and even better when they have defined how their score is measured. This is the discipline of engagement. If the scoreboard isn’t clear, play will be abandoned in the whirlwind of other activities.
4. Create a frequent forum for accountability. Unless we feel accountability, and see accountability on a regular cadence, it also disintegrates in the daily whirlwind. It’s even better if team members create their own commitments, which become promises to the team, rather than simply job performance. People want to make a contribution and win.

These four disciplines must be implemented as a process, not as an event. That means your team needs to see them as a normal and continuous focus, not a one-time push which fades in the rush of other daily priorities. The team needs to see the process practiced by the startup founder, as well as preached regularly.

Startup founders also need to realize that building and managing a company is quite different from learning to search for and solidify an idea that can grow into a company. Every entrepreneur has to navigate that personal change from thinking to doing to managing.

It’s not only the change from thinking to managing, but also the change and learning from constant iterations. Major changes, called pivots, are terrifying to a team that has put months of constant focus into executing what they thought was a great idea. If you don’t have an execution process, you have chaos.

Overall, every entrepreneur should be concerned if they don’t regularly feel stretched beyond their comfort zone, meaning mastering the art of execution if you are mainly creative, or developing creativity if you are mainly process driven. Don’t forget that the fun and challenge is in the learning, so enjoy the ride. The entrepreneur lifestyle is not meant to be comfortable.

Martin Zwilling, Contributor

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Be Captain Of Your Destiny - Not Prisoner Of Wishful Thinking

It's hard to will a business into being. Anyone who doesn't understand this through intuition figures it out soon enough through experience.

To win, an entrepreneur needs the conviction to overcome inertia. People have gotten along just fine without whatever it is you hope to sell them. Fact is your early attempts to convince them otherwise will almost always fail, which means you need the tenacity to keep swinging until you connect with the market.

George Bernard Shaw famously observed that the reasonable man adapts to his circumstance, that only an unreasonable man would seek to adapt the outside world to his own needs. Progress depends on the unreasonable man, said Mr. Shaw. It's a quote I've always loved. It means that apparent failure is just another obstacle to be overcome by an individual with the will, and the character, to do so.

That's an attractive idea to an entrepreneur. But sometimes that attraction is fatal.

 

For every story of conviction overcoming a perceptual speed-bump, there are 10 of an entrepreneur who hung on too long after the point where the market responded with a resounding, “Meh.” The stronger your sales skills, the longer you'll tend to hold out past the “point of meh,” and the higher your opportunity costs will be versus investing in an offering with the potential to be pulled by the marketplace rather than pushed by the brute force of your sales and marketing prowess.

So how do you know? How do you tell the difference between a light at the end of the tunnel, and the oncoming train of market indifference?

Here are 5 questions that can help:

1. Is your quality of execution sufficient to take quality of execution off the table as a variable? Poor execution of the right strategy will most likely lead to failure, just as brilliant execution can hide the holes in a flawed strategy. So where are you on that scale? If you're happy with the quality of your execution, on balance, you need to look deeper for the source of the challenges in your business.

2. Do your customers understand your offering differently than your prospects? The world has a learning curve, and dealing with it is part of the entrepreneurial adventure. But does the perception of the people who've climbed that curve — your existing customers — really change in important ways from that of your further-out prospects? If the answer is no, you're seeing something your customer doesn't. And that usually means it doesn't exist.

3. Are others finding success in your space? This one is simple. Is someone in your space kicking butt? If so the competitive threat may be important, but so is the validation that you're chasing something which can be caught.

4. Will the larger context change in some way to smooth your path to success? m-Qube was the 800-lb gorilla in a non-existent industry for years before the US text messaging phenomenon took off. We kept our powder dry, and waited it out. Are you doing the same? If so agree on a tangible trigger and conserve your cash until you hit it. If not consider giving the money back, and changing over to a game you can actually win.

5. Is the source of your conviction what you need, or what actually is? I love Shark Tank, and in almost every episode some amateur tells the sharks that their idea will take off because they need it to. Cuban and Kevin typically bow out soon after that. The reason? Entrepreneurs motivated by an objective opportunity have a much better hit rate than those motivated by an internal psychosis, or an external requirement.

This last one breaks my heart, and I see it a lot. I get that you hate to disappoint your uncle Nunzio, or that you promised your spouse you'd make it work this time. But the fact is those things are irrelevant to the question of whether your idea will fly, and anyone willing to point that out to you is someone you can trust over the long run.

Don't be that person, folks. So much of the pain in life, over time, is caused by distance from the truth. And the same is true in business.

Ask these questions of yourself, and try hard to answer them honestly. If the news is bad and you deal with it like an adult, I promise you'll live to fight another day. If the same is true but you're a good enough salesperson to sell yourself eventually you're going to hit somebody else's wall, and create collateral damage you might otherwise have avoided.

There's a fine line between being the captain of your destiny, and the prisoner of your own wishful thinking. Use these questions to help sort out which side of it you're on, and please share what you learn with the rest of us here.

Source:  OnStartups,com

How Israel turned itself into a high-tech hub?

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By Katia Moskvitch Technology reporter, BBC News, Tel Aviv

WATCH: How did Israel establish itself as a fertile ground for hi-tech start-up companies

When a grey-haired grandmother clutching a smartphone mounted the stage at Montreal's Start-up Festival this summer, young Israeli entrepreneur Guy Rosen knew he had pocketed a very special award.

His company, Tel Aviv-based Onavo, offers an application that shrinks mobile phone data to help users save money - and appeals to any age. That made Onavo the winner of the Grandmother's Award for best start-up, judged by tech-agnostic ladies in the later stages of life.

Standing in his office in Tel Aviv, Mr Rosen recalls the moment: "They went on stage and said: 'We love Onavo and we understand what it does... it is such an easy app to understand' - we just save money, that's it, period, they loved us."

Guy Rosen is one of Israel's many young, enthusiastic entrepreneurs who, fresh out of the army, decided to set up a tech firm.

Tiny Israel, a country embroiled in conflicts for decades, has managed to transform itself from a stretch of farmland into a high-tech wonder.



Formula for success 

Israel currently has almost 4,000 active technology start-ups - more than any other outside the United States, according to Israel Venture Capital Research Centre.

In 2010 alone the flow of venture capital amounted to $884m (£558m).

The result: high-tech exports from Israel are valued at about $18.4bn a year, making up more than 45% of Israel's exports, according to the Central Bureau of Statistics.

Israel is a world leader in terms of research and development spending as a percentage of the economy; it's top in both the number of start-ups and engineers as a proportion of the population; and it's first in per capita venture capital investment.

Not bad for a country of some eight million people - fewer than, say, Moscow or New York.

Serial entrepreneur Yossi Vardi says there is a whole blend of factors responsible for turning Israel into a start-up miracle. He himself has invested in more than 80 Israeli high-tech firms - among them the first web messaging service ICQ. He sold many of them to technology giants such as AOL, Microsoft, Yahoo and Cisco.

For high-tech firms, Israel offers much more than beautiful beaches
 

"If you look at how this country was created, it was really a start-up on the large scale," says Mr Vardi, who has been dubbed the godfather of Israel's high-tech industry.

"A bunch of crazy people came here, to a piece of desert, trying to pursue a dream of 2,000 years."

Over just a few decades, Israeli start-ups have developed groundbreaking technologies in areas such as computing, clean technology and life sciences, to name a few.

"Look at... agriculture, at the defence industry, at the universities here," says Mr Vardi.

"The high-tech is a popular story right now, the internet gave it a lot of visibility, but the story of the culture and the spirit is part and parcel from the kinds of the cultural genes of [the Israeli] people."

“Start Quote

These entrepreneurs are thinking big, they are trying to build global businesses, trying to create something huge”

Saul Klein Index Ventures
 

Government's role
 

But there is more to this start-up scene than certain aspects of Israeli culture - the lack of hierarchy, a constant drive for individualism, regular risk taking. The government played a key role in the rapid rise of this start-up nation.

"The government jump-started the industry," explains Koby Simona from Israel Venture Capital Research Centre.

One was the creation of the Yozma programme in 1993, a so-called fund of funds set up to invest in local venture capital funds that would channel money into new technology firms.

Soon numerous start-ups dotted Israel's industry landscape, and venture capital funds mushroomed all over the country - a blooming industry that quickly attracted foreign investors.

Israel's defence forces are also boosting entrepreneurship.

Military service is compulsory, but besides regular military units, the army also has designated hi-tech units, where computer-savvy conscripts are constantly prompted to come up with innovative ideas in disciplines such as computer security, cryptography, communications and electronic warfare.

"The military enables young people in certain units to get technological skills, to run large technological projects at a very young age, where they need to improvise in order to get fast solutions," says Prof Niron Hashai from the Jerusalem School of Business Administration at Hebrew University.

Once back in the real world, many military alumni use the newly acquired experience to launch their own technology start-ups.

Tel Aviv has several high-tech hubs: Herzliya is popular with international tech giants; Rothschild Boulevard is home to many young start-ups
 

And then, of course, there is Jewish immigration - a key driver of the country's economy since its foundation.

The biggest and the most important wave of immigration came from Russia, says Prof Hashai.

"Many were very smart people with technological background," he says.

"Maybe they were not so much entrepreneurs, but when these guys meet Israeli-born guys, many interesting things happen."

Lost decade 

The first start-up boom of the 1990s lasted just a few years though. When the global dot.com bubble burst in 2000, the fortunes of Israeli venture capital started to decline.

Today, industry insiders speak of a lost decade.

Waze, a web community-based GPS app, has been extremely popular in the US and Israel ->

 

Still, venture capital continued to flow into the country, and now investors are reaping the rewards.

During the past two or three years, all around Tel Aviv a new generation of start-ups has begun to emerge, ready to prove that Israel's high-tech industry is back in business.

Take Takadu, a company founded in 2008 that offers smart water infrastructure monitoring, remotely detecting leaking pipes in real-time all around the world. One of Takadu's customers is Britain's Thames Water. When a water pipe in London bursts, chances are that it will first be spotted by a computer in Tel Aviv.

Another example is Boxee. The five Israeli founders decided from the get-go to headquarter the company in Delaware in the United States, but locate the company's research and development office in Tel Aviv.

Boxee tries to provide the missing link between content on television and the internet. Once you connect Boxee's small shiny black cube to your TV, it will also link wirelessly to your home network. With a remote control, you can then browse and watch all online content on the big screen - not just your movies, YouTube videos or web TV, but also videos uploaded by your friends to Facebook, Twitter and other social networks.

Shortly after its launch in 2008, Boxee's little box could be found in more than two million homes across the US, Canada and the European Union, says Tom Sella, one of the firm's co-founders.

Then there is Waze - a firm that has developed a free app that turns your smartphone into a web community-based GPS device.

It will guide you through a city's road labyrinth, but combines the map with updates from other users - or "wazers" - from traffic jams to construction works to accidents.

Silicon Boulevard 

The bright Middle Eastern sun may be setting slowly, painting Tel Aviv's roofs in warm shades of red, but one part of the city will continue to buzz for many hours.

Tel Aviv-based start-up Onavo offers a free smartphone application that shrinks a phone data to help users save money - and appeals to any age

This is Rothschild Boulevard - also known as the Silicon Boulevard, home to the offices of many hot start-ups such as Face.com and Soluto.

Some of them do not mind following in the footsteps of ICQ, 5Min, LabPixies and others, who have been scooped up by international tech giants.

Take the Gifts Project, for instance, set up by a handful of young enthusiastic employees sharing a tiny office with a balcony that looks out to Rothschild Boulevard and sports a huge logo of a pink pig. They've just been bought by the world's biggest online store eBay.

Others want to strike out on their own. One of them is Soluto, a firm that aims to make computers more user-friendly and crowdsources technical support that helps computer users anywhere in the world, for free.

Whatever their strategy, it seems that they are here to make an impact.

"These entrepreneurs are thinking big, they're using the latest web technologies, they are trying to build global businesses - they're not satisfied by building something small, they're really trying to create something huge," says Saul Klein, a Tel Aviv-based investor working for British venture capital fund Index Ventures.

"I think the new Israeli technology scene is almost rebelling against the last 10 years, where Israel for many years has underdelivered.

"This is Rothschild Boulevard - and I believe this is the place to watch."

Many foreign companies set up their research and development hubs in and around Tel Aviv

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CEO, the Least Popular Job in Silicon Valley

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Potential CEOs are opting for quicker dollars at startups and investment firms

 

Illustration by Sophia Martineck

By Peter Burrows

Dave DeWalt is known within Silicon Valley for his technical chops, his charisma, and his business accomplishments, which include reinvigorating security software maker McAfee and selling it to Intel (INTC) in 2010 for $7.7 billion. At 47, he now has bigger ambitions. “Running a big-cap company is considered the crowning achievement in many people’s careers, and I feel that way as well,” says DeWalt.

Such talk makes DeWalt an anomaly. In tech circles, the C-suite at a publicly traded company is no longer the be-all and end-all. Just look at the troubles Yahoo! (YHOO) and Hewlett-Packard (HPQ) have recently had finding new leaders. HP canned former SAP (SAP) Chief Executive Officer Léo Apotheker after just 11 months—then faced a barrage of criticism for replacing him with HP director and former EBay (EBAY) CEO Meg Whitman without bothering to look beyond its own boardroom.

Industry consolidation has created a small number of very large technology companies such as HP, Cisco (CSCO), and Microsoft (MSFT). They’ve stumbled in recent years as disruptive developments like the mobile revolution and the dash to the cloud shake the entire sector. As the job of leading these companies gets tougher, there are fewer talented leaders with the skills—and inclination—to do it. Rather than wait for high-profile CEOs such as Cisco’s John Chambers, Microsoft’s Steve Ballmer, and Research In Motion’s (RIMM) Mike Lazaridis and Jim Balsillie to step down, many potential replacements have decamped for more exciting, and potentially more lucrative, gigs at startups or as investors. “This is the first time in tech history that you have this many companies with CEOs approaching 60 that don’t have any obvious successors,” says John Thompson, vice-chairman of recruiting firm Heidrick & Struggles (HSII).



Consider Cisco. With 62-year-old Chambers now in his 16th year as CEO, many of his most capable lieutenants have given up waiting for their chance to succeed him. The list of departures since 2007 includes former Chief Development Officer Charles Giancarlo (now a private equity partner at Silver Lake), longtime general manager Tony Bates (who jumped to Skype just before it was purchased by Microsoft in May), and former head of the data center business Jayshree Ullal (now CEO of Arista Networks). While the accomplishments of Chambers and other longtime CEOs including Ballmer are undeniable, their long tenure has sapped the strength of the back bench, says Heidrick’s Thompson. Now a common belief is that both companies will need to go outside for their next CEO—not an easy task when the competition for talent includes hot pre-IPO companies such as Facebook. “The people who could possibly do these jobs realize it would be easier to create a new company rather than try to get an old stodgy one to adopt new ideas,” says Trip Hawkins, CEO of game developer Digital Chocolate.

Boards of directors get low marks on recruitment and retention, too. Few give much attention to succession planning until crisis hits, says Jeffrey A. Sonnenfeld, senior associate dean of the Yale University School of Management. New hires such as Bartz and Apotheker are set up for failure as boards prioritize near-term earnings over long-term risk-taking. “We’ve been weeding the qualified people out of the system for the past 15 years,” says Roger McNamee, a longtime technology investor and co-founder of private equity firm Elevation Partners.

Nor have tech companies excelled at developing CEOs. Once executives prove themselves in a given area—say, software engineering—they rarely go through General Electric (GE) -style development programs to get exposure to a business’s full breadth. There are exceptions: Intel and IBM (IBM) are both organized so that top executives get to run multibillion-dollar business units. IBM Senior Vice-President Michael E. Daniels, for instance, runs the $56 billion services business. At Intel, young executives have an apprentice system where they shadow top executives (current CEO Paul S. Otellini spent years carrying Andy Grove’s bags). As a result, both companies have succeeded at finding internal candidates for the top job. But this is not the norm in Silicon Valley, where most companies are organized along strictly functional lines such as marketing. “The tech industry is great at producing technology, but it’s not producing leaders,” says Rosabeth Moss Kanter, a professor of administration at Harvard.

To break the cycle, some tech industry veterans say it’s time for a new approach to choosing CEOs. Forget the old idea of finding an older, well-known operations or sales executive to maximize earnings and soothe nervous shareholders. Too often, those experiments—Dell’s (DELL) Kevin Rollins, Apple’s (AAPL) John Sculley, Yahoo’s Carol Bartz—have failed, says McNamee. Now Old Guard tech companies need to find risk-takers willing to bet big on new visions. That’s hard enough for entrepreneurs such as Amazon.com’s (AMZN) Jeff Bezos. It may be even harder at companies settling into middle age.“Somebody is going to have to take some risks, and bring in younger CEOs for a while,” says McNamee.

To find them, some boards are taking a larger role in succession planning. Egon Zehnder International has been testing a new approach for two years, in which board members use a number of techniques such as mentorship programs to groom internal candidates, says Karena Strella, managing director of the firm’s U.S. unit. The goal is to take some focus off past accomplishments and identify impassioned, adaptable people. Then it’s up to the board to back them, says Thompson. “People forget that it took Steve Jobs seven years to really move the needle at Apple,” he says. “If you used that standard today, he would have been fired long ago.”

The bottom line: Shortsighted boards and the long tenure of some CEOs have led to a succession crisis at big-cap tech companies.

Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.

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America’s Entrepreneurial Innovation Needs Help

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Martin Zwilling Startup Professional's Musings

                                    Image via Wikipedia The innovation engine that powered the U.S. economy over the last century seems to be slowing down and dying, threatening not only local opportunities, but the economies all over the world. The $30 billion trade surplus in advanced technology products that America enjoyed just one decade ago has now become a $56 billion deficit.

More and more people, like Henry R. Nothhaft, in his new book “Great Again: Revitalizing America’s Entrepreneurial Leadership” are already calling these last ten years the “Lost Decade.” Nothhaft has put together a challenging but small list of things we have to do to revitalize our innovation leadership, and I’m supportive:

1. Liberate entrepreneurs from regulatory shackles. Startups in the U.S. face the highest combined federal and state tax rates in the world. At 39%, it’s more than 50% higher than the European Union countries average of 25.5%. Rates around the world are still going down, while U.S. rates have remained fixed for the last ten years. In addition, due to Sarbanes-Oxley and other regulations, accounting costs have gone up an estimated four times for all businesses, and 2008-2009 represented the worst IPO market in forty years. We need a regulatory regime that nurtures startups, rather than penalizing them like giant corporations.  
2. Fix the patent office to keep up with the backlog. Since 1992, Congress has diverted nearly $1 billion in applicant-paid fees already earned by the USPTO to other uses (like the 2010 census), leaving the patent office unable to deal with the threefold increase in patent applications over the last 20 years. As of January 2011, there are a staggering 1.2 million applications awaiting approval, and more than half have never had an initial review, which really hurts startups. The average total fees for obtaining a patent are now way up to $38,000. In most cases, no patent means no financing, no new products, no new jobs, and no new industries for tomorrow.
3. Offer meaningful incentives to bring back high-tech manufacturing. In the last ten years alone, more than one-third of America’s largest factories have shut down. That’s 42,400 factories, including 15 semiconductor plants, and 12 million lost jobs. We now produce only 14% of the world’s supply of semiconductors, and even less of other things. Both China and Taiwan now provide a 5 year, zero-tax holiday, for semiconductor manufacturers, followed by 5 years at rates as low as 5%. Germany, Ireland, Israel, and most other non-Asian nations also provide major tax incentives, and huge R&D tax credits. We need to make a strong manufacturing base a national priority.
4. Ease immigration rules to turn brain drain to a brain gain. Studies show that foreign immigrants who enter on H-1B visas make a greater innovation and scientific contribution to the nation, by patenting at double the rate of native-born Americans, and publishing more highly-cited engineering articles. In fact, between 1995 and 2005, these same immigrants founded over 50 percent of the venture-backed technology companies in Silicon Valley, and are some of the key venture capitalists there as well. The evidence is that immigrants don’t take jobs, they create them by the millions.
5. More programs to support basic science and research. Over the past decade, there has been an exodus of scientific and technical expertise from the DoD (Dept of Defense) and academic community, with basic research dropping from a high of 26% in the 1960’s budget to only 12% of their budget today.

Government should learn from private industry and invest research funds just like a venture capitalist invests startup capital. It should invest in people and teams first of all, and let startup entrepreneurs take the fruits of that research and build from it a better tomorrow.

It’s time for us to get back to the basics of fostering innovation. I agree with Nothhaft that the answer is neither the “big government” of the radical left nor the “no government” of the radical right – it’s the “smart government” of the common-sense middle. Startups can be our silver bullet to kick-start our economy and innovation, so let’s give them some help, and be great again.

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