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The Imperial CEO – Still Alive & Kicking?

My first job in engineering, during the summer between my junior and senior years at Royal Holloway College, was at International Computers Limited, in Bracknell in the UK, doing something inconsequential with MECL. At the time, the important names in electronics – IBM, DEC, Motorola, Intel, National Semiconductor, TI, Burr-Brown – were all American.

Some of them had their founders still in charge, and those CEOs were legendary figures: Ken Olsen of Digital Equipment Corporation (DEC), the world leader in minicomputers; Charlie Sporck of National Semiconductor; Tom Brown of Burr-Brown; Gordon Moore (yeah, that guy) of Intel.

With the notable exception of Gordon Moore, though, their careers ended with a whimper, not a bang. Ken Olsen famously dismissed microcomputers in 1977, stating “There is no reason for any individual to have a computer in his home.” We all know how that turned out – towards the end of his career, Olsen was criticized as being autocratic and resistant to new trends, and was forced to resign in 1992.

Charlie Sporck stuck around until 1991 before retiring as chairman. At the time he left, National had lost money in four of the last five years and the stock was trading at less than five dollars a share.

How about Burr-Brown? Tom Brown founded it in 1956 and remained on as chairman until 1993; a couple of years later (1995) the company had annual revenues of only $269 million. Arch-rival Analog Devices, despite being founded almost ten years later in 1965, reported annual revenues of $942 million in the same year. (Full disclosure – I worked at Burr-Brown from 1996 to 1999.)

What's the problem with such larger-than-life figures towards the end of their reign? Why do they so rarely ride off into the sunset in a blaze of glory and record profits? One reason is that the characteristics needed to start a company – a willingness to take a leap of faith, involvement in every aspect of the business, belief in yourself and your vision, a certain arrogance – aren't the same as those needed to run a large company.

Large company CEOs worry about long-term strategy, building a strong outside board of directors, talking to investors, and so on. They also have to take a step back from the operational details: hire the best senior management team possible and let them run the day-to-day business.

The two skill sets are very different, but by the time the disparity between them becomes obvious, it's often too late. If the founder is a legend in the industry, it's that much harder when it's time to go.

Intel is one of the few corporations that has successfully made the transition despite a series of legendary leaders, but they have a mandatory CEO retirement age of 65.

I wonder if this same principle will apply to the current crop of tech whiz-kids – Mark Zuckerberg, Elon Musk & co.? One of the characteristics of the imperial CEO is a lack of hubris: once you dream big and succeed on a grand scale, there's the tendency to believe in your own omnipotence and take your company on successively wilder adventures, dragging others along by the sheer force of your vison.

Back in the days when CEOs thought that “a widget is a widget is a widget”, and by paying attention to the numbers you could make and sell just about everything, we ended up with conglomerates like Singer (everything from furniture to sewing machines, avionics and flight simulation) and ITT (hotels, insurance, gaming, defense, industrial control and much more). That ended badly with a rash of bankruptcies and layoffs; even the most successful old-style conglomerate, GE, has started to trim down, offloading most of its financial businesses.

How will the future look back on Musk's involvement in electric vehicles, space exploration, solar panels, not to mention a 600mph transportation system between LA and San Francisco?

Mark Zuckerberg, apparently not chastened by the disaster that was Facebook Home, has now taken a page from Oprah's playbook and started his own book club. His own cable TV channel will no doubt not be far behind. Meanwhile, his flagship product (and cash cow) is hobbled by an API and documentation that can charitably be described as bush league.

A couple of quotes seem appropriate: “Plus ça change, plus c’est la même chose”. And, of course, the evergreen: “Those who do not learn history are doomed to repeat it.” .

What say you?

5 comments on “The Imperial CEO – Still Alive & Kicking?

  1. Hooey0
    October 14, 2015

    It would seem like the Imperial CEOs have too much hubris, not a lack of it.

  2. jimfordbroadcom
    December 2, 2015

    Well, didn't Tom Brown sell Burr-Brown for $4 billion dollars to TI in 2000?  I'd say he did OK.  I don't think the business was what was worth the $4B but the analog engineering talent that BB brought to the table.  Of course, Henry Samueli, cofounder of my employer Broadcom Corp, soon to be Broadcom Ltd, made out even better with the $37B sale to Avago.  We shall see how imperial CEO Hock Tan fares…  Maybe he's more interested in the money than the power, and maybe that's OK.  Ask me again in 6 months!

  3. Paul Pickering
    December 2, 2015

    Duh… you're right, of course. should have read “excess of hubris”. Thanks!

  4. Paul Pickering
    December 2, 2015

    By the time Burr-Bron was sold, Syrus Madavi was the CEO. I think Tom may have been the Chairman Emeritus, or something like that.

    It seems to me that TI paid an awful lot for the company, which had underperformed its peers for years, if not decades, before Madavi came along – I think it was 30X sales, forget about profits! 

  5. jimfordbroadcom
    December 2, 2015

    True; those were heady days back then, and companies sold for many times what they were worth.  I'm sure you know the details about Burr-Brown as an insider better than an outsider like me.  They did make some great IC's, though, and as an IC customer, it was often hard to decide whether to buy ADI or BB parts.  Who can say what will happen next in these days of seemingly daily mergers and acquisitions…

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