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Decision-Making Advice for CEOs

By April 2, 2012Article

Editor’s Note: John Thompson has a wealth of experience as a CEO of both consumer and enterprise technology companies. Currently the CEO of fast-growing Virtual Instruments, he also serves on the boards of Microsoft, UPS, DOMO and Liquid Robotics – one of the top 50 U.S. innovative companies. Former positions include chairman and CEO (and on the board) at Symantec as well as leadership positions at IBM. In this article he shares insights on the mistakes that CEOs make, his perspective on working with startups, and the best way to judge success or failure. A lot of software firms of all sizes are changing their business model these days. What is your advice for success in this endeavor?
John Thompson: There is no nirvana in a business model. Nirvana is about execution. A well-executed old-fashioned business model can create a lot of value. I’m not one who says that business model changes alone necessarily will drive as much value creation as investors expect or want in a company. CEOs must be mindful of the changes that occur in terms of the buying behavior of their target market or the way in which public or private investors will value the company based upon the business model. CEOs should not drive their business decisions solely by the business model but, rather, by how customers want to buy and how value is being created. Is there an area where CEOs most often make business decisions based on a wrong premise?
John Thompson: I think the issue that happens more often than not with most leaders is that they don’t follow their intuition. Most really effective leaders have a great intuitive sense, but they tend to want to supplement that intuition with a lot of facts. The bigger the organization becomes, the more fact-bound it becomes, as opposed to intuitively driven. As a result, sometimes decisions get strung out much, much longer and can slow a company down quite substantially because of the rigor with which one wants to adhere to established company processes or practices.
This is almost always the case when making major role or personnel changes. Intuitively, you know when someone is serving the needs of the team and helping to build a great business. But as a company gets bigger, often a lot of the internal processes around HR limit a leader’s ability to act quickly on intuitive sense. Small companies don’t have as well-established practices and processes, so a leader’s judgment drives the ultimate decisions.
In my opinion, the hallmark of great leaders is that they see when someone does or doesn’t fit and they see when someone is or isn’t making the right contribution. They have a clear sense of what success is or isn’t, and they act on that – as opposed to waiting for eight months of facts to support a decision that they reached eight months earlier. A leader must be mindful of labor laws but should do what’s right by the company. What are some other mistakes that CEOs – especially young CEOs – make?
John Thompson: I think, all too often, we confuse great strategy with a plan that isn’t well executed. I would take a well-executed plan any day over a well-developed strategy. Even if the strategy isn’t perfect, a well-executed strategy is better than a perfect strategy poorly executed. Leaders need to focus on the execution side. How can a young entrepreneur or CEO look at his/her attributes and realize he/she is not cut out to lead a company?
John Thompson: Regarding effectiveness, there are many examples of very thoughtful young leaders who reach a point where they say, “I can be the visionary and the strategic brains behind this, but I’m not the guy to be the public face of the company or the leader of the company after it reaches a certain scale in size.”
I think it’s important for all leaders, not just young entrepreneurs, to look at themselves in the mirror and ask, “Am I helpful here, or not? If I get out of the way, is there someone else who could be more effective in helping the team achieve what they set out to accomplish?” Great leaders don’t hold themselves on a pedestal and say they are the right leader for the organization at any moment in time. At various moments in time in a company’s evolution, success requires different leadership skills and capabilities. What is Virtual Instruments about? Where are you taking this startup and what is causing the fast growth – tripling customer acquisition – that you experienced in 2011?
John Thompson: Our company is about helping very large enterprises improve the performance and availability of their physical and cloud-based infrastructure. Over the years, these environments became very, very large and very complex, and the tools didn’t evolve to keep up with the complexity. So we created a set of capabilities that gives our customers very unique insight into how to optimize their performance and availability of their environment and, in the process, save a lot of operating expense and capital.
It’s a great business. We grew at almost 200 percent last year; and through the first half of this fiscal year, we’re up over 100 percent. It will be challenging to sustain that growth rate, but our expectation is that we’ll be able to continue to grow at a very high rate for the next couple of years. Assuming we’re able to keep that track up, we should be able to take it to the public markets sometime in calendar year 2013. You’re not the founder of Virtual Instruments. What attracted you to become the CEO of a startup after many years in larger, long-established companies?
John Thompson: It’s kind of a roundabout path. I announced my plan to retire from Symantec at about the same time that I sold my interest in the Golden State Warriors. I was contemplating what I would do post-retirement and in April 2009 invested in Virtual Instruments.
About a year later, the company had had a less-than-stellar quarter, so I stepped in for what I thought would be just a few months to help redirect the business and make changes that I and other board members concluded we needed to do. A few months turned into almost two years so far. And I’ve had a heck of a lot of fun. What is the fun part of working with a startup? It’s a lot of hours and work.
John Thompson: It’s a lot more fun than running a business that’s huge and not growing very fast. I liken the difference to a time when I had two cars: a 7 series BMW and a 1976 Triumph TR6. The utility value of the two was identical; however, the ride was very different. Big companies tend to lumber along, sort of like a 7 series BMW. Small companies tend to behave just like the TR6 – you can feel every single bump in the road. It’s a ride that can be very challenging but very exciting.
That’s why I have not chosen to extract myself from Virtual Instruments. While we could find a new CEO here any day, I’m having a lot of fun. And the team seems to be responding well to what we’re trying to do. What’s the most important advice you have for young entrepreneurs or first-time CEOs that would help them achieve success over the long term?
John Thompson: Focus on the long-term objectives that you have for the business. If you become too preoccupied with the short-term consequences or tactics, you will tend to sub-optimize what the company’s future could become. If you’re going to build the company, you have to have a long-term view. Other than the growth of the company, how can a CEO assess if he/she is successful?
John Thompson: When it’s all said and done, regardless of the size of the company, it’s always all about the people. It’s always about how the team comes together and rallies around a common set of goals, a common long-term vision, and holds each other accountable for executing against that vision.
There’s no better judge of success or failure than the peer group around you. Leaders must be open to others critiquing them as well as the group members critiquing each other.
John Thompson is CEO of Virtual Instruments and has been a member of its board of directors since 2009. He was formerly chairman of the board and CEO of Symantec Corporation. Earlier, he was general manager of IBM Americas. He served on the National Infrastructure Advisory Committee (NIAC), making recommendations regarding security of the nation’s critical infrastructure, and on the Financial Crisis Inquiry Commission to investigate the cause of the 2008 financial collapse and make recommendations to Congress on steps to avoid or mitigate the impact of a reoccurrence. He is an active investor in early-stage companies and currently serves on the board of directors of Liquid Robotics and DOMO. He also serves on the boards of UPS and Microsoft.

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