Success factors in leadership of high tech...

Serge A. Leef

Vice President New Ventures

General Manager System-Level Engineering Division

Success factors in leadership of high tech organizations

© 2012 Mentor Graphics Corp. Company Confidential

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“On the job” learnings… Intel

– Corporate politics and internal rivalries – Cold, hard facts about ranking and rating – Non-democratic leadership and decision making

Microchip – Operating under budgetary constraints – Strategic soul-searching and direction building

Silicon Graphics – Managing external suppliers – Managing R&D “rock stars” – “Innovator’s dilemma”

Mentor Graphics – Managing large, complex, multi-functional organizations – P&L operational management – Mergers and acquisitions – Venture portfolios

Success factors in leadership of high tech organizations 2


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The Ecosystem

Suppliers o External: contractors, off-shore organizations o Internal: contracts, legal, immigration, HR, purchasing, IT…

Employees o Managers, individual contributors, celebrity scientists

Sales organization o Global, classic, telesales, indirect

Customers o Major accounts, teaching customers

Competitors o Direct, mind-share/vision competitors

M&A targets o Successful start-ups, failing startups, mature companies

Legal Department o IP issues, communications, depositions, etc…



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Suppliers

Philosophy o These people and entities provide services that are key to

your success and should be treated seriously

Objective o Extract maximum value for minimum $$ while

encouraging and rewarding repeatable successes

Mechanics o Look for scalability and flexibility o Remember that you are the customer - non-performing

suppliers should be fired and replaced o High performing ones should be rewarded as if they were

a part of your organization



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Employees

Philosophy o In technology companies the employees are a

fundamental asset, but their decisions should be limited to areas of competence and responsibility

Objective o Establish and rigorously practice structured and

repeatable processes for all aspects of management (throughout the hierarchy)

Mechanics o Recruiting, compensation and rewards o Management by objectives o Ranking and rating o Expose key technoids to customers as much as possible



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Defining the relationship


Serge,

Let’s clearly define our relationship right from the beginning:

•We are not friends

•We will never be friends

•You will do things that make me look good

•And I will reward you

Ed Concilla

Engineering Director

Intel Corporation (my 1st boss @ 1st 1:1)


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Career paths for MS in EE, CE, CS


ENG MGR

ENG DIR

BU GM

DIV VP

CEO

TME

FAE

MTS

SR ENG

PRJ LEAD

Staff ENG

Principal ENG

Tech Fellow

Chief Scientist

Sales VP

MKTG DIR

TME MGR

MKTG MGR

Sales DIR

FAE MGR

Sales MGR

$70K

per

year

$500K

+ p

er

year

MS Degree 30 years of experience

Act MGR


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Recruiting, compensation & rewards

Recruiting “best athlete” o Plans ALWAYS change - need to have a flexible and multi-

talented contributors o Look for people smarter than yourself o Avoid hiring “Yes-men”

Stakeholder mentality o Push stakeholder mechanisms to the max o They are more powerful than traditional compensation

Personalized retention mechanisms o Determine what motivates key contributors o Leverage that knowledge in reviews and rewards

Dealing with resignations o Amicable separation vs. not



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Rank and rate

Goal: o Measure direct value

contribution to the business

Results vs. activity o Results are valued at 2X

Ordinal ranking is key o Small company

abstraction


Name ( R I T B C ) Total Action

XXXXXXXXXX ( 6.0 5.0 5.0 5.0 6.0 ) 33.0

XXXXXXXXXX ( 5.5 5.0 5.0 5.0 6.0 ) 32.0

XXXXXXXXXX ( 5.0 6.0 4.0 5.5 5.6 ) 31.1

XXXXXXXXXX ( 6.0 6.0 4.0 4.0 5.0 ) 31.0 promo

XXXXXXXXXX ( 5.0 5.0 5.0 5.5 5.0 ) 30.5

XXXXXXXXXX ( 4.0 5.0 5.4 6.0 6.0 ) 30.4

XXXXXXXXXX ( 5.5 4.3 5.0 5.0 5.0 ) 30.3

XXXXXXXXXX ( 5.0 5.2 5.0 4.0 6.0 ) 30.2 promo?


XXXXXXXXXX ( 5.0 5.5 6.0 3.5 5.0 ) 30.0 6m

XXXXXXXXXX ( 5.5 4.5 4.0 5.0 5.0 ) 29.5

XXXXXXXXXX ( 5.0 5.0 5.0 5.0 4.0 ) 29.0

XXXXXXXXXX ( 4.5 4.5 5.0 5.6 4.5 ) 28.6

XXXXXXXXXX ( 5.5 4.0 5.0 4.0 4.5 ) 28.5 6m

XXXXXXXXXX ( 5.0 5.0 4.0 5.0 4.4 ) 28.4

XXXXXXXXXX ( 4.0 4.0 5.3 6.0 5.0 ) 28.3

XXXXXXXXXX ( 5.0 4.0 5.0 5.0 4.2 ) 28.2

XXXXXXXXXX ( 4.5 4.0 5.0 5.0 5.1 ) 28.1


XXXXXXXXXX ( 4.5 4.5 4.1 4.0 5.5 ) 27.1

XXXXXXXXXX ( 5.0 5.0 3.0 4.0 5.0 ) 27.0

XXXXXXXXXX ( 4.0 4.0 5.0 5.0 4.0 ) 26.0

XXXXXXXXXX ( 4.0 4.0 4.0 5.0 3.0 ) 24.0

XXXXXXXXXX ( 4.0 3.0 4.0 5.0 3.1 ) 23.1

XXXXXXXXXX ( 4.0 3.0 4.0 4.0 4.0 ) 23.0

XXXXXXXXXX ( 4.0 3.0 4.0 4.0 3.0 ) 22.0

XXXXXXXXXX ( 4.0 3.0 4.0 3.5 3.1 ) 21.6

XXXXXXXXXX ( 4.0 3.0 3.5 3.0 4.0 ) 21.5

XXXXXXXXXX ( 3.0 3.0 3.0 5.0 4.0 ) 21.0

XXXXXXXXXX ( 2.0 3.0 3.0 4.0 4.0 ) 18.0 90 day PIP

XXXXXXXXXX ( 2.0 3.0 3.0 3.0 2.0 ) 15.0 30 day PIP

XXXXXXXXXX ( 1.0 2.0 3.0 2.0 2.0 ) 11.0 out


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Management by objectives

Quarterly objectives

Weekly 1:1s

Real-time feedback

Quarterly grading

No review-time surprises

Feeds right into R/R


I. Execute on QVS Project

A. General

1 Obtain Sufficient Computing Resources by February 1 (done).

2 Obtain QA Engineer for the Project by February 1 (done).

3 Hold First Executive Program Review by February 1 (done).

4 Hold Second Executive Program Review by March 10 (done).

B. Satisfy PPC Milestone

1 Produce Functional Specification by February 1 (done).

2 Produce Documentation Plan by February 1 (done).

3 Produce Quality Plan by February 1 (done).

4 Produce Project Plan Including Master Schedule by February 15 (done).

5 Produce Intergation Plan by February 15 (done).

6 Achieve PPC Milestone by February 19 (done).

C. Satisfy ES Milestone

1 Complete Alpha Testing by March 5.

2 Integrate Alpha Test Feedback into Product by March 10 (done).

3 Complete Engineering ES Requirements by March 17 (10 days late).

4 Achieve ES Milestone by March 23 (10 days late).


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Sales Organization

Philosophy o In technology compnaines the sales organization is the principle

asset that differentiates big companies from start-ups. Key dynamics need to be understood and pro-actively managed

Objective o Get disproportionate mind-share and sales focus on your

products to fuel sustainable growth

Mechanics o Identify opinion leaders and key benefactors

– Smother them with attention to ensure initial successes

o Partner with them in advisory/inclusive fashion o Establish “channel facilitation” mechanisms



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Customers

Philosophy o The customers have fundamental problems that need to

be identified and addressed with best-in-class products

Objective o Maximize bookings and support revenues while gaining

insight into future product requirements

Mechanics o Identify 6-10 most important customers ($$) and serve

them to the max (even if they are irrational) o Identify and engage with industrial partners o Identify and turn down non-core and difficult customers



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Competitors

Philosophy o Competitors, while useful for market validation and

organizational focus, must be systematically and utterly destroyed (with extreme prejudice) - they are a direct threat to your continued, gainful employment

Objective o Assess relative threat and establish competitor specific

sales practices (that may need close oversight)

Mechanics o Don’t allow company rules prevent you from doing

what’s right for winning in your segment o Don’t lose any business on price o Engage in “jungle warfare” if necessary



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M&A Targets

Philosophy o Start-ups are the principle source of innovation in most

technology sectors. Ones aligned with strategic or tactical needs must be recognized and acquired

Objective o Acquire category-defining or void-filling technology

entities either EARLY or at the asset sale phase

Mechanics o Constant M&A landscape assessment o Establish a post-merger operation model before pulling

the trigger on the acquisition o Earn-out based talent retention



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Legal Department

Philosophy o You will end up working with lawyers. Awareness of legal

context is essential in relation to IP matters

Objective o Protect self and company from exposure and litigation

Mechanics o File patents o All communication is persistent o Never put anything in writing that you can’t explain in

front of a judge o Respect confidentiality agreements o Never approve legal documents o When in doubt, always consult in-house council



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Strategy

What drives and defines product strategy? o Customers? - no they can barely assess the present o Sales organization? - no they can’t see past quarter end o Competitors? - most are terminally confused o Vision? - “you may be right, you maybe crazy” (Billy Joel) o Answer: all of the above

– Encourage internal debate - avoid yes-people – Iterate with visionary customers – Include opinion leaders from sales in the process

Strategy maintenance o Externally: project consistency and focus o Internally: constantly challenge and re-assess



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Decision making

Timely decision making is central to operational excellence o This is the leader’s principle duty to the organization o It’s better to make a decision and to regret it then not to make a

decision and regret it o Encourage decision making at lowest levels of hierarchy, but in the

absence of timely decisions, a leader must step in and make them

Democracy vs. benevolent dictatorship o Democracy is no way to run an organization o There is time for input and debate o In the end a decision must be made o Seek “highest quality” decision - correctness is not guaranteed

Input session vs. collective decisions o Agree/support o Disagree/support o Disagree/don’t support -- these people should go somewhere else



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Encouraging creative tension

Importance of tension o Nothing good happens when everyone agrees

– People don’t feel strongly about their work or – They silently disagree and go along without buy-in

Want people to feel strongly o Hire people willing to stand up to the management and

proactively argue to advance their (hopefully) distinct opinions o Don’t punish passion

Clear path to decision o Must be understood by all o Escalation mechanisms should be available o Establishing plan of record


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