Every founder CEO begins as a “creator”. Not every founder CEO graduates from “creator” to “builder”. Creators eventually self-implode (Elon Musk, Tesla and Travis Kalanick, Uber) whereas other founders are able to scale over the long-term. For example, Microsoft founder Bill Gates and Amazon’s Jeff Bezos are builders (We provide a list of Builder CEOs…
Successful CEOs possess each of the attributes described below. This is an unscientific analysis based upon my prior experience covering and acquiring companies (equity research analyst; M&A executive) as well as my current role as founder of CEORater. It is important to recognize that while these attributes are qualitative in nature they do impact the…
To Centralize is to Oppress This article focuses on centralized business models and why they don’t work. Ben is our anti-hero who learns this lesson the hard way. We Detest Centralized Business Models for Several Reasons: 1.) The centralized model assumes that corporate headquarters knows best. Could there be a more arrogant assumption? For any…
Apple no longer innovates. Look no further than its cash cow iPhone. Prior to the iPhone’s initial launch in January 2007, Motorola, Blackberry and Nokia ruled the mobile phone universe. Today, rather than driving innovation, rather than striving to leapfrog the competition, Apple is content to play a feature/functionality cat and mouse game with Samsung,…
The following 7 rules apply to public companies across a variety of industries – particularly to Enterprise Software, FinTech and Information Services companies. 1.) Make Your Numbers 2.) Regular, Transparent Investor Communication 3.) Drive Expanding Operating/EBITDA Margins 4.) Don’t Stockpile Cash 5.) Control Waste 6.) Use Debt as a Tax Shield 7.) Board Composition –…
We created the CEORater Technology Founder CEO Index in 2017 to illustrate our strong belief that founder CEOs are better qualified to lead Technology companies than are “hired” CEOs/ professional managers. The CEORater Index remains undefeated through July 13th 2018.
The CEORater Technology Founder CEO Index returned 24.7% and 22.8% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018 – July 13th 2018 period.
The S&P 500 Information Technology (TKR: S5INFT) returned 13.7% on a Weighted basis over the same period.
The Powershares S&P 500® Equal Weight Technology ETF (TKR: RYT) returned 14.5% on an Unweighted basis over the same period.
Personality Analytics Holds the Key as to Why Apple Was More Innovative Under Steve Jobs than Tim Cook
Apple has lost its creative mojo under Tim Cook. Incremental product enhancements have become the norm, replacing a time when revolutionary new products, space age design and landmark advertising was the standard. What changed? Look no further than the CEO chair. Apple founder, CEO and creative genius Steve Jobs prematurely passed away in October 2011. Jobs’ hand-picked successor, Tim Cook, is by experience an operator with a background steeped in supply chain experience. Cook could not be more different from Jobs from a personality standpoint (see our table below).
The importance of assessing a CEO’s personality when conducting a CEO selection process (corporate boards, executive recruiters), or investment due diligence process can not be overstated. This is especially true of industry verticals marked by rapid change where the cost of having an ineffective CEO can be extremely high. It is not so rare to find a situation where a CEO, Board and institutional investor base were slow to realize that a given company’s customers were migrating elsewhere due to product obsolescence or other factors that ought to have been recognized. Few participants want to acknowledge this type of deterioration early or mid-cycle and only do so when it’s too late.
CEOs that create “adaptable” corporate cultures are less likely to lead companies that suffer irreparable declines due to product under-investment or other negligent factors. Adaptable cultures are less likely to be caught off guard and instead lead market change.
Corporate cultures are often an extension of the CEO’s personality. Yes, CEOs influence culture and corporate strategy even in mega-cap companies. Look no further than Microsoft (MSFT) during Steve Ballmer’s tenure as compared to Satya Nadella‘s time as CEO. MSFT’s product & services strategy is dramatically different as is the firm’s approach to competing and partnering with other technology companies.
We highly value the personality trait “openness” in large part because of its relationship to adaptable cultures. Steve Jobs and Tim Cook score similarly on the openness scale – 92nd percentile and 94th percentile respectively. However, looking at the personality sub-traits under openness, Jobs scores far higher than Cook in the two most creative personality sub-traits: “artistic interests” and “imagination”.
Given that Cook lags in these areas, one would need to get comfortable with the idea that a non-creative personality like his (32nd percentile and 14th percentile as detailed below) is capable of generating massive creative output from Apple’s 120,000-plus employees. This is asking too much of Tim Cook in our view. What doesn’t come naturally doesn’t come easily and may not come at all.
Our May 2018 CEO personality analytics research piece may be found here: Personality Analytics: Technology CEOs Analyzed
Our recent podcast on the subject:
1.) Be Bold:
- Similar to VCs, public investors want to invest in a bold vision. (See Tesla). Why does TSLA enjoy a premium valuation to other Auto OEMs? Answer: Musk’s vision and spin.
2.) Don’t Be Bullied by Investors – Dictate Your Story:
- Tell the Street you plan to take margins down temporarily to pursue “X” initiative. Investors will cut you slack so long as you explain the rationale, the execution and the intended outcome.
3.) Balance Execution Today with Investment for Tomorrow:
- Don’t fall into the short-term EPS growth trap at the expense of new product development, keeping your products fresh and building a culture of innovation.
- If you pursue the short-term – investors will love you in the short-term (fleeting). The key is to build long-term value over years and decades (see AMZN, CSGP and SSNC as examples of the latter).
It is true. Your CEO’s personality influences his/her ability to scale (among other things). It may seem self-evident. One’s intuition may suggest such a relationship between personality traits and workplace effectiveness. Well, it is more than a hunch. Published research demonstrates a relationship between CEO personality traits and company performance. Gow, Kaplan, Larcker and Zakolyukina…
We created the CEORater Technology Founder CEO Index in 2017 in large part to illustrate our strong belief that founder CEOs are better qualified to lead Technology companies than are “hired” CEOs/ professional managers. The CEORater Technology Founder CEO Index returned 13.0% and 10.5% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018…