I have a soft spot for sales after spending nearly 5 years in commercial real estate brokerage.
Sales is tough, very valuable and absolutely crucial to almost every organization.
But...
If a CEO doesn't present a technical advantage or cannot model their own company financially, they can probably only grow it so big.
That being said, some sales CEOs are great for maintaining a business:
Intel's CEO, http://en.wikipedia.org/wiki/Paul_Otellini Otellini is one of the few CEO's in America that came from a sales background. I would argue that he is also very strong in finance and strong technically in the sense that he understands how the pieces go together.
My point is that it is always dangerous to generalize, but I don't see how someone can grow a business successfully and not have a deep understanding of finance. Understanding how decisions impact profitability and balance sheets is crucial to making good decisions.
Not having that background is like trying to win a game without knowing the rules.
Otellini has done a fine job of selling Intel's existing products, but they haven't won in any new categories in his tenure. Intel may have missed the boat on tablets and phones by not developing anything competitive with ARM-based SoCs, which may replace 90% of desktops in the next 10 years. It's too early to say, and there may be something big around the corner. But if Intel stays the course and doesn't expand beyond the shrinking desktop market, Otellini will exemplify the problem the article cites with salesguy CEOs : failure to chart a winning course through the next technological disruption.
Intel hasn't missed the boat on tablets or phones, they will be there shortly.
It takes years to design and tool a fab to build a new chip. Intel started the R&D process years ago to maximize battery life. But, soon they will be in lots of phones and tablets.
The part of Intel/SoC/iPad/Tablet/Phone world that people don't understand is that there is almost no profit in making low end phone chips. At $35-$45 gross per chip, they only make a few dollars in profit.
A high end i7 processor probably achieves profitability in the $700+ per chip sold range.
That means they need to sell roughly (round numbers) $700/$5 = 140 smart phone chips to make the profitability from one high end computer chip.
No one is going to try to compete with AMD/Intel on the high end since there just isn't room for a competitor and the R&D risk is too high.
For Intel, they need to get in phones and tablets for the extra profit because they can, but there isn't that much there.
Whether Otellini has done the right thing or not is yet to be seen, but I would bet that Intel will start getting design wins in the next few years and will eventually become the dominate phone processor seller.
You have just stated the Innovator's Dilema, and nothing Intel is doing appears to be any different than anybody else who has been displaced has done. Waiting for the profits to get "large enough" simply gives the entrant time to solidify their base.
Intel isn't going away, but it's going to have some rough times.
Larry Ellison seems like the epitome of a sales CEO at a long term technical organization. People like Mark Cuban also count, but that was more of a flip.
Steve Ballmer is an example of a sales guy as ceo of a tech company. Perhaps he is a victim of bad timing, but I wouldn't call his tenure as successful. He will ultimately leave the company in a worse position than when he took the ceo reigns, partially because his sales-oriented view.
Comments
Kind of disagree, CEO - Should be from more from Sales than Tech/Finance.
As CEO's main job is to get more money, get new partnerships in place, etc.
founders/products architects can be Tech/Finance.
I have a soft spot for sales after spending nearly 5 years in commercial real estate brokerage.
Sales is tough, very valuable and absolutely crucial to almost every organization.
But...
If a CEO doesn't present a technical advantage or cannot model their own company financially, they can probably only grow it so big.
That being said, some sales CEOs are great for maintaining a business:
Intel's CEO, http://en.wikipedia.org/wiki/Paul_Otellini Otellini is one of the few CEO's in America that came from a sales background. I would argue that he is also very strong in finance and strong technically in the sense that he understands how the pieces go together.
My point is that it is always dangerous to generalize, but I don't see how someone can grow a business successfully and not have a deep understanding of finance. Understanding how decisions impact profitability and balance sheets is crucial to making good decisions.
Not having that background is like trying to win a game without knowing the rules.
Otellini has done a fine job of selling Intel's existing products, but they haven't won in any new categories in his tenure. Intel may have missed the boat on tablets and phones by not developing anything competitive with ARM-based SoCs, which may replace 90% of desktops in the next 10 years. It's too early to say, and there may be something big around the corner. But if Intel stays the course and doesn't expand beyond the shrinking desktop market, Otellini will exemplify the problem the article cites with salesguy CEOs : failure to chart a winning course through the next technological disruption.
Intel hasn't missed the boat on tablets or phones, they will be there shortly.
It takes years to design and tool a fab to build a new chip. Intel started the R&D process years ago to maximize battery life. But, soon they will be in lots of phones and tablets.
The part of Intel/SoC/iPad/Tablet/Phone world that people don't understand is that there is almost no profit in making low end phone chips. At $35-$45 gross per chip, they only make a few dollars in profit.
A high end i7 processor probably achieves profitability in the $700+ per chip sold range.
That means they need to sell roughly (round numbers) $700/$5 = 140 smart phone chips to make the profitability from one high end computer chip.
No one is going to try to compete with AMD/Intel on the high end since there just isn't room for a competitor and the R&D risk is too high.
For Intel, they need to get in phones and tablets for the extra profit because they can, but there isn't that much there.
Whether Otellini has done the right thing or not is yet to be seen, but I would bet that Intel will start getting design wins in the next few years and will eventually become the dominate phone processor seller.
You have just stated the Innovator's Dilema, and nothing Intel is doing appears to be any different than anybody else who has been displaced has done. Waiting for the profits to get "large enough" simply gives the entrant time to solidify their base.
Intel isn't going away, but it's going to have some rough times.
Another good sales CEO:
http://www.sap.com/corporate-en/our-company/executives/mcder...
Larry Ellison seems like the epitome of a sales CEO at a long term technical organization. People like Mark Cuban also count, but that was more of a flip.
Steve Ballmer is an example of a sales guy as ceo of a tech company. Perhaps he is a victim of bad timing, but I wouldn't call his tenure as successful. He will ultimately leave the company in a worse position than when he took the ceo reigns, partially because his sales-oriented view.