Doug Barber knows a thing or two about building a successful technology firm. He was one of the founders and the long time CEO of Gennum Corporation which he built into one of the most successful and best managed tech firms in Canada. Though some might disagree, the firm was never quite the same after he retired in 2000 and frankly is a shadow of its former splendid self today. Dr. Barber has also had a long illustrious teaching career at McMaster University and so is familiar with how and what young people are taught at the post-secondary level. Finally, experience aside, Dr. Barber has always impressed me as a very wise man who rarely offers opinions that are ill-considered.
Several years ago Dr. Barber took it upon himself to study why so many R&D intensive startups fail, or perhaps better stated why so few thrive long-term. He looked at some 18 tech firms which were founded in Canada and gave it the old college try before being subsequently sold or folded. He presented his findings at a breakfast talk I attended this morning in Hamilton.
Dr. Barber had many interesting findings. Of the 18 firms he studied, 17 disappeared in between 3 and 14 years of existence (the average lifespan was 7.2 years). Also, of the 18 firms studied, 8 never secured a single sale, while 7 never even engaged with a customer during their entire existence.
Among Dr. Barber’s many observations:
1. No customers, No sales, No business – Many, many of the firms examined were naïve about the critical importance of customers. They failed to understand that they were in business not to innovate technologies but to create value for customers. Enterprises start and end with customers, not technology. External financing breaks the value exchange between customers and suppliers as it negates or delays the need for customers. It also distorts the viewpoint of startup businesses who come to rely on external funding and the artificial metrics on which it is dispensed. But no customers, no sales, no business.
Dr. Barber goes so far as to suggest that there are elements of a customer averse culture cutting across this country. For example, governments in their various initiatives value technological innovation but undervalue the necessary business acumen, training and skills to do anything with them.
2. Enterprise Incompetence (governance, finance, management, culture, planning) – Dr. Barber observes that many of these firms had management that lacked enterprise competence, funded by investors who lacked enterprise competence, and advised by lawyers and accountants with little enterprise competence. He also noted that planning has sadly devolved into a pure financial tool rather than enterprise focused discipline for success.
Dr Barber argues that more balanced learning needs to be introduced into schools, that experiential learning needs to be emphasized and valued, and that faulty beliefs about how commerce works in the tech sector needs to be corrected. Better mechanisms need to be developed so that knowledge can flow and better businesses and leaders can be built
These are a few of the many cogent points he made this morning. I look forward to reading his report when it is eventually released.
One Reason Interviewing Candidates is So Difficult
July 13, 2010
I was browsing in my local bookstore on the weekend when I came upon a small book titled ‘Toughest Interview Questions'. Always interested in this subject I quickly leafed through it and put it in the pile to buy.
Strategies for those wanting to make a career or sector change
June 23, 2010
Many transitional executives contemplate career changes. It may be a career auto or general manufacturing sector executive questioning its future, or a large-company type who covets the chance to work in a smaller organization. Often, it is simply individuals longing to shed unfulfilling careers for exotic destinations as yet unknown.
Executives in Transition- Why a rifle beats a shotgun in nabbing that perfect job
June 21, 2010
As a headhunter I am an obligatory stop on the networking circuit of many executive job seekers. I hold the promise of a barometer on the employment market, contacts, ideas, and even suitable ongoing searches. I am always happy to participate in courtesy interviews as I neither envy the job seekers' circumstances nor take lightly their courage in reaching out to me.
The Perils of the Successful Matchmaker
June 14, 2010
What is a successful matchmaker?
Last week, the Wall Street Journal published an interview with Patti Stanger who runs The Millionaire's Club, a Los Angeles-based "elite" matchmaking service and reality television program.
Interviewing: The Quest for Patterns and Themes
May 14, 2010
Last week, two seemingly unrelated articles caught my attention. The first was a magazine obituary on C.K. Prahalad, the management thinker best known for his work on core competencies. The article spoke extensively of his ‘big ideas' and noted his habit of traveling the world "prying useful information out of everyone he met…always looking for connections and patterns, hoping to predict change".
Checkers vs. Chess: Why Candidates Play The Wrong Interview Game…and Pay the Price !
May 4, 2010
I often join my clients when they conduct candidate interviews. I moderate, participate, listen and learn. They are fascinating glimpses into how candidates and companies alike play the complex game of talent acquisition.
The superhero hiring game and why everyone loses
April 5, 2010
When it comes to recruiting leaders, companies continue to search for those Steve Jobs-like characters that can single-handedly turn around a company's fortunes, blaze paths of innovation and market their wares like no other before them.
Why candidates should expand and prep their references
February 3, 2010
As headhunters scramble to match candidates with their shapeshifting clients, process and painstaking due diligence rule the day. To some candidates such rigor may feel intrusive or simply unnecessary. It shouldn't. In fact, rigor should be embraced and used to all candidates advantage. Consider the use of references as an illustration.
The Unwanted CEO Job …and the one individual who thought otherwise
January 8, 2010
Several recent articles have lauded the success of Ottawa-based Bridgewater Systems. With skyrocketing revenues, a growing market, and money in the bank, the firm's prospects have never been better and the street appears to love the story. It was a much more difficult story to sell in 2003, with one notable exception.
Hiring Executive Talent: The Sheepish Canadian Startup
December 26, 2009
Much is written about the state of the Canadian tech startup sector and why it lags the US, Israel and other countries in producing a richer community of world-class companies.
While I am not qualified to comment on many of the contributing factors I am witness to how Canadian startups hire and lever talent at key points in their growth. I would argue that for many of these firms the bar excellence is set so cautiously low that to expect anything but mediocrity is laughable. Let me provide a recent example.
Dr. Doug Barber on why tech firms fail
June 10, 2009