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.
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.
To The Candidates I Will Offend Next Week
December 3, 2009
As a condition of being released from custody, the brilliant yet troubled title character in the movie Good Will Hunting must meet regularly with a counselor. Determined to sabotage the process he torments and is dismissed by a series of psychologists until he is sent to ‘Sean' played by Robin Williams.
The Talent Game in Venture-Backed Firms
November 13, 2009
Last week I met the CEO of a recently funded tech firm (yes, it still happens) who described at length his plans to build his business. As he spoke of his young executive team, its successes to date, and his plans to lever the new funding round to conquer the world, he exuded the sense of invincibility that comes with youth and the validation of funding. Afterwards, as I reflected on our meeting, part of me hoped that underneath the bravado was an individual who was as least a little frightened, for if he bothered to peruse his new venture partners' playbook, he would know that he is anything but invincible.
What it takes to Climb to the Top – The Case for Grit
October 14, 2009
If intelligence is the best predictor of achievement what accounts for the wide range of achievement among individuals of equal IQ? Professor Angela Duckworth studies this question for a living and believes she has the answer
Why Recruiting from the Best Companies is Perilous
September 26, 2009
If you long to be taken to Shangri-la, that fictional, mystical, utopian oasis of harmony and love, what kind of person do you hire to help you get there? Do you recruit a lifelong resident, intimate with the ways of the land, or someone trained in navigating the treacherous jungles to the western end of the Kunlun Mountains where it is said to be located?
Creativity: Hardwired or A Skill We Can All Develop?
September 17, 2009
This week the Globe and Mail published an article titled "How to Shine Again After A Year of Gloom" in which employees as well as candidates looking for jobs are urged to emphasize their creativity as a means of differentiating themselves in the marketplace. This appealed to me as great advice, provided you are one of the few people who actually are creative. For everyone else it is a waste of time.
Why Best Practices Can Be So Dangerous
September 10, 2009
I recently dusted off Jim Collins' book Good to Great. For those who have forgotten, the book compiles a list of companies that have achieved ‘greatness' over a period of 15 years and then analyzes them in order to "discover the essential and distinguishing factors at work". The resulting best practices of these best companies has been a bestseller since 2001.
This Week's Leadership Changes at OLG and NHLPA
September 3, 2009
Two high profile firings took place this week. Both shed light on how boards of directors and the big-named international headhunters who advise them make questionable decisions.
The first involved the CEO of Ontario Lottery and Gaming Corporation who was dismissed along with the majority of the firm's board of directors. Published reports suggested that topping the list of Kelly McDougald's purported transgressions was her failure to deliver wholesale culture change at the government run monopoly. If this was in fact her primary mandate, it is reasonable to look at her credentials going into the job.
Dr. Doug Barber on why tech firms fail
June 10, 2009