6 Egregious Habits of IT Company CEOs

My first job in the IT industry was at HP way back when. The enlightened management style that I encountered at the time was a revelation. I had worked early in my career at large, “old-school” industrial companies. “Top-down” authoritarian management approaches (and other practices much worse) in that industry were still the norm. The management style of the average American company (IT, industrial, or other) has generally progressed positively as society itself has. But even today, even in the generally progressive IT business, I still see Tech CEO management practices that make me shake my head.

I’ve compiled a list of a few things that I witness software & hardware company CEOs doing – which they really should stop doing. Tech CEOs, you know who you are! Let’s take a look at the list:

Manage on a Strictly Financial Basis

I see this phenomenon frequently. Not surprisingly, from tech CEOs who come from a strictly financial background. But also sometimes by those who don’t have direct, front-line experience in the type of business that they are charged with running. In truth, in many cases, this is the only basis on which these individuals can manage the business. That’s due to a lack of key experience and expertise. But it almost never works well in the IT business.

Without the proper background, it is very difficult to quantify the creativity required to succeed in developing and marketing new technology products. Please don’t misunderstand. There definitely is an important financial component to managing a technology-based business. In fact, many IT companies fail due to a lack of budgetary controls. This is often due to a financially unsophisticated tech CEO. Often, this is from CEOs who come from the technology side of the business.

Tech CEO Too Focused on the “Shiny New Toy”

Another interesting phenomenon I run across is the tech CEO with a VERY short attention span. New things are good. Older things are bad — or at least ignored. This can mean a singular focus on NEW employees, products, technologies, markets, M&A deals, factories, etc. Doesn’t matter what it is. They get excited about what’s coming down the pike or just around the corner. It’s natural to get excited about new things that hold promise to positively impact the business. But it can also lead to a lack of attention to core (and often boring) existing functions and staff. This can cause real problems when important parts of the business are given short shrift. While the latest “shiny new object” is lavished with resources and attention.

Treat People the Same as Office Furniture

You often see this mentality in very financially-focused CEOs. Everything on the balance sheet is seen as an asset that is ultimately disposable. Without consequences. Unfortunately, staff is sometimes treated in this same manner with this approach. Hire them on when needed. Discard them when there is an excess, or when they are viewed as past their useful life. This works fine with desk chairs. When applied to Doris in accounting, it has tragic human consequences for the affected staff.

But it takes a terrible toll on the company culture as well. When employees are not treated with the respect that humans deserve, everyone in the company is negatively affected. Even those who aren’t let go. Morale suffers, reducing productivity. Loyalty to the company is diminished, leading to reduced tenure and increased turnover. This can create institutional knowledge gaps and increased recruiting and training costs. All of which reduce overall productivity. These are “soft, indirect costs”. Harder to measure than direct costs, but very real and potentially large.

Top-Down, Non-Participative Decision-Making

This is the old-school management style that I referred to in the introductory paragraph of this article. Sadly, it’s not extinct even as we sit here today. It will never go away. It’s often practiced by a personality type that is not uncommon among high performers. This management style can work. As long as it’s not accompanied by too many of the other items on this list! Imo it’s not an optimal approach for managing a tech company. But it does have some strengths, such as consistency and potentially enhanced execution speed. And even in more enlightened management approaches, sometimes the decision just needs to be driven from the top. But my advice to any tech CEO is to use this approach sparingly and with great care.

Tone Deaf Tech CEO, Dismissive of Criticism

This is a big one and probably most corrosive to a company’s culture and performance. These days employees want to be heard. Even if the management style is top-down, a tech CEO can still solicit input. And listen respectfully to complaints and ideas for improvement. I always said, “Bring solutions, not just problems” to folks reporting to me. But in truth, to be seen as an effective leader, it’s very important to be seen as an individual capable of listening to criticism. Not personal criticism, but criticism of how the company is operating. Even if it feels PERSONAL.

Human nature makes that very hard for many. But that’s why the CEO is paid the big bucks. Ignoring input, or dismissing it lightly, will cause important information that you need to do your job to no longer reach you. When this occurs, it’s easy to become isolated from reality. Once you’ve become an “Emperor Without Clothes,” employees are afraid to deliver you bad news. At this point, things don’t look good for your personal performance or your company’s prospects.

Breed a Fear of Failure and Stifle Innovation

There is actually something even worse than being tone deaf and dismissive of complaints and other input. It’s when you see a tech CEO PROACTIVELY create an environment where any mistake, no matter how well-intended, is punished with impunity. In software, SaaS, and hardware businesses in particular, innovation is usually a huge key to marketplace success. So the CEO who is so focused on limiting mistakes that he quickly punishes every misstep to prevent a recurrence is inadvertently “cutting off his nose to spite his face”.

An IT CEO needs to walk a delicate balance. Obviously, management needs to create controls that limit huge mistakes. Those that can have huge negative impacts on the business. And if an employee takes foolish, excessive risk, they shouldn’t be rewarded. And probably punished. But if you want that important innovation to occur, it’s critical to allow people to take acceptable risks. And make reasonable mistakes in the course of attempting to make something positive happen for the business. Once you create an environment that won’t allow this, the innovation pipeline will dry up. This is often the beginning of the end for a tech business.

I’ve seen many of these management practice no-nos over and over again by software and hardware company CEOs. Do I think it’s time for an AI CEO? No, I wouldn’t go that far! God forbid we get to the point where AI takes on these types of roles.  But I highly recommend that CEOs review this list. And be honest with themselves. And take those to heart that apply.

Please post a comment below to add to the list!