Tricky transitions in tech leadership

Companies in the relatively young tech industry haven't endured all that many transfers of power from iconic founders to new managers. Here are a few that have.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
4 min read

For every George Seifert there's a Sammy Hagar: making the change from an iconic leader to even a well-groomed successor can be very tricky.

The tech industry doesn't have a whole lot in common with the San Francisco 49ers or Van Halen, both of which were forced to integrate new leaders into their organizations following the departure of dynamic leaders (Bill Walsh and David Lee Roth) who put their respective groups on the map. But the tech industry is relatively young and hasn't often been forced to confront the tricky question of how to replace an iconic founder.

Obviously, the topic has surfaced again with the news that Apple CEO Steve Jobs will be taking his third medical leave in seven years, having already endured surgery for pancreatic cancer and a liver transplant. Apple has had a long time to think about this particular issue, and while Jobs may once again return to the helm, the company says it has a succession plan in place.

But it seemed worthwhile to look at how other tech companies have navigated such transitions, as history usually has a few lessons to pass along.

Former Intel CEO Andy Grove was part of an orderly transition of power at Intel throughout the decades.

INTEL: One of the oldest companies in Silicon Valley, Intel has pulled off this trick with aplomb over the years as it transitioned between three giants of American business. Co-founders Robert Noyce and Gordon Moore installed Noyce as Intel's first CEO, but Noyce gave way to Moore in 1975. Moore formally turned the reins over to Andy Grove in 1987, and Grove turned Intel into a tech industry powerhouse with the rise of the PC.

Craig Barrett and Paul Otellini have since succeeded Grove, and those transitions have gone relatively smoothly, although one could argue whether Intel is about to miss the boat on mobile computing. One aspect that helps is that CEO retirement is mandatory at Intel: once you're 65, you're done. But Intel has also been successful about maintaining the culture laid down by its founders by grooming executives for years before they reach the upper ranks.

HEWLETT-PACKARD:The oldest tech company in Silicon Valley has also had one of the more tumultuous progression of CEOs in the last 10 years after decades of stability. Bill Hewlett and Dave Packard were the Steve Jobs of their time: dynamic founders who literally put their names on an industry and inspired two generations of technology executives.

Succeeding CEOs John Young and Lew Platt largely adhered to the HP Way, but once Carly Fiorina took over, HP became a very different place. It's arguably in the best financial shape of its life as one of the largest companies in tech, but morale suffered greatly in the Fiorina and Mark Hurd years, and with yet another new CEO in place following Hurd's scandalous departure, it's anyone's guess which direction the company will now take.

APPLE: Don't forget that Apple has actually had to deal with this before, when it first ousted Jobs in 1985 over his disagreements with then-CEO John Sculley about the direction of the company. The outcome of that move is well known: Apple foundered for nearly a decade, losing its identity as a computing innovator and barely afloat by the time Jobs returned in 1996.

All Jobs has managed to do in the years since his return is create the second-most valuable company in America, changing the tech landscape several times with the iPod, iPhone, and iPad. Now with firm control of the company that once kicked him out the door, he's likely to make sure such a mistake does not happen again. However, the details of Apple's succession plan remain a closely held secret.

Bill Gates (left) turned things over to Steve Ballmer in 2008, but Ballmer does not enjoy the same respect paid to Gates.
Bill Gates (left) turned things over to Steve Ballmer in 2008, but Ballmer does not enjoy the same respect paid to Gates. Dan Farber/CNET

MICROSOFT: Bill Gates decided in 2006 that it was time to step down from day-to-day operations at the company he founded to devote more time to his foundation. He left loyal lieutenant Steve Ballmer in charge in 2008, and it's hard to argue that this transition has been smooth.

Much of what has ailed Microsoft since Gates' departure--Vista, the lack of a coherent mobile strategy, and a staggeringly unprofitable Internet division--are all things that began under Gates. But Ballmer does not appear to enjoy the confidence that employees and investors had in Gates, one of the signature minds of the early tech industry. Instead, he's allowed the once unthinkable prospect of Apple overtaking Microsoft in both influence and market capitalization to happen on his watch, and with the departures of three of the four most senior Microsoft executives in recent months, would appear to have succession problems of his own at some point down the road.

SUN MICROSYSTEMS: One company that might have actually waited too long to make a call to the bullpen was Sun, dominated by the visionary and brash Scott McNealy for years. McNealy's company was an essential part of the rise of client-server computing in the 1990s, powering the back-end systems that ran Wall Street and gave the fledgling Internet industry the equipment with which to get off the ground.

But Sun missed out on two key trends during McNealy's watch, namely the rise of cheap servers using inexpensive software chained together in a massive array, as opposed to Sun's large and expensive servers. By the time Sun belatedly started to figure this out in the early part of the 2000s, it was really too late, and there was little Jonathan Schwartz could do as McNealy's hand-picked successor to right the ship, leading to a fire sale that made one of Silicon Valley's most beloved companies into a division of Oracle.

Correction at 1:57 p.m. PT: Somehow we initially managed to misidentify one of the co-founders of Hewlett-Packard. His name is Bill Hewlett.