Culture

What tech layoffs tell us about management

We can learn about how to manage a company by watching those that clearly don't know how to do so. Good CEOs get paid for vision and holding to a budget.

Several sites are tallying up lists of start-ups that are undergoing significant layoffs. (Interestingly, not much noise on that front is coming out of Europe.)

Every day, we're hearing about yet another start-up (or established technology vendor) laying off workers. This may mean that the companies are battening down the hatches in preparation for a nuclear economic winter, but it also likely means that these same companies haven't been prudently managing their VC investments.

It took Sequoia Capital to describe the obvious: we're in a tight, recessionary economy. But any CEO worth her salt should have seen this long ago. I wrote in February about a pending recession and its effects on open-source start-ups like SugarCRM, but I was no prophet: everyone was talking about a weakening economy.

I guess it took the collapse of a few financial institutions to convince us that we actually have to start treating our companies like businesses, not Monopoly games. Perhaps we were distracted by cutesy Web 2.0 names. More likely, we were distracted by the cutesy Web 2.0 revenue models that are long on marketing and short on substance.

At any rate, welcome to the real world. In the real world, CEOs get paid for vision and holding to a budget. In the real world, companies must be managed well to win. Sure, every so often, there's a Google that grows for years without any apparent adult supervision, but for every Google phenomenon, there's a Microsoft, Intel, or IBM that wins because it out-executes the competition.

The next IBM is likely to be born in this recession. You'll know it because it's the one pumping out profits, not press releases.