Is the longevity of top tech executives a plus or liability?
By Michelle Kessler
USA Today
SAN FRANCISCO — Michael Dell, 39, seems too young to retire. Then again, he has had the same job for 20 years.
Dell has run the PC maker that shares his name since 1984, when he started it in his college dorm room. He has lasted twice as long as most chief executives — and much longer than many management experts recommend.
Then again, Dell won't qualify for full Social Security benefits for an additional 28 years. "My dad is about to collect Social Security," he said, laughing, in a phone interview with USA Today.
Dell — and a number of other tech titans — are in a tough position. They've been with their companies much longer than the average insider CEO, who steps down after 9 1/2 years, says consulting firm Booz Allen Hamilton. But they are years from the average CEO retirement age of 58 1/2.
CEOs with too much time at the top can be a huge, hidden liability, says Yale University management expert Jeffrey Sonnenfeld. They can become complacent, run out of new ideas or become unreceptive to new ways of doing things, he says.
So where does that leave Dell and his contemporaries — Microsoft's Bill Gates, Sun Microsystems' Scott McNealy, Gateway's Ted Waitt, Apple's Steve Jobs and Oracle's Larry Ellison?
Each of these entrepreneurs founded or co-founded companies in the late 1970s or early 1980s and are still working there today — although some, such as Jobs, have taken breaks. With the exception of Ellison, 59, they are younger than 50. "Everything's out of sync," Sonnenfeld says. "You need some fresh perspective ... but they're not retirement age."
Passing on the title
Dell surprised many Wall Street analysts last month when he announced plans to give his CEO job to Kevin Rollins, Dell's president. Dell is at the top of his career. His company is the No. 1 PC maker and earned record revenue last fiscal year.
Stepping down was still a smart decision, Sonnenfeld says. It makes room for new ideas while allowing Dell to stay involved.
Dell admits that it will be a little strange to give up the only job he has ever had, save for delivering papers and working in a Chinese restaurant as a teenager. But he says the benefits are great: "I wanted to recognize Kevin and give him the star power he deserves."
The handover should be easy, since the two executives work closely together. "The idea that one person runs a company that's $60 billion in revenue is not really true," Dell says. He expects 90 percent of his job to be the same.
Dell's move mirrors Gates' 2000 decision to hand the CEO job at Microsoft to his No. 2, Steve Ballmer. Like Dell and Rollins, Gates and Ballmer share the job of running the world's largest software maker. Gates' current titles are chairman and chief software architect.
Gates, 48, remains a visible presence at Microsoft, and analysts say his job description has changed little. Author and tech pundit Robert Cringely says Gates changed his title partially to reward Ballmer and partially to step out of the spotlight amid the government investigation of Microsoft over antitrust concerns.
Gateway's Waitt also gave up his CEO title — twice.
Waitt, 41, first stepped down in 2000, when sales were soaring. His No. 2, Jeffrey Weitzen, took over. When the dot-com bubble burst, dragging Gateway revenue with it, Weitzen resigned and Waitt took his job back. The company has not made money since 2000.
Waitt gave up the CEO title again this year, to eMachines CEO Wayne Inouye as part of Gateway's deal to acquire its smaller rival. "I feel comfortable stepping back again," says Waitt, who remains chairman.
Gateway has begun adopting the eMachines model. It has closed all 188 of its stores and plans to sell PCs through retailers such as Best Buy and Circuit City, as eMachines does.
Many Wall Street analysts applauded the move, saying former Best Buy executive Inouye has a better chance of saving Gateway. Since the deal was announced in January, Gateway's stock has risen 33 percent.
'What else would I do?'
Dell, Gates and Waitt each garnered praise when they stepped aside. But Oracle's Ellison, Sun's McNealy and Apple's Jobs have expressed no interest in giving up their CEO titles.
"What else would I do?" Ellison asked in a recent interview with USA Today.
"I can't sail all the time," says Ellison, an accomplished sailor. "And this is a more exciting race than the America's Cup."
Ellison's bold leadership style has defined Oracle for nearly three decades. His current brash moves include a hostile takeover attempt of rival PeopleSoft, which PeopleSoft CEO Craig Conway called "atrociously bad behavior."
Oracle is the world's second-largest software maker. Microsoft is still bigger. That's what drives Ellison, author Cringely says.
Some management experts wonder whether that focus is best for Oracle. In its most recent fiscal year, Oracle earned $2.3 billion, about a third of the $6.3 billion it earned at its peak in 2000. The proposed PeopleSoft deal has regulators raising antitrust concerns.
But Cringely points out that it's hard to imagine Oracle without its bombastic leader. And Ellison insists he's not in it for the glory. Some people "want the spotlight right on them," he says. "I hope I'm not one of them, but who knows?"
McNealy says his long tenure at Sun is an asset. "I'm 49, motivated, experienced (and how), with lots of ideas," he wrote in an e-mail interview with USA Today.
Sun bets big on expensive, specialty business computer systems designed in-house. Yet the tech industry is moving toward cheaper, standardized systems using components from many vendors, analysts say. That trend has driven some cost-conscious customers away from Sun. In its most recent fiscal year, Sun lost $3.4 billion. In 2000, its best year, Sun earned $1.8 billion.
McNealy acknowledges he has made mistakes but argues that he's making up for them. "We've recovered from (missing the move to smaller systems) with an onslaught of low-cost computing alternatives," he writes. "Customers are loving our stuff, but we should have done that sooner."
Asked whether he ever considered giving the CEO job to someone else, McNealy says, "not more than once a day for the last 20 years, but ultimately that's not my call. It's up to Sun's board and shareholders. I'm hugely respectful of that."
