What makes a great CEO? Let’s ask one of the greatest, Ray Zinn, Silicon Valley’s longest serving CEO.
Guy Smith: Hello, everybody, and welcome to another edition of the Tough Things First Podcast. I’m your guest host for today, Guy Smith. As always, we have Silicon Valley’s longest serving CEO, Mr. Ray Zinn. Good morning to you, Ray.
Ray Zinn: Hey, guy. How’s it going, today?
Guy Smith: It is fantastic.
Ray Zinn: Great.
Guy Smith: It couldn’t be better. We’re in Silicon Valley, the sun is shining.
Ray Zinn: Right.
Guy Smith: The birds are singing, spring is here. I couldn’t be doing better. But I want to talk to you today about was great CEOs. I’m a fan of reading CEO books. I’ve read your book. There’s some really spectacular people who have had the top job. There have been some amazingly bad flame outs recently, here in Silicon Valley, some CEOs who have gone completely south on us. I’m intrigued by the idea of what actually makes a great CEO. Lou Gerstner, at IBM, he was a great CEO when he rescued IBM from near bankruptcy. Steve Jobs, always hailed as a great CEO. I’ve read the employee comments from Micrel, you’re credited as being a great CEO. What is it that really makes a great chief executive officer? What is the boundary between being merely competent and being really fantastic at the job?
Ray Zinn: I think it really boils down to how does the executive feel about his people, and his company. If he loves his people, and he loves his company, he’s got a good start at being a good CEO. If he’s more concerned about the investors, the shareholders, if he’s more concerned about his image, then he’s probably not going to be as good of a CEO. The key here is, if you want to be, have the backing and support of your people, you need to show a loving attitude, and an attitude of understanding, be willing to listen, and not be listened to, as you would. That’s been the key as I see it for the great CEOs. They say, “How can I help,” as opposed to, “Here’s what I want you to do.” There’s a big difference.
Guy Smith: Helping, and being a servant as opposed to being a commander, or a manipulator.
Ray Zinn: They call it being a servant leader.
Guy Smith: Maybe that explains what’s happening in the modern day Silicon Valley. I mean, you were very much a servant leadership. Bill and Dave at Hewlett-Packard, they were definitely servant leadership kind of people. What’s happening with modern Silicon Valley? Why are so many CEOs coming up short?
Ray Zinn: I think it’s a change in attitude. Back when I took my Micrel public, you had to be profitable for at least three quarters. Yeah. Something like that. Yeah, three quarters of profitability, before you could go public. Now, you don’t even have to be profitable, ever. You just decide to go public, and as long as you can pass the audit, and the legal entanglements, you can go public. Fewer companies are going public these days, too, because the companies evaluations are now not based on earnings it’s more based on revenue. With companies trying to grow fast, some of these CEOs are quite young, they’re under 40, and they just have not had enough time in the traces, as they say, to be seasoned.
To be a seasoned CEO, you can’t be a 25 year old, and they’re not trying to denigrate 25 year olds, I’m just saying you can’t be a seasoned CEO at 25, and yet somehow or another they think just because they graduated from college, or maybe not even that, or they’ve gotten to a certain age, and all of a sudden they think they can run a large organization. But they have not had the time and the traces, they’ve not learned how to be good leaders.
Guy Smith: Yeah. This goes to the whole Google thing when Brin and Page brought on an outside executive, because as they said publicly, they needed adult supervision. They saw that they weren’t quite ready for primetime, and brought in somebody to actually handle the top spot. Is this inexperience what’s causing things like Uber, and Theranos, all these companies that aspire to greatness, and then are flaming out in spectacular ways? Is this part of the problem, or the complete base of the problem that they’re having?
Ray Zinn: A lot of its ego, when your younger, and we see this with professional athletes. They get caught up in their own greatness, as you would. As Orson Wells says, “No wine before its time,” in other words, they’re getting a head of themselves, and their ego drives their decisions in how they interact with others. Rather than just picking out a particular company, and saying, “Well, that guys got this problem or that problem,” you find that true even with older folks like, Bill Cosby.
I mean, they get caught up in their, and he’s older, obviously, he’s older than I am, but he got caught up in just your ego. Your ego then says, “Well, I’m invincible.” There’s the whole thing about Chappaquiddick, and Ted Kennedy, and you think you’re pervious, you think that you can do no wrong. The higher you get as a CEO of a company, you feel, hey, look where I am, and what I can get away with now, because of who I am. I think that’s been the challenge for the CEOs is to remain humble. I absolutely believe that if those other folks that you mentioned were more humble, than they wouldn’t have had the difficulties, and problems that they have. I think the key ingredient is missing with some of these CEOs is humility.
Guy Smith: You know, I can’t help but believe that the Silicon Valley venture capital community is contributory to this. They get young pups with a good product idea, they feed them money, they keep getting them to run the rat race of the next round of funding, but by building that top line revenue, regardless of lack of profitability, and keep escalating these people up the financial ladders with the dreams of that IPO, and the big hit, then maybe that the investors are stoking this lack of humility, and this ego.
Ray Zinn: They’re pushing them to get the revenues, so they can bail themselves. They push them too hard, and too fast. I think that’s the shame of it, especially in today’s market. They’re just so eager to make that return, so they can move onto the next round, or their next fund, that they push these CEOs to do things that they really shouldn’t, or not really capable of doing. I go back to the comment I made earlier about humility, humility, and honesty, and integrity will really drive you to make the right decisions, and not get carried away with yourself, as you would.
Guy Smith: By the way, for the audience, if you want more insight into servant leadership, the act of being humble within side of leadership roles, get Ray’s book, Tough Things First, and also his companion book, Zen of Zinn. Both of these are going to give you the guideposts, the mechanisms for understanding how to serve your employees, as well as your fellow man in order to make them more successful, and in that process if you’re heading up a company that makes that company more successful.
We’ve talked about humility, we’ve talked about serving people, but the CEOs job today seems more complicated than ever. The markets are moving faster. Technology is moving at blinding pace. Regulations are becoming more complex and stiff. Now, we’ve got this whole new social main that corporations must be public servants, and serve some sort of public good, as well as making a buck. How does a good CEO stay ahead of all this? How does he not only make all of that stuff work, but also keep it from becoming such a huge distraction that he quits paying attention to his people, and to his corporate culture?
Ray Zinn: We just wrote an article about that for Forbes, about how to deal with change. That’s the one thing that is going to be ever present is change. You have to adapt, but the thing you don’t want to forget is your people. No matter what the media does, no matter what demands are put on you, don’t forget your people. They’re going to be there, they’re the most important asset that you have, and if you treat them as they’re an important asset, then their more likely to stay with you. We had the lowest turnover in the industry, employee turnover. It was because we didn’t forget where our bread and butter comes from, and that’s from our people. That’s what I would recommend to those listeners who are CEOs, or want to be CEOs, is remember where your bread is buttered on, what side, it’s your people, and you treat them with dignity, and respect than they’re going to be better employees, and you’re going to do better as a company.
Guy Smith: You know, Fred Smith, the founder of FedEx, was always fond of saying that the typical corporate pyramid was upside down. It’s all the frontline people, the people who deal with the customer who should be up at the top, and the CEOs job down there at that little point at the very bottom of the org chart is basically just to keep that pyramid from falling over, and you do that by serving everyone up the chain, so that they can serve the customer.
Ray Zinn: That’s a good thought. Again, if you tend to look at your role as a supporting role and not as an overseer, as you would, you’re going to get more support from your people.
Guy Smith: Thanks again, Ray. For the audience, three favors, please. Go buy his books, Tough Things First, and Zen of Zinn. They are going to be your best education this month, once you finish reading them. Also, please write and review this podcast, that’s important as other people go searching for wisdom, they will understand that you found value in this. By all means, tell all of your friends to subscribe to the Tough Things First Podcast, so that they can get the same benefits every week that you are.