INSIDE THE MIND OF THE HIGH-TECH CEO TECH2002

1. INSIDE THE MIND OF THE HIGH-TECH CEOTECH2002 Stewart Cheifet COMPUTERCHRONICLES & Net Cafe

2. OBJECTIVES • 1. Understand • CEOs of Major High-Tech Companies • CEOs of Companies Dependant on High-Tech • 2. Learn • How to Be a Better CEO • How to Deal with CEOs • 3. Realize • High-Tech CEOs are People Too • CEO Mythology is Just That

3. THE CEO PERSONALITY • CEO Drives Company Style & Culture • Apple: Jobs vs Sculley vs Amelio vs Jobs • Where Did CEO Come From? • Founder • Sales & Marketing • Engineering • Finance • Legal

4. THE CEO PERSONALITY • What is CEO’s Agenda? • First Time CEO • Merger Survivor • Designated Adult • Hired Gun • Disciplinarian • Feel Good • The Company is the CEO !

5. AMAZON.COMPURCHASE CIRCLES Oracle - Larry Ellison Microsoft - Bill Gates IBM - Lou Gerstner Apple - Steve Jobs

6. E-Business or Out of Business: Oracle’s New Economy Roadmap The Oracle Edge: Take No Prisoners Strategy Made an $8 Million Software Powerhouse Oracle Applications Performance Tuning Handbook Implementing Oracle Financial Analyzer by John Cunningham Oracle Advanced PL/SQL Programming Manual The Difference Between God and Larry Ellison: Inside Oracle THE CEO PERSONALITYORACLE: LARRY ELLISON

7. Yookoso! An Invitation to Contemporary Japanese Workbook/Lab Manual to Yookoso Contemporary Japanese All I Really Need to Know in Business I Learned at Microsoft The Microsoft Edge: Insider Strategies for Building Success Trust on Trial: How the Microsoft Case is Reframing Competition Proudly Serving My Corporate Master: What I Learned in Ten Years at Microsoft THE CEO PERSONALITYMICROSOFT: BILL GATES

8. Complete Baseball Record Book: 2002 Edition Learning How to Learn: Psychology and Spirituality the Sufi Way The Quantum Brain: The Search for Freedom and the Next Generation of Man The Constant Gardener Time Lord: The Creation of Standard Time Schaum’s Guide to Advanced Calculus IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America’s Most Powerful Corporation THE CEO PERSONALITYIBM: LOU GERSTNER

9. Harry Potter and the Goblet of Fire Harry Potter and the Chamber of Secrets Harry Potter and the Sorcerer’s Stone Harry Potter and the Prisoner of Azkaban Harry Potter: Quidditch Through the Ages The Second Coming of Steve Jobs THE CEO PERSONALITYAPPLE: STEVE JOBS

10. THE CEO PERSONALITY • Top CEO Drivers • Survival • Image of Leadership • Maintaining Control but Delegating • Loyalty of Staff • Growing the Business • Fending off Competitors • Dealing with Crises

11. THE CEO PERSONALITY • Top CEO Concerns • Do I really know what’s going on inside my company? • How can I handle high level tasks while still staying in touch with the trenches? • Am I being blindsided – what have I forgotten to think about? • How do I stay popular while still pursuing long-term goals?

12. THE CEO PERSONALITY • Dominant Characteristic of the CEO? • Insecure • Paranoid • Bi-Polar • Key Insight into CEO Personality? • What Sport Did CEO Play? • What Position Did CEO Play?

13. Greg Priest Smart Force Football Lineman Kathy Levinson E-Trade Basketball & Soccer George Bell, Excite@Home Triathlete Tony Ridder Knight-Ridder Skier Eric Spivey NetCom Cross Country Cyclist Steve Jurvetson Fisher, Draper, Jurvetson Ultimate Frisbee Kim Polese Marimba Ballet Dancer Steve Young Found NFL Quarterback THE CEO PERSONALITY

14. CEO CHALLENGESTHE VISION • Vision • What Does Company Stand For ? • Profits and What Else? • How to Maintain Corporate Vision ? • Need for Constant Strategy Change • What Business Are We In ? • Manufacturing, Services, Internet

15. CEO CHALLENGESEXECUTING THE VISION • Execution • Competitive Strategy • Offensive vs Defensive • Innovation vs Barriers • Control vs Delegation • The Gurus Say “Give it Up” • Authority vs Power • “I’ve never had so many bosses!”

16. CEO CHALLENGESTHE BALANCING ACT • Vision & Execution • Cannibalization • Ability to Redefine the Company • DEC • IBM • Apple • Hewlett Packard • “You may have to eat your own children because if you don’t reinvent yourself, someone else will do it for you.”

17. CEO CHALLENGESORGANIZATIONAL STRUCTURE • Regions vs Products • Proctor & Gamble • Country Units to Business Units • Big vs Small • Nokia • From 28 Product Lines to 4 Product Lines • “If you are in a broad sweep of businesses you tend to fall into a mediocre way of running things and you don’t and can’t understand all the businesses you’re in.”

18. CEO CHALLENGESORGANIZATIONAL STRUCTURE • Centralized vs Localized • Coca Cola’s New “New Coke” • “The world was demanding greater flexibility, responsiveness and local sensitivity while we were further centralizing decision making and standardizing our practices.”

19. CEO CHALLENGESTECHNOLOGY • Dealing with New Technology • Era of “Frictionless” Commerce • But There is Profit in Friction • Internet Enabled Direct Distribution • Hurting Long-Term Partners • Balance between Sales Force & Web Direct • Encyclopedia Britannica • Hewlett Packard & Dell • Tower Records

20. CEO CHALLENGESMANAGING CHANGE • The Rate of Change & Managing Change • People Change Jobs Faster • Customers Change Vendors Faster • Shareholders Churn Portfolios Faster • From Linear to Multi-Tasking • The Car Wash vs the Pit Stop • Balancing vs Juggling • Taking Risks without All the Facts

21. CEO CHALLENGESMANAGING THE NUMBERS • The Numbers • Budget Issues • Reducing Waste & Lowering Costs • Increasing Revenue • CRM & ERP • Setting Priorities when Resource Restrained • Defining & Using Appropriate Metrics • Self Performance Analysis

22. CONFLICTING GOALSLONG TERM vs SHORT TERM • Setting Goals • Realistic or Rosy • Look Good Now vs Look Good Later • The Right Business Model Amid Change • “This is not a place for five-year plans. We don’t know what will happen 9 months from now.” • “You can’t have a long-term strategy anymore because with it you’re going to be confined and you won’t be able to move fast enough.”

23. CONFLICTING GOALSLONG TERM vs SHORT TERM • Major Goal Conflicts: • Shareholder Value vs Other Values • CEO Looking over Shoulder toward Board • Differing Stakeholder Interests • Shareholders, Customers, Employees, Partners, Suppliers, Communities • Need for Speed vs Approval Layers

24. CONFLICTING GOALSLONG TERM vs SHORT TERM • Good Data vs Necessary Speed • “I don’t know how we’re going to make money over the Internet but if I wait to have a business model in place I’ll be the last guy in the market.” • “We’re going to have to make decisions with 75% of the facts. If you wait for 95% you are going to be a follower.”

25. CONFLICTING GOALSLONG TERM vs SHORT TERM • Good Data vs Necessary Speed • “The effort to create a 100% accurate solution insures that a decision will come too late because the market will change by the time you’re done.” • “A bad decision on Monday is better than a good decision on Friday.”

26. GLOBAL PRESSURES • Opportunity vs Competition • Opportunity • Goldman Sachs • 1980: 3 % Employees Overseas 3 Overseas Offices • 2000: 50 % Employees Overseas 25 Overseas Offices • Competition • Automobiles, Aerospace, Entertainment, Electronics • Internet and Web • Fed Ex Buys New Planes from Czech Republic

27. GLOBAL PRESSURES • Management Challenges • Travel • John D. Rockefeller – United States • Today’s CEO – U.S., Europe, Asia, Latin America • Corporate Culture • Diversity of Talent vs Cohesive Corporate Culture • Multinational Supervision • International Team vs Closely Knit Team • National Differences & Management Styles

28. GLOBAL PRESSURES • Globalism vs Localism - Marketing • “Everything is local.” • “International mergers are essential.” • Globalism vs Localism - Managing • “We must be flexible enough to move with rapidly changing currents.” • “We must have strong central controls to be a credible global player.”

29. GLOBAL PRESSURES • Globalism vs Localism - Customers • “Corporations are moving globally but the customer tendency is moving locally.” • “Businesses are moving to a global scale while customers are moving to a local scale, driven by language and culture.” • “There is a renaissance of nationalism and localism which is growing faster than globalism.”

30. GLOBAL PRESSURES • Globalism vs Localism – Strategic Location • Philips • California: Set Top Boxes • Hong Kong: Audio Equipment • Amsterdam: Headquarters • Sony • New York: Music • California: Movies • Japan: Headquarters

31. MERGERS & ACQUISITIONS • The Urge to Merge • 19 of the 20 Largest Mergers in History Occurred in 1998 - 2001 • “Can a mere ten billion dollar company survive in this decade?” • Daimler & Chrysler • Boeing & McDonnell Douglas • Exxon & Mobile

32. MERGERS & ACQUISITIONS • Offensive vs Defensive M&A • Most Mergers Fail! • Distraction… of Post Merger Consolidation Issues from Main Business Issues • Aetna • Tension… between Centralized Management and Need for Decentralized Specialization • Cultural Compatibility • Integration of Systems & Philosophies

33. MERGERS & ACQUISITIONS • Challenges • Leverage Size While Maintaining Flexibility and Responsiveness • “Like Turning Around an Aircraft Carrier” • How Much is Too Much for a CEO to Effectively Manage • Fear of New Government Regulation • Burden of Social Responsibility

34. MERGERS & ACQUISTIONS • Alternatives to M & A • Organic Growth • Internal Growth • Small Acquisitions • GE • Merrill Lynch • Nokia • Maintains Corporate Culture • But Slower Growth

35. TECHNOLOGY & THE INTERNET • Pace of Technology Change • Radio: 50 Years to Reach 50 Million Users • TV: 40 Years to Reach 50 Million Users • Web: 6 Years to Reach 100 Million Users • Pace of Corporate Growth in Tech Sector • Priceline: $0 - $500 Million in Two Years! • Concentration in Retail E-Commerce • EBay, Amazon & Priceline = 90% Mkt Value

36. TECHNOLOGY & THE INTERNET • Shrinking of Decision Time-Line • Decide with Limited Data • Slow-Pitch Softball to Fastball Baseball • Execution vs Vision • Different from other Market Changes • Not New Products but New Way to Buy Same Products • Amazon, Ticketmaster, Priceline

37. TECHNOLOGY & THE INTERNET • Click Loyalty • Harder to Hold on to Customer • Frictionless Commerce • More Power to the Customer • Revenge of Old Economy Dangers • Complacency • Role of Internet Inside the Company • Intranets & Extranets

38. MANAGING KNOWLEDGECOMMUNICATION • Controlling Corporate Knowledge • How to Get the Whole Company Thinking Alike ? • How to Engage Every Employee ? • Whispering Down the Lane ? • Direct vs Indirect Communication • “You have to get every mind into the game.” • “Half of the corporate knowledge in this company is in the heads of the employees and will go out the door with them if they leave.”

39. MANAGING KNOWLEDGE COMMUNICATION • Accessing & Sharing Corporate Knowledge • Good Execution Requires Good Information • How to Get the Data? • Balanced Communication at Microsoft • “Does this company only have good news, isn’t there ever any bad news?” • Communicating Change at 3M • “You can’t order change. There’s only one of me and 75,000 of them.”

40. THE TECH EFFECT:ORGANIZATIONAL STRUCTURE • Getting Horizontal • Lines Blurring between Producer, Supplier, Partner, and Customer • Broadening Definition of Stakeholder • Dealing with Multiple Constituencies • Defining Core Competencies • Buy or Build • “No company, no matter how successful, can go it alone in this new world.”

41. THE TECH EFFECT:ORGANIZATIONAL STRUCTURE • Takes Time to Develop Horizontal Relationships • Pressure of Quarterly Referendum on CEO • Managing the “Octopus” of Partnerships • Successful Horizontal Partnership • FedEx and Fujitsu • PCs Assembled in Fed Ex Memphis Warehouse • Failed Horizontal Partnership • Ford and Firestone • Hedging against Brand Damage from Partner

42. THE TECH EFFECT: THE CUSTOMER • How Customers Buy • Technology & The Internet Effect • Buying On-Line vs In-Store • What Customers Buy • Technology - New Products • Cell Phones, Cable TV, Computers

43. THE TECH EFFECT: THE CUSTOMER • “We hoped we never heard from the customer because if we did, that meant something was wrong.” • Old Ford • “Our customers are the most valuable resource of knowledge in this company.” • New Ford

44. THE TECH EFFECT: THE CUSTOMER • Future Customer Behavior Trends • Global vs Local • Pepsi in India and China • Customer Design Control • Shipping, Computers, Shoes, Next? • Internet vs Bricks & Mortar • Physical Assets vs Digital Assets • “If it’s the Net, then I have too many people and too much real estate, but if I’m wrong and get rid of them, then I lose customers and market position.”

45. MAINTAINING CONTROL • “We’d have a meeting and at the end we would all agree to one course of action and then after the meeting the managers would ignore it all and do their own thing.”

46. MAINTAINING CONTROL • Theory: Leadership Flows from Bottom Up • Practice: CEO Wants to Lead From Top • Theory: CEO Sets A Strong Compass and Direction for the Company • Practice: Business Climate Changes and CEO Must Constantly Change Direction

47. MAINTAINING CONTROL • Theory: Define Corporate Commitments and Work to Develop Staff Confidence and Trust • Practice: Staff Doesn’t Trust CEO When Market Pressure Makes CEO Tenure Volatile • Investor Capitalism vs Managerial Capitalism • Theory: CEO Should Share the Risk with the Staff • Practice: Huge CEO Severance Packages Despite Corporate Failure • Mattel, Coca Cola, Procter & Gamble

48. MAINTAINING CONTROL • “People within the company now have so much data and access to data that they can easily challenge the CEO’s decision.” • “If you are taking comfort in the fact that you have finally put the right organizational structure in place and you are feeling secure, you are probably in serious trouble.”

49. MAINTAINING PERSPECTIVE “When they put you in the ground and they throw dirt on your coffin, there won’t be shareholders standing around the grave, it will be your family. Never forget that.”

50. INSIDE THE MIND OF THE HIGH-TECH CEOTECH2002 Stewart Cheifet COMPUTERCHRONICLES & Net Cafe