A Personality Trait that Drives Corporate Innovation

February 5th, 2010 at 2:00 PM - Columns and Opinions by John Martellaro

For a company to remain great, its leaders must have a certain kind of passion: one that leads to sacrifice and true leadership. But for many companies, executive power is merely an end in itself: a means to acquire more power. That will cripple any company that depends on high tech innovation. How did Apple preserve that passion and Microsoft lose it?

On Thursday, Bryan Chaffin posted news of an op-ed article in the New York Times, written by a former Microsoft V.P. Dick Brass. In addition to the revelations there, but I'd like to add a little background because what Mr. Brass described is not peculiar to Microsoft alone. In fact, Apple itself was troubled by the same problem in the 1990s.

Before go into detail there, I need to kick things off with what I think is the key personality trait that bears on issues like this. It's something I've seen over and over in my career, namely:

There are two kinds of people: those who feel injured by the world and seek compensation and those who feel blessed by the world and seek to give of themselves.

When an organization grows large, wide and deep, a special kind of energetic, powerful VP is required to manage its various divisions. They are often working in a technical area that the CEO is not a master of, and so the VP more less gets to run his (or her) own empire within the corporation. If that VP falls into the wrong personality type, as described above, then the kinds of problems Mr. Brass described arise.

During Gil Amelio's reign at Apple, as described in his book, "On the Firing Line: My 500 Days at Apple," Mr. Amelio described how he'd issue directives to various VPs at Apple that were never heeded. Mr. Amelio was trying to look out for Apple's best interests, but those VPs were steadfast on preserving what was best for them. So they ignored him.

One example was the well documented case of "channel stuffing." Apple VPs, absent adult supervision, would grant themselves liberal bonuses for Macs that shipped -- but which couldn't be sold by the retailers because demand was slight. The Macs were later returned and written off. The VPs got rich, sales numbers looked good, but Apple wasn't earning real revenues.

When Steve Jobs returned to Apple as CEO, he fired every single former VP of Apple and installed men he knew and trusted from his days at NeXT.

Unfortunately, the hiring practices of large corporations these days makes it difficult to hire familiar executives who can be trusted. Worse, there's often a culture of: "If you don't rat on me, I won't rat on you, and we'll both get rich."

You may have seen that in your own company.

People often wonder why Apple has been so successful and so innovative. It's because Steve Jobs has been able to select VPs who share his passion and his vision. They use their power for the good of the company. They work as a team for the success of Apple, and that success is rewarded via stock options, not outright plunder of the company's resources. There's also a reason Peter Oppenheimer's office is very, very close to Mr. Jobs' office. Oversight.

The disclosures by Mr. Brass demonstrated that various divisional VPs haven't been reigned in by Mr. Gates in the past nor Mr. Ballmer recently. Powerful men, when they put themselves and their fortunes first, learn that milking a wealthy corporation is a way to satisfy their personal needs. Somehow, they've been injured, and they need to take all they can from their corporation and the world to set things straight. As a result, money, ideas, resources and information remain locked inside their realm. Threats are eliminated.

Corporations like Apple, who have learned to avoid men and women like that, will always out think, out maneuver and out innovate the competition.

And that's why Microsoft, according to Mr. Brass, hasn't brought us the iPhone, the iPod, the iPad and iTunes ... nor Google, Facebook and Twitter. The future that Microsoft was supposed to bring us has been mortgaged to its turf protecting VPs. They won't let go of their kingdoms easily, even if Microsoft begins to crumble around them.