Tucci’s exit signals new, nimbler era
Today’s tech titans need to reinvent strategies to prosper
A tech leadership era has ended. Perhaps not a moment too soon.
Dell’s stunning $67 billion purchase of EMC on Monday signals not only the possible resurrection of Michael Dell and his Austin PC company but the imminent retirement of Joe Tucci, 67, who for 15 years has tightly gripped the reins of his Hopkinton, Mass.- based data storage provider.
In stepping down, Tucci joins other departing titans of the ’90s tech boom, notably Oracle’s Larry Ellison, 71 (he became executive chairman last fall after 37 years as CEO), Cisco System’s John Chambers, 66 (executive chairman after being CEO since 1995), and Microsoft’s Steve Ballmer, 59 (now disconnected from the company after 13 years as CEO).
Today’s cloud- and mobile-first age is being guided by the next generation of leaders such as Salesforce founder Marc Benioff, 50, Microsoft CEO Satya Nadella, 48, and Dell, 50, who is unique in straddling both the hardware and cloud eras with his once-again privately held company.
This leadership transition spells good news for the tech industry, analysts say, not because of ageism but because it highlights the need for CEOs of any age to assume that the only way to keep their companies vibrant is to be prepared to reinvent them — characteristics that seemed almost lacking in the old guard considering the staggering successes they enjoyed.
Put simply, when you think the good times will never end due to your market dominance, you’re not prepared for the inevitable bad times.
“Guys like Ellison and Chambers had an instrumental role in creating the technology landscape that we see today, but the problem was that that success meant they often missed out on the key tech trends,” says Daniel Ives of FBR Capital Markets. “They seemed to display an inability to look in the mirror.”
Tucci and EMC are a case in point. For years, there was mounting pressure from investors to either break up the 36year-old company into various brands, such as VMware and Pivotal, or sell. Tucci hinted at stepping aside, but as chairman of his own board he felt no pressure to do so. Finally, under pressure this year from activist investor Elliott Management, which invested $1 billion into the $56 billion company, Tucci shifted gears that led to conversations with Dell.
“If you’re busy running the board you might not really be watching for the next big trends in your business,” says Holger Mueller, principal analyst at Constellation Research. “This new era of tech is all about moving your company to the next level and taking on the higher risks as- sociated with that. But in the end, it’s really not an option. Leaders like Tucci and Chambers didn’t have the critical pieces to move forward in the new tech economy.”
Adds Ives: ‘This isn’t about age, it’s about the dangers of experiencing unparalleled success early on and thinking it’ll always be that way. The mythical CEO types aren’t waking up worried about their jobs, so as a result they’re often cruising along in their horse and buggies while guys like Benioff are passing them in their Ferraris.”
To be clear, Chambers was critical to growing Cisco over the past 20 years from a $2 billion hardware manufacturer to a $48 billion services company. But along the way were missteps such as its $590 million purchase in 2009 of the Flip camcorder, consigned to the tech dustbin. Ellison captained Oracle to huge growth in the database software space, only to see one of its stars of the ’90s, Benioff, start his own company hinged on the futuristic notion that companies ultimately would pivot to cloud-based solutions to data management.
Ultimately, Ballmer’s tenure at Microsoft, a company founded by his college buddy Bill Gates, proved among the most controversial in becoming cocky to the point of all but ignoring a few critical trends including smartphones, cloud computing and social networking.
Says Ives: “Today’s deal is a shot across the bow that will cause tech CEOs to wake up.”