Recruiting the Right Executive is More Important than the Product, Market

By: Peggy Thompson

Some Stool Legs Carry More Weight

Carpenters build three-legged stools knowing that each leg is essential to the stool’s success.  If each of the three legs isn’t equally strong, the stool will crumble under load-bearing weight.

Most investors and CEOs believe that the success of a private-venture technology company is also built on three equal, load-bearing legs:  1) viable, clearly differentiated products or services; 2) a large, well-timed market; and 3) strong, smart executive leadership.   They believe that if all three legs aren’t equally strong, the company could fail under the weight of unanticipated challenges (e.g., the product doesn’t scale; the targeted market’s adoption rate is slower than planned; an essential VP Marketing leaves the company to step into his first CEO role).  

Summative’s experience and observations suggest otherwise.  We believe it’s the executive leadership that is the most important factor to the success of a private-venture technology company.  

Over the years, we’ve seen clients launch complex technologies that initially failed.   We’ve seen others work to define new markets that never materialized.  But, instead of crashing under the weight of these failures, these clients went on to become hugely successful.

Their secret?   Great executive leadership.

One Case in Point:  OpenPages’ Executive Leadership Overcame Disintegration of Market

When Summative recruited Michael J. Duffy to lead OpenPages in 2000, the peak of the dot-com bubble, the company was in the then hot content management space.   Within months of Mike joining the company, the bubble burst and most of OpenPages’ targeted market evaporated.  At that point, many companies would have failed.   Many companies did fail. 

Not OpenPages.

Instead, Mike worked closely with the Board and his executive team to identify a new market opportunity for OpenPages’ existing IP.   In 2002, they re-launched OpenPages in the nascent Sarbanes-Oxley compliance market and then went on to become the leading vendor in the much broader GRC (governance, risk, and compliance) market. 

Thanks to his leadership, Mike, playing the role of strong war-time general, successfully led the company from a disintegrated market to a much bigger market that they were able to define and dominate.  This culminated in a great exit via acquisition by IBM in 2010.   

Products can fail.   Markets can evaporate.   But, exceptional CEOs like Mike can compensate for market and technology weaknesses by bearing a greater weight of the company’s ultimate success. 

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