Inflated stock options. Teenage dot-com millionaires. And a giddy high-tech sector hopped up on fast money and looking for even faster ways to spend it.
It was all part of what Gary Kovacs calls the “crazy, emotional roller coaster” which burst like an over-inflated party balloon with last year’s collapse of the tech-heavy stock markets.
But how did CEOs and top executives manage to guide their companies through the darkest days of the technology meltdown? And what lessons can be learned for the benefit of all business sectors about crisis leadership?
“Through this entire time, it took a lot of intestinal fortitude, gumption and a lot belief in your leadership abilities to drive an organization thorough this,” says Kovacs, president of Calgary-based Zi Corporation.
Kovacs spoke last week in Calgary at a meeting of the Strategic Leadership Forum, a not-for-profit, national association of senior business professionals interested in issues relating to strategic management and leadership.
He related the challenges encountered by Zi Corp, a technology company that provides interface solutions for mobile devices, including eZiText, which connects people to powerful applications in 27 languages.
The company’s stock has plummeted from $40 to a low of $3 just after Christmas, and has since climbed to about $8. “Zi’s comparable basket of companies, the ones the analysts always compare us to, have lost collectively over 92 per cent of their value since March 2000, and several have since gone out of business,” he said.
“This was something that you cannot teach somebody to manage through.”
Kovacs, a U of C grad, was lured to Zi with the promises of stock options from a nine-year career at IBM, “the big warm barn of a company.” But he soon found himself facing the cold reality of last year’s markets.
“In hindsight, it’s not surprising that the entire tech market fell and, in fact, in some cases it’s quite justified. It went up without justification, it didn’t make any sense and we all got crazy,” he recalled. “I was ready to invest in just about anything. Socks dot-com? Anything.”
Kovacs believes that many company executives began to rely too heavily on stock options to solve their internal problems, at the expense of their company’s vision. New hires didn’t care to ask about five-year plans, day cares, business goals or working environments in their job interviews. “They glazed over,” Kovacs said. “They wanted to know two things: ‘How high’s your stock going to go, and how much do I get?’ ”
Rich stock options became both a blessing and a plague, motivating employees and, in many ways, de-motivating organizations. “In Silicon Valley, it became about how fast and how rich, not how to make a better company. We changed our whole sense of what matters,” said Kovacs.
But things are slowly changing, he said, and people are once again looking for jobs where they can make a difference and working environments that respect a diversity of skills and opinions. Stock options still play an important role in compensation, but not a dominant one.
Kovacs told the forum that the past year has taught him several important lessons of effective leadership, including:
* It’s not about being correct, it’s about being flexible. There is no absolutely correct way to run an organization;
* The answer is not in the textbooks. “As much as I respect my formal education, nothing, no theory, no model, no textbook or group discussion has prepared me for the harshness of the real world.”
* Leadership is an every-day job that cannot simply be constrained to a work environment. Your organization is looking to you for optimism, vigour, passion and energy in the best of times, combined with dignity in times of defeat. “You are a leader and people expect you to lead,” says Kovacs. “They don’t want to see when you’re having a rotten day, or that you’re down.”
Leadership, he adds, should be demonstrated in the community as well as the workplace.
* When leading, don’t forget to “do”. Leaders have a responsibility to work on their own functional skills. At Zi Corp, says Kovacs, “there’s no room for me and my salary to be walking around shaking hands. It’s all hands on deck, and people come to respect that.”
* It’s hard to steal second base with your foot on the bag at first. Kovacs says his favorite Yogi Berra quote should remind company leaders to take some risks, and not fall into the habit of simply plotting a path to profitability without taking any chances.
* If 12 people are sitting around the same table saying the same thing, fire 11 of them. Another of Kovac’s favorite quotes, attributed to U.S. auto executive Lee Iacocca. “To me,” says Kovacs, “leadership is encouraging diversity of thought.”
His experience with Zi Corp. in China reminds him that “many people will tell you what they think you want to hear.”
* Leadership carries zero additional power. Most talented company leaders can encourage people to follow without having to pull rank. “If they are ordered, people will walk behind us,” says Kovacs. “If they are encouraged and nurtured, they will run beside us.”
* Develop your own capabilities. Have the courage to be wrong, and the determination to improve.
* Leadership can be invisible, and give a helping hand without being a hindering intrusion. Hideous leaders, says Kovacs, are those whom the people despise. Good leaders are those whom the people revere. Great leaders, he says, are those who cause people to say: “I did this myself.”
Web Watch:
www.zicorp.com
