The Engineer as CEO – The Invisible Man
A Right Recruiting Newsletter, April 2009
I am sending this to both my Candidate and Manager lists because it may have resonance for both. It’s a follow-up to the last Newsletter, “So Ya Wanna Be a CEO?”. I know that some of you are not engineers but most of you work with engineers, which is why this topic may have broader interest. It may help you to better understand your company, staff and peers.
I began recruiting in 1979 and, for the first 10 years, 95% of my searches were for engineers. I have probably spoken to more engineers in more local companies than anyone else in the region. I think engineers are very smart people yet, surveys have shown, they are incredibly under represented on executive row. Why is that so? Are their skills unrecognized in the business world or are they uninterested in leaving the technology and engineering nest? Let’s find out.
Our survey showed that most of those who started in engineering and then moved into a CEO/President role have done so at their own company. In other words, they invented a product and then built a company to deliver their product to market. The astute ones saw the business system as part of the product development process and maintained their enthusiasm by connecting the marketing/sales functions to the product development and manufacturing areas. When looked at from afar, the business itself, not the widget, became the product. To the extent that a CEO can extend his/her passion for invention to the business as a whole, that’s a useful game of mental gymnastics. Unfortunately, that’s a game most can’t play. It’s limited to entrepreneurs. Once I remove the CEO/Engineer/Owner datapoints, I am left with only a handful of CEO’s whose career roots and educations are in engineering. That’s from over 2,000 local companies, all of which are either technology or manufacturing oriented. There are three questions before us today. The first is, do engineers have the capability of being business leaders? The second is, do engineers want to be business leaders? I’ll save the third for the end.
Do Engineers Have the Skills To Be Business Leaders?
There are two components to this question; intellectual and cultural. Of course, engineers have the intellectual strength to spread their wings. They have strong analytical skills, deep math knowledge and a good understanding of systems. The commonly held belief that all engineers are dull nerds is clearly nonsense. The engineers I know have similar, if not better, communications skills than other professionals. Academically, an engineering degree is one of the hardest, if not the hardest, Bachelors degrees to get. It requires both abstract and practical thinking. Once employed, many engineers work in jobs where failure is very visible. Their on-the-job training is excellent, which should lead to a meritocracy, where good engineers move up the business ladder. Clearly, engineers have the intellectual firepower to run a business.
However, there are some legitimate questions about a cultural divide. By this, I mean the philosophical viewpoint the engineer brings to a business decision or problem. There is a possibility for discord between an engineering approach to a business problem.
Engineers live in a literal world. An equation balances or it doesn’t. A machine works correctly or it doesn’t. 2+2 = 4, and it does so every time. Most technical decisions are “digital”, but not in the electronics sense. In the “on or off with no in-between” sense. Let’s face it, when I press the brake pedal, the cylinder should engage every darn time. Thankfully the engineers who designed and built my car brake agree with that concept.
Sometimes, I think it’s difficult when an engineer leaves the world of technical certainty and enters a business leadership role and become responsible for areas other than engineering. It’s hard to leave a mental infrastructure in which a certain input always creates a certain output. Not only do employees rear their unpredictable heads in the business world, so do vendors, clients and competitors. Frankly, it can be messy when plans go awry and relationships shift. To someone trained in a field where predictability is, well, predictable, it can be very frustrating dealing with the rest of us. I think engineers are exposed, both in college and in their formative career years, to a work life that rewards absolutes and abhors uncertainty. For many technologists, rubbing elbows with the rest of us can be a very unsettling experience.
Sometimes, this can come across as technical arrogance – the belief that everyone else in a company is stupid. A good example of this was in the early 1980’s at Commodore Computer. For those who are too young to remember the early days of the personal computer, there was Apple, then IBM and then Commodore. Commodore was based in West Chester, PA and had a product whose technology rivaled Apple’s. Many thought it was the best computer on the market for high-end graphics. For awhile our region had the potential to be on par with Boston and Silicon Valley in electronics.
Commodore had a great product but it was a product that no one bought. Marketing and engineering hated each other. They would constantly complain about each other and there were fierce internal battles fought about product features, release dates and other practical considerations. Engineering viewed the product through a hobbyist’s eyes and marketing viewed the product through a consumer’s eyes. The classical business question of whether to rush to market or to delay and add enhancements was never settled. Commodore, competing in an industry where speed-to-market was critical and new product releases leap-frogged each other, was always a day too late. Rather then design a product in response to legitimate consumer desires that were channeled through marketing, the technical group saw themselves as the vanguard of a technical revolution. As such, profit was a secondary consideration.
The technical group lived in a world where the best product should always win. Since they were the closest to the product, they voted themselves to be the arbiter of product perfection, not the customer. Considerations like price, ease of operation, aesthetics, supply chain, etc. were for smaller minds. If the market was not willing to make sacrifices to buy the best product, then the market was stupid. Somehow the folks at Apple overcame this and the folks at Commodore didn’t. A shame for us locally, don’t you think?
I don’t think this is rudeness. It’s myopia. If you’ve always worked around people with a certain viewpoint, you will likely share that viewpoint. In it’s most extreme, like at Commodore, it becomes a badge of honor. It’s a value system that rewards “on-off” thinking. It’s not meant to be rude. It means that if a peer in another department, a vendor or customer is not needed at that moment, they do not exist. They are “off”.
I see it in my business. Of all the disciplines in which I recruit, I get less cooperation from engineering than from all others. It’s not unusual to send out emails to contacts about open positions, asking about either personal interest on their part or asking for referrals. Almost every contact on the business side provides some type of response, even if they are not interested. I also get referrals regularly from all parts of the business community. On the engineering side, I get much less bounce-back. A typical example will be someone who sent a resume and then had a conversation with me. A week or two later I might call them with a question or an interview possibility and never hear back. They may resurface 3 or 4 times in my database and then receive emails or calls about specific jobs, possibly for them or for a referral. I rarely hear back. Then, 4 years later, when looking for a job again, they send a new resume and, lo and behold, we are best friends. While this behavior pattern is common in the technical area, it’s very rare in the business area. There is more dialog and more give-and-take with business candidates; executives, finance people, marketing people or HR. There is a huge difference in behavior. The personality type that I am describing sees relationships as a distasteful game to play. In reality, relationships are a necessary management tool.
Over the years I’ve learned to depersonalize this. I’ve taught myself to believe that it’s not rudeness. It’s digital behavior. The relationship with me is in the “off” switch. It’s “off” because the engineer has no need at that moment to consider a new job and no need to provide a referral and help another engineer or friend. Should the need arise in the future, the engineer will turn the switch to “on” and the relationship will continue as before.
Now imagine someone like that running a company. Here’s where some engineers, those who are very entrenched in a digital value system, eliminate themselves from any possibility of running an organization and moving into the executive suite. Most relationships are analog. There should always be a little juice running through them. People need to feel a part of something. They need to be motivated. They need to be rewarded and punished. They need to be nurtured. No matter how smart the executive, no matter how good the MBA, without the ability to understand clients, vendors, peers and staff the executive is doomed to failure.
So, for the question of whether the engineer has the capability to be a successful CEO, my answer is a qualified yes. Most have to intellectual depth but not all recognize the validity of other people’s needs. Without that second characteristic, no company board or search team or fellow executive is going to recommend promotion to a strategic, business-centric role. If a corner office is your true career goal as an engineer, ask yourself whether this is an area for personal improvement. As a tip for you, when I have technology candidates who are being considered for executive positions, I often ask them what type of literature they read. A student of people is usually a student of good literature.
Do Engineers Want To Be CEOs?
The easy answer to this is - of course they do. Who wouldn’t want to make 500k or more? Who wouldn’t want prestige? Who wouldn’t want wealth? The real answer to that is – not everyone.
Engineering is a unique field. Many engineers decide at an early age that they like technical stuff. For many, it was a hobby first, than a subject matter, finally a vocation and career. This complicates career decisions in a few ways. There are more variables about a job in engineering than in accounting, for example.
Imagine an engineer with the opportunity to interview for a promotion in a different company. He has normal questions about salary, product line, industry stability, organizational structure and benefits. These are the same questions that any professional will have and are pretty standard. However, the engineer may introduce other variables. For example, what CAD system do they use? Is the product personally interesting to them? Is it a neat technology? In other words, engineers have a wider range of motivations than an average professional, which may complicate their career decisions. They have the opportunity to be technical snobs. That complication might inhibit their professional advancement which, in turn, can limit an engineer’s career to a continual series of technical roles.
An accountant, for example, will never care about the software package used in finance, their equivalent to a CAD system. Accountants care less about the product and more about the company than an engineer. The accountant will want to know where the job leads and whether the company is growing. He will ask about their goals for going public or whether they will grow organically or by acquisition. The engineer will care less about the company and more about the product and technology. This can lead the engineer through a series of job changes within a series of weak companies, all while chasing a neat technology. This can produce someone with 20 years experience who has never gotten beyond a senior engineer role. By then, any hope of promotion beyond a technical role is a futile dream.
Because engineers often get into the field for non-career oriented reason, they have an interest, sometimes a passion, for some aspects of their jobs. They also can have a startling lack of interest in other, more standard, areas of their jobs. This can create static in their career decisions, like the example below.
John Jones is a Design Engineer with 8 years experience on high-speed machinery at a small company. He makes $75k and has no chance for advancement. He uses ProE in his current job and likes the high-tech aspect of his products. He likes his job but just had his first child so he wants to make more money.
John interviews with a larger company for a team leader role in a product design group. The company makes consumer products that are not highly technical. It’s an AutoCAD shop. He will supervise a team of 5 engineers and designers and, in 3-5 years, may have a shot at a more senior role. The job pays 90k and a chance in a few years for a 120k job that would also give him budgetary power.
You can guess the rest. John is not interested. It’s not an acceptable CAD package and the product is “ not challenging”. The fact that it’s more money and more responsibility and a more successful firm than his current employer does not even register with John. While he wants more money for his family, he won’t sacrifice the enjoyable parts of his job to get it.
No other discipline would make this decision. An accountant would see an opportunity for more money and power. He would say, “When I am the boss I can make the company buy whatever software system I want”. A marketing person would see more money and a company that is established and growing, which means more opportunity to make a difference. John not only dismisses everything the salary bump will do for him, he also ignores all the good he can do with the increased power at his new employer.
John has every right to make this decision. After all, he is the one making the sacrifice. But, John represents a percentage of engineers who will rarely get into the executive suite and are unwilling to trade technical enjoyment for career advancement. If we take our “universe” of engineers, this eliminates a definable percentage of them. We must subtract those whose motivations are not connected to business advancement. Their goal is job-specific and not career-specific. A smaller percentage of engineers have career goals that include business leadership than those in other disciplines. This, of course, translates to fewer engineers on executive row.
So, we have a group of smart people, some of whom are not interested in being a CEO or business leader. Of the rest, some have personality or cultural traits that may eliminate them from consideration for executive jobs. Certainly, those two factors create a smaller group of engineers able to filter up to CEO jobs. However, the scarcity of engineering talent on executive row is so profound that I think there is more to the story. This leads us to the last of the 3 questions -
Do Businesses Want Engineers As CEOs?
No, they do not. They should but they do not.
About 10 years ago I was working on an assignment for a local pharmaceutical company. They wanted me to fill a Project Engineering job at a local plant. They finally settled on one candidate who they really liked. They made a disappointing offer which he was going to reluctantly decline. He really liked the job. When I told the HR Manager that they only needed to bump the salary by $2,000 to get him, she said no. She then said something that has always stuck in my mind. She said, “All engineers are the same. We will find someone cheaper. It doesn’t matter”.
All engineers are the same! What a ridiculous statement. The difference in performances between an average engineer, good engineer and exceptional engineer is phenomenal. Microsoft has actually done studies on the effectiveness of programmers and finds that the difference between a good and exceptional programmer is measured in factors and not multiplication. Good technical people are not only more efficient, they can come up with startling new ideas. It is literally immeasurable.
However, most businesses don’t see this. For many, engineering is overhead. Even in companies that design and build technical products, engineering is sometimes treated like the strange relative that is kept in the basement, only to be brought up during holidays. When clients visit, the product development department is called a “jewel”. When the client leaves, the CFO cancels the budget for a new workstation. Many companies agree with the aforementioned HR person. Engineers are commodities.
I know this from comments I hear from companies. I know this from hiring and layoff patterns at companies. I know this because it’s not unusual to hear about a technical layoff at a company that has just created a slot for a new accountant, for example. I know this because many CFOs will approve an agency fee for an HR or finance position but then tell an Engineering Manager to pick his candidate from weak ad response. Mind you, not all companies think this way, but many do. Why?
Self selection is the answer. We’ve already discussed why engineers rarely get corporate leadership roles. With no representation at the top, there can be no appreciation for the function internally. Simply put, engineers have no advocate on executive row. Not only does engineering talent need to be appreciated, it needs to be measured. It’s not enough for someone to scream, “I am important.” Someone must explain why they are important. I think that’s where things break down.
I think that engineering, as a discipline, needs a wake up call. So do companies that employ engineers. Here are my recommendations:
1) Engineering education needs to include info about the sea in which engineers swim. Courses in economics, business and basic legal principles should be represented in engineering curriculum. After all, 99% of engineers will perform their jobs in the business world. The more you know about marketing, finance and your peers, the better engineer you will be.
2) Engineering professors should stop “business bashing”. I teach occasionally at a local college. I once overheard a professor tell his students that all business was corrupt because they will lay off any employee when they turn 50 years old. That creates a false impression in a student’s mind about what they can expect out of their employer. In other words, if you begin your career expecting the worst from your peers, you are guaranteeing that’s exactly what will happen.
3) Businesses need to understand where their money comes from. This has recently become obvious. For years, auto companies were basically finance firms. They could generate profits through car financing, which meant they could de-emphasize product development and manufacturing. Other companies and industries, like GE, took the same route. When an industrial company gets half of it’s profits from financing, their focus changes. As we all know, recent events have changed that outlook. Hopefully, this is a permanent, not temporary, change.
4) For engineers to be successful in integrating an understanding of business needs into their job functions, they need to learn how to advocate for their ideas. Too often, the engineers see themselves as a clique, apart from other employees. When that occurs, it is a small step to seeing everyone else as an enemy. Years ago, Hewlett Packard, one of the most innovative companies of it’s time, used to require that every engineer they hire work in sales for 6 months. That experience, they felt, created a better, more well rounded engineer. They were right. It also created an engineer in product development who was a more effective advocate for their ideas internally.
5) Salaries for engineers need to increase. The only people who can do this are managers. Too often, engineering managers try to be corporate heroes by running a low-cost department. While we all have budget constraints, in some situations that strategy actually signals that your department is not important. In my experience, engineering managers don’t fight for their people with the same intensity as do other departments.
You get the idea. We need a closer integration of technical and business talent. That should create a new group of business leaders who intuitively understand product development, technology integration and real world issues. Over the next 5 years I expect a rebirth of our manufacturing and technology sectors. For that to occur, we will need insight from both sides of the engineering/business divide. We need to find the kernels of a new group of business and technology leaders. For those who think it’s too late and, as I hear all the time, “manufacturing has all moved off-shore!”, remember this - last year the US manufactured more goods than at any time in it’s history and the US is the world’s largest exporter. We must be making something and someone must be buying it!!
Thanks for reading this far. Please don’t hesitate to email or call with any questions, comments or complaints. And, as ever, don’t forget Right Recruiting for all you employment needs.
Jeff
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