It is a lament heard
across the Canadian technology sector: Where
are the successful serial CEOs and why do they appear so
much more plentiful in the U.S. than in Canada?
A quick scan of the U.S. tech community readily surfaces
a class of executives for whom success only eggs them on
to pursue even bigger challenges. They are serial CEOs hooked
on the game of tech and driven by the goals of mastery and
excellence of play. They move from one successful start-up
or turnaround to the next adding one experiential notch after
the next to their expanding belts and wallets. And they appear
everywhere, sprinkled liberally across venture capital rosters
as executives/entrepreneurs in residence, and at the helms
of countless tech companies.
A similar glance at the Canadian tech landscape does not
yield such a class of CEOs. Boards regularly struggle to
find proven executives to navigate their firms through the
next stage of growth. CEOs of successful firms appear to
disappear altogether from the field of play. One could easily
draw the conclusion that CEOs who have been successful in
one Canadian venture tend not to surface in a second. By
extension, the number of serial tech sector executives who
have been successful twice and pursue a third venture are
at hand is whether this casual observation is fact or parlor
game myth? Perhaps
it is a simple function of a population ten times greater
south of the border. Or maybe Canadians promote their successes
less readily or loudly than their American counterparts
and it only appears that there are fewer of them. On the
other hand, what if it is true? What if the U.S. leadership
DNA is somehow more robust than the Canadian strand? Or
what if there are structural, government policy, funding,
or even geographical forces at play which somehow interact
to affect the behaviors and decisions of these individuals?
The issue is important for though the tech sector likes
to bask in an aura of youthful innocence and innovation,
the fingerprints of experienced hands can almost always be
found on the most successful companies. Youth may well create,
but it is usually experience that executes.
And while experience in winning and losing are both formative,
it is experience in winning that is most coveted. Winning
implies that the executive is either skilled in the game
of tech leadership, or minimally, lucky in the one successful
game that they played. Experience in winning cannot easily
be dismissed, for if nothing else, it stands in stark contrast
to the many more corporate helmsmen who have yet to demonstrate
either skill or luck.
Experience in winning is also perceived to mitigate risk
for stakeholders in subsequent ventures and thus, despite
there being no assurances that the executives can be successful
again, one time winners are sought out and given the benefit
of the doubt a second time around. Serial winners are another
level of coveted altogether and therein lies the problem.
As headhunters tasked with finding them, we can speak with
some authority that they are an elusive species in Canada.
So why does successful U.S. tech leadership become habitual?
And where do the Canadian leaders go?
Though the answers are not easily forthcoming, they likely
incorporate some of the following thoughts:
1. The Height of the Bar
First, in a land of
such global giants as Steve Jobs, Larry Ellison, and Bill
Gates, it could be argued that success in the U.S. is a
very relative notion. It is possible that a successful
venture or two south of the border are mere table stakes
in a big-league game played by many highly skilled players.
A Canadian who now resides in Silicon Valley once expressed
this sentiment to me when I congratulated him on what was
a very successful exit by Canadian standards. As he said, ‘Sure I made some money but that is nothing
down here. I am just starting”. Though he is now the
CEO of his fourth company, all successful to various degrees,
he remains a minor blip on the U.S. tech map. Determined
to make his mark, he continues to ply his trade.
Though Canada has its share of tech sector giants, perhaps
the competitive bar is slightly lower in Canada, and for
some executives, the serenity and peace of accomplishment
can be acquired at a lower, one-time cost. For these executives,
rather than heading to another organizational challenge they
head for the beach.
2. The lack of Critical Mass
It is altogether possible that critical mass, or more accurately
the lack of it in the Canadian tech sector, limits growth
opportunities for its most successful members. Canada boasts
a wide array of small and startup organizations but far fewer
mid-sized organizations. Thus, an individual seeking to leverage
a success venture by pursuing a larger or more complex leadership
opportunity is invariably challenged by the selection of
such companies in Canada.
The limited number of mid-sized Canadian technology companies
is not due to a national inability to nurture young startups
beyond infancy. Rather, it is the tendency to sell these
firms when they reach a certain marketable size that is to
blame. Once sold, some of these firms remain standalone business
units but many more are relegated to engineering labs. For
the pool of successful CEOs looking to grow, the pyramid
of opportunity narrows all too fast.
Due to this, many executives head south of the border. Once
there, these individuals rarely come back unless compelled
by family or quality of life issues back in the Great White
3. Nascent Regional Clusters
Executives exiting a business in a given technology market
have greatest currency in that market. This is where their
knowledge lies, their relationships are strongest, and in
many instances, their passion most intense. But many cities
in Canada lack the clustering of inter-related businesses
to afford opportunities to stay in those markets. Where,
for example, do Ottawa-based Cognos executives go if they
elect to leave their new IBM masters? Where were Alias or
ATI executives to go in Toronto?
This is not to say that Canada lacks clusters altogether.
Telecom professionals in Ottawa have a range of choices available
to them as do enterprise software executives in Toronto and
Waterloo where a rich tapestry of related companies can be
found. And while NRC and others work to foster various regional
clusters across the country, for many executives, there remains
a lack the critical mass of companies to keep them in those
Robust regional clusters, or the lack thereof, is also a
factor in several other ways. Executives are attracted to
clusters not only because they provide choices of employment,
but also because they provide access to talent that spans
all stages of growth. An executive once told me that he had
set up his security software company in Ottawa specifically
because the city boasts a broad ecosystem of large, mid-sized
and small firms in that sector as well as a pool of seasoned
executives cutting across all sizes of firm. Access to such
talent was a decided factor in successfully raising funds
for that company. Clusters have become a regional advantage
for Silicon Valley and selected other geographical hubs acting
as a magnet in attracting and retaining a wealth of high
Finally, clusters are a broader talent management issue
as they provide the infrastructure for executive movement.
As has been proven many times in Canada, it is very difficult
for executives from firms such as Nortel or Celestica to
step directly down to work for small or early-staged companies.
The reverse is equally true. The experiential gap is too
large, leadership demands too different, and the learning
curve too steep. Failure is frequently the result of such
attempted leaps and individuals along with their careers
get lost in the chasm. While it is easy to question the judgment
of those making such attempts, in the absence of viable transitional
alternatives, executives often have little choice. This is
where clusters play an important role by providing the infrastructure
of intermediary companies which serve as bridges in the efficient
movement of talent. They leverage experience, mitigate risk
and provide career stability for all involved.
While efforts continue to nurture clusters in Canada, their
relative scarcity combined with the tendency to sell so many
of our firms robs many executives of the opportunity to stay
in the game.
4. The Pull of Capital
It has been argued that access to investment capital influences
the behavior of CEOs and other leaders.
Firms looking for
growth capital, especially those requiring what would be
considered round B or C or even later round funding, invariably
find greater choice in the U.S. than in Canada. With those
dollars come gravitational forces which often pull the
company and/or its leader south. A U.S. ‘face’ is
put on the company where it can be closer to markets, partners,
acquirers, and if the truth be told, the investors themselves.
Once executives make the move across the border they are
seduced by the promise of even more money, more opportunity,
and in some instances more agreeable taxes and climate. Over
time, they build networks of relationships that they come
to value and it becomes harder and harder to return home.
5. Our Approach to Leadership Development
The supply of serial
CEOs in Canada is also affected by the approach to developing
talent in this country. Outside of the very largest organizations
there has been precious little support for developing talent.
Tech firms are ‘sink
or swim’ games of skill and chance in which employees
are the sole proprietors of their development. Boards worship
at the altar of speed and have little patience or time for
the error component in ‘trial and error’ learning.
It is ‘keep-up or get out’.
Not surprisingly there
are a large number of leadership casualties. Some resurface
and are given second chances while others are labeled ‘lacking’ or pigeonholed for
selected tasks, business contexts, or stages of growth. Despite
the potential to become much more, many high potential tech
sector leaders are marginalized to the scrapheap of ‘wannabes’ or ‘has-beens’.
Many drop out of the game altogether thus affecting the upstream
supply of tomorrow’s potential winners.
6. Opting Out for New Possibilities
Finally, the shortage of serial CEOs in Canada is in some
part due to an increase in the number of individuals who
are voluntarily removing themselves from the field of play
in favor of other pursuits.
Over the past few years a growing number of executives have
indicated to us that while they have been schooled in the
venture-capital model of wealth creation, it no longer interests
them. Instead, they are seeking new types of opportunities
with different levers of control and equity participation.
It is as though they are re-pricing the opportunity cost
of each of the options available to them and the numbers
are taking them in new directions.
Some individuals are
tapping into demographic trends and acquiring owner-managed
firms. Others are moving to the private equity world while
yet others are making changes out of tech altogether. It
is a migration to the edges and it is taking place among
the population most coveted in the marketplace…the
So back to those elusive serial CEOs……where
exactly are they? The good news is that they haven’t
disappeared, they have just spread out. They are blazing
paths in the U.S., they are buying their own companies, they
are changing sectors and they are right here waiting for
their next gig while sitting on boards, consulting, or serving
as angel investors.
The key is that they
have choices, lots of choices, which are expanding as the
global market for this class of talent grows. Keeping
and repatriating them is a worthwhile pursuit though one
rife with challenges. Overcoming these begins with a better
understanding of how structural, political, geographical,
psychological and market forces interact to guide the decisions
About The Author
Robert Hebert, Ph.D., is the Managing Partner of Toronto-based
StoneWood Group Inc, a leading human resources consulting
firm. He has spent the past 25 years assisting firms in the
technology sector address their senior recruiting, assessment
and leadership development requirements.
Mr. Hebert holds a Masters Degree in Industrial Relations
as well as a Doctorate in Adult Education, both from the
University of Toronto.