These were some of the point points raised during the Stanton Chase EMEA Technology Team meeting, which was held on the 3^rd and 4rth of February 2012 in the Amsterdam office. 

Concerning the major market trends identified within the global technology business, Stanton Chase Technology practice leaders expect to see much deeper integration amongst the three main subsectors of the industry (ie  Software/Hardware, Telecommunications and IT Services & Semi-Conductor Industry)  during 2012 — especially along with the expansion of cloud computing as that continues to develop and flesh out.

Two topics that have been batted around in 2011 but should get some more attention in 2012 are gamification and user empowerment. We have seen some businesses touch upon the incentives of gamification at work for productivity and team building purposes, but the Stanton Chase team expects to be able to see more of this in action more as the solution evolves and gets picked up by more companies. Additionally, bringing-your-own-device to work has become an ever-so-pressing issue in 2011 for IT departments and CIOs, and the Technology practice group team of Stanton Chase predicts for this to continue as end-users become empowered to directly grab solutions from the cloud or app stores for their mobile devices and computers.

As one of the global leaders in Executive Search, Stanton Chase International is organized across 9 practice groups. The Technology Practice, which focuses on Clients with core business in the three subsectors mentioned above, ie Software/ Hardware, Telecommunications, IT Services and Semi-Conductor Industry, is the third leading practice globally in terms of revenues.

The meeting was hosted by Jan-Bart Smits, EMEA Technology Practice Leader, with the presence of Tom Goorman, Global Practice Leader and the support of George Cross, International Chairman of Stanton Chase. The general conclusion is that the 2012 outlook is positive and that the year will be one of continued growth despite the financial and economic head-winds.

Checking your recent forecast via your Iphone’s ‘app’. . Saving your data in the cloud. Reducing your cost of ownership by using business software as a service, monitoring your customer ‘s behavior on social media… .

More than ever technology has brought tangible advantages to every day business life.  The  return on technological  investment has become more and more visible in the corporate strategy of companies around the globe. This causes CIO’s to move out of the technical comfort zone to a business strategic ‘twilight’ zone.  Goals changed, business language changed, innovations lead the way to competitiveness…but how to deal with it?

Recent studies showed the four domains which occupy the minds of today’s CIO’s;  flexibility, risk management, cost control and gapping the bridge with business stakeholders. On the pure technical level, they see themselves challenged on data storage/management, investigating the cloud and above all mobility. Deduction to be drawn from this evolution, is that sticking to the pure technical side of the story will thus cause ICT companies to miss the boat…

Moreover, the ICT landscape is nowadays less diversified through continuous consolidation of companies, resulting in fewer choice of technological partners in a market driven by the giants. Furthermore, technology as such has been changing rapidly; there is a strong convergence of the communications sector towards the Information Technology segment. Smartphones have affected the mobile communication segment, making them move to a data aware and content driven strategy. Communication companies enter the infrastructure sector, broadening their services in the cloud/storage environment. Major IT services companies have taken a firm stand in the business consulting area.  Social Media are causing a partly similar wave of changes in corporate communication, as once email did. The pure technical barriers have been fading over the years, leaving ICT companies with an opportunity to diversify on other levels.  The ICT biotope has become one where the best adapted will survive.

But what is the way to adapt? Listen, understand, dare to change. Positioning of technology as a solution to specific business challenges within  the new context of flexibility and manageable risks at optimal cost of ownership. Abandon the pure technical discussion is key for ICT companies.

As ICT companies will have to talk business with their clients, understanding corporate strategies and endeavors , so will Executive Search firms have to talk business with their clients in technology. The changed ICT landscape urges Technology companies to develop or  attract new competence within their talent pool. If we can understand their challenges in corporate strategy,  and if we can adapt our approach, we will have a common goals as our clients: growing to be a trusted business partner for our clients. Before we look….we listen, understand and adapt!

Apple, Facebook, Google, and Amazon battle for the future of the innovation economy.

Gilbert Wong, the mayor of Cupertino, California, calls his city council to order. “As you know, Cupertino is very famous for Apple Computer, and we’re very honored to have Mr. Steve Jobs come here tonight to give a special presentation,” the mayor says. “Mr. Jobs?” And there he is, in his black turtleneck and jeans, shuffling to the podium to the kind of uproarious applause absent from most city council meetings. It is a shock to see him here on ground level, a thin man amid other citizens, rather than on stage at San Francisco’s Moscone Center with a larger-than-life projection screen behind him. He seems out of place, like a lion ambling through the mall.

“Apple is growing like a weed,” Jobs begins, his voice quiet and sometimes shaky. But there’s nothing timorous about his plan: Apple, he says, would like to build a gargantuan new campus on a 150-acre parcel of land that it acquired from Hewlett-Packard in 2010. The company has commissioned architects–”some of the best in the world”–to design something extraordinary, a single building that will house 12,000 Apple employees. “It’s a pretty amazing building,” Jobs says, as he unveils images of the futuristic edifice on the screen. The stunning glass-and-concrete circle looks “a little like a spaceship landed,” he opines.

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Before taking this role, he worked as recruited specialists as an Account Manager for the IT and Telecommunication market at Kommlink Group.

Prior to moving into executive search, Metodi worked as a Financial Consultant for ING Life Insurance and as an Intern for the Bulgarian Stock Exchange. Metodi graduated from the University of Basel, Switzerland with a bachelor’s degree in Economics and Business, specialization in Economics and Finance.

Furthermore, he was actively engaged in the largest students’ organization AIESEC, working on a voluntary basis as Local Committee President in Basel.

Telecom market trends in the Middle East

As all market reports indicate, the telecom industry in the Middle East will face or is already facing significant challenges, threats or opportunities, on a scale that was not previously seen. Although some issues have been around for a while, there are several new aspects that lead us to believe that 2011, as well as 2012, will be years of various changes within the Middle East telecom operators.

The trends most likely to reshape the Middle East telecommunications market in 2011/2012 break down into three main pillars, M&A activity and Consolidations, Introduction of new services and cost-conscious / lean operations. In more details:

Increasing M&A activity and/or Consolidations

Telecom operators in the Middle East in 2011/2012 are expected to shift gears, looking to enter new markets or augment their market share in existing markets, and regional M&A activity is expected to accelerate rapidly.

In more details, while we can identify a significant number of consolidated activities happening in the region (so called megadeals), at the end of the day, there are countable 4-5 big players in the league of telecom operators in the region: Etisalat, Du, STC International, Qtel Group, Airtel and Zain. These blockbuster transactions will remain attractive as individual entry points into markets become scarcer due to the global economic crisis and cost consciousness. Thus, operators recognize that large deals can enable them to secure entry into multiple markets through a single transaction, eliminating the complexity of pursuing many deals. Irrespective of the size in their incumbent markets, the above mentioned operators have finalized some interesting investments not just in the region, but have extended the footprint beyond it.

A majority of interest was drawn to the Asian and African markets; for instance, with an overcrowded Asian market (especially India) whose subscribers count has reached a saturated level, the challenge & opportunity is left in mobile broadband. On the other hand, Africa is one market which needs a tremendous boost in building the basic GSM infrastructure throughout the continent.  These markets could certainly provide more opportunities for growth and the chance to serve customers with more mobility, connectivity, speed and new mobile applications. However, expansion in these markets still remains complex as considerable amount of time should be invested into the creation of low-cost operating models and also into the provision of advanced development and skill-transfer programs to develop local talent.

In addition, M&A activity within the Telecom sector in the Middle East is expected to play a central role during 2011 and 2012. As data indicate, M&A activity among Gulf operators, for instance, declined from 10.6B USD in 2007 to 6.7B USD in 2008 and only 0.9B USD in 2009. Although activity is only at 0.1B USD as of the 3^rd quarter of 2010, the 12B USD potential deal between Zain and Etisalat, as announced in the media, could lead the industry unto a strong 2011 and an even stronger 2012.

Introduction of new services

Mobile voice services still remain a lucrative business for today’s telecom operators; however, traditional services no longer provide strong growth potential. For instance, data services are showing strong growth from 7% of total service revenues in 2007 to 10% in 2009. Of course, if we compare this 10% share of business with other more mature telecom markets in North America, Europe or in Asia Pacific, we can understand that there is significant potential for further development (28% in North America, 38% in Europe and 44% in Asia Pacific). Telecom operators in the Middle East are expected to drive new revenue streams through fixed or mobile broadband and this movement will probably prove to be the key driver in the next wave of organic industry growth, both in widening access or enabling more content and services. Notable examples of this trend are represented by Zain Iraq that has called for the Iraqi government to move quicker to the latest wireless 3G standards, as well as the Lebanese telecom market is getting ready for 3G, as announced by both operators, Alfa (managed by Orascom Telecom) and Mtc (managed by Zain). Both of them have heavily started the preparations for the 3G services, a launch that is expected before the end of 2011.

The growth potential of 3G in the majority of the Middle East markets remains significant as consumers demand ubiquitous access and high bandwidth to handle a growing array of services. Competition among telecom operators is expected, therefore, to intensify during 2011-2012 in value added services, including 3G.

Another notable trend in the development of new services is that 2011 and 2012 are considered to be pivotal years in the relationship between telecom operators and consumers – a relationship that is threatened by the aggressive growth of both internet companies (such as Google, Yahoo and Skype, that was also recently acquired by Microsoft) and social media/networking platforms, such as Facebook, LinkedIn, Twitter etc. As a result, pressures will mount on telecom companies’ operating models, spawning the need for operators to find ways to offer innovative products and respond to customer demands that evolve continuously.

Cost-conscious operations

Telecom operators in the Middle East are focusing already on lean operating models. Pressure to expand and to compete with new services and capabilities will force operators to explore new ways to reduce operating costs without sacrificing quality. Operational efficiency will come into sharper focus and telecom operators will probably channel efforts in several areas in line with shifting positions on the value chain. In this respect, we can identify two major sub-trends; operators will seek to benefit from digitization in order to increase operational efficiency, as well as there is already a clear need for cost reshaping, not simply cost reduction. The latter could lead to new operating models, lean management and increase in outsourcing activities.

Conclusion

Without doubt, 2011 and 2012 are expected to be quite interesting years for the Middle East telecom operators. Emerging from the global as well as from the regional recession, Middle East telecom operators stand at a critical juncture; the successful telecom operators in the Middle East for 2011-2012 are expected to be able to expand successfully, increase their market share from competitors and carve out new revenue streams/introduce new services, operating in an effective and lean manner. At the same time, they are expected to increase their employee retention, develop people from within, as well as in some cases import talent either from other more mature telecom markets, or from local competitors that will help them implement their challenging growth plans.

THE long passage that connects the two wings of IBM’s headquarters in Armonk gives a new meaning to the expression “a walk down memory lane”. From punch cards to magnetic tapes and disk drives to memory chips, every means of storing information since the advent of modern calculating machines is on display, either as an exhibit or as a photo. Other relics of computing can be found in the building, an hour’s drive north of New York City. Near the boardroom sits a desk-sized calculator with hundreds of knobs. Visitors can also wonder about a tangle of wires connected to a metal plate—an early form of software called a “control panel”.

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The IT services company has lagged on the performance barometer compared to its peers and, therefore , is looking for a new CEO to boost its
performance—something very similar to what happened at IT major Wipro in January this year. The company’s chairman Azim Premji showed the door to joint CEOs Suresh Vaswani and Girish Paranjpe, the first-ofits-kind public ouster of senior officials in the country. However, the successor, TK Kurien, came from within the system unlike what is going to happen at this IT services company.
Failure to perform, though , is not always the reason for CEOs being asked to leave. For instance, a head hunter says that an automobile company has given it a mandate to launch a search because the present CEO was not being able to rally his team and is an individual worker even as the company’s performance has not been hurt.

Once on the job, confidentiality is the key to such a search as naturally, the news should not reach the existing CEO, says a head hunter. Narrating an instance, he says, a multinational launched a replacement search for its local CEO through a firm in Hong Kong, which eventually spoke to a number of candidates without understanding the Indian context and in a matter of few weeks, the local CEO knew of this search. He then challenged his bosses who then had to sheepishly withdraw the search as it drew a blank and quietly extended the contract of the incumbent.

Most head hunters who work with companies to help them recruit top officials say that such a search is challenging and extremely sensitive for the client and the agency involved. “It is tricky to launch such external searches without a proper internal backup plan or a quiet market scan,” says an executive search firm head who did not want to be named.

Most companies watch their CEOs for at least six to eight quarters before taking any drastic action, say experts . “The purpose of such search assignments are sometimes to have a back-up if things go awry. So corporates are continuously evaluating the quality and calibre of talent available externally. It is not at all a one-sided contract negotiation anymore with the CEO, it has to be backed up by some stringent performance criteria,” says R Suresh, MD, Stanton Chase, a leading executive search firm.

Succession Planning has been at the center of discourse on organizational continuity and success ever since the publication of a book called “Executive Continuity” by Walter Mahler. While experts within the business community almost unanimously agree on the critical importance of systematically developing a pipeline of talent to take charge at the helm when the time comes expectedly or unexpectedly (as in case of sudden departure, illness or death of a leader), the reality is that with a few exceptions, most  corporate entities – even the most iconic in some cases – do not have well defined and transparent policies in place to identify potential successors to the current leadership.
While questions over Apple’s leadership in the long run is on top of recall for most today, we take a look at the looming uncertainties around succession in three other leading corporate organizations.

Oracle Corporation: Founded in 1977, the American multinational technology major specializing in hardware systems and enterprise software products, has had just one CEO in its history – co-founder Lawrence “Larry” J. Ellison. Thanks in part to his almost obsessive control over the operations of the Company and also, of course, the heights to which he has taken it, Oracle without Larry Ellison is almost unimaginable. As tech-journalist Karen Southwick writes in her book, Everyone else must fail: The Unvarnished Truth About Oracle and Larry Ellison, “no other large company is as dominated by a single individual.” Naturally questions have surfaced over what will happen when Ellison retires, sooner or later.

Often criticized as an egotist and control-freak, the CEO himself is known to be not-too-enthusiastic about such questions. A 2006 article in Forbes magazine quotes Ellison as saying “It is silly to think you can groom someone. Jack Welch didn’t have a successor. If you want to put me in his league, by all means, guilty as charged” (The Jack Welch example is not quite applicable, though) While blogosphere has been rife with speculations and surmises (from Marc Benioff returning to Oracle to ousted HP Chief Mark Hurd being considered for the post), the Company itself has been remarkably tight-lipped about how it is, or will be, approaching the selection and grooming of an apt successor to Ellison. Perhaps it is so as the leader himself shows little readiness to step down.

Microsoft: This offers a strange study in contrasts. Microsoft was cited as one of the most successful case studies when it came to corporate succession planning judged by the long and phased transition of leadership from Bill Gates to Steve Ballmer. As early as January 2000, founder-CEO Bill Gates relinquished the post to Steve Ballmer, stepping down himself to focus on long-term strategy. However, he remained chairman and assumed the new title of chief software architect. Six years later in June 2006, Microsoft announced that Gates would transition out of his day-to-day role to focus on the Bill & Melinda Gates Foundation and finally exit the company in 2008. Over that period, several other executives shot to limelight, the most prominent being Ray Ozzie. Ozzie, then chief technology officer, was named chief software architect in June 2006 and would be working side-by-side with Gates till the latter’s last day in office.

With a history as outlined, it is surprising that Microsoft today has little to share by way of who may succeed Ballmer. The performance of the company has been lukewarm under Ballmer, leaving Wall Street deeply discouraged and raising questions over whether it is time for a change at the top. However, there have been no evident indications of succession planning and the uncertainty has actually been aggravated by a series of high profile departures from the top echelons of management over the past year, among them that of Ozzie in October 2010. 
AMD: Just a few days back, in a rather sudden and unanticipated move, the Board of Advanced Micro Devices Inc. (AMD) forced out Chief Executive Dirk Meyer, citing rather vague reasons over the desired acceleration in pace of growth. While Chief Financial Officer, 47-year old Thomas Seifert has been named as Interim CEO, the contender himself has reportedly asked not to be considered for the permanent role. Thus the search for a CEO will continue with Seifert handling the responsibilities in both positions in the meantime.

Dirk Meyer had taken over the role of CEO in 2008 from Hector Ruiz, before which he was COO of the company for two years. Analysts have been fuming over Meyer’s ouster even before a successor was named and especially when the company seems to be on the growth trajectory. Some even view this as a frantic and clueless move by the Board to find some miraculous edge in its perpetual competition with Intel, where it has chronically been the underdog. Whatever the reason for the ouster may have been, it is clear that the Company is in need of a better succession management policy. It also highlights the question of whether corporate boards have a larger responsibility towards ensuring smoother leadership transitions and better succession planning for the long run.  The lack of clarity in this regard inherent in AMD’s governance policy has been highlighted in an article in Fortune magazine: it points out that while the guidelines place the responsibility for succession planning on the CEO, it also requires the board to determine if the plan is satisfactory. Moreover, it recommends that the board shall choose the CEO and other executive officers annually, but never outlines a clear and coherent succession process.

Surprisingly, the current downturn in technology industry search assignments within Stanton Chase has not actd predictably.  The downturn spread from the U.S. to Europe, but did not reach the Nordic Countries with the same impact.  Nor in India.  The numbers in NA have declined significantly – by 40-50%, or more, depending on the region, while our Asian and European operations have declined only by 30-40% and 3% respectively.

By technology sub-sector, Hardware and IT Services are down 74% and 28% respectively, Telecommunication is down 1%, while Software is up 9%!  We believe that software and telecom is where the innovation and demand for more executives is higher and we expect this trend to continue into the recovery.

McKinsey said in its study in Spring 200 that Technology is always the first into a recession, but also usually the first one out.  We as a search firm are seeing the early signs of a recovery and are wondering if the economic recovery will follow the old rules of being West Coast of U.S. Centric.  Has the world changed? Will the enormous innovation investments in India and China turn the tide? Or are the solid technology companies in Europe taking the driver’s seat in the recovery?

As the Global Practice Leader for Stanton Chase’s Technology Practice Group, I don’t believe the technology world has changed that much.  The U.S. technology market is still the largest unified market, and it still attracts a major share of startup and innovation investments.  And, importantly, it attracts the best talent.  Innovations will always come from the best talent, therefore we are expecting the United States to catch up to and then lead the world’s economic recovery.

By Mikael Stelander, Global practice Technology Leader and Partner – Helsinki