Leading an IT-Driven Company
John Ebb is typical of many small business owners — a champion of technology, an aggressive technology user and a self-confessed non-technologist. Ebb is owner of Boston-based Brett's Luggage and Suitcase.com, an online travel superstore that recently underwent a major technology overhaul.
At Suitcase.com there is little separation between the business and the technology that runs the business. So it was the log files from his Web site that clued Ebb into the problem with his business last year and suggested the technology solution. "Customers couldn't find what they needed. They were abandoning their shopping carts mid-stream, and we knew we had to do something," he recalls. Suitcase.com was losing sales because of poor product database functionality, awkward navigation and user interface design, cross-browser incompatibilities and spotty server performance.
For Ebb, like other owners of technology-driven businesses, re-architecting his business and making the right technology decisions required a delicate balance of trust, creative leadership and tried-and-true project management skills. Recognizing his strength as a retailer and weaknesses as a technologist, Ebb and his team defined a clear strategy for integrating the Web into the rest of their business and then selected an experienced Web design firm to help his company through the process.
After launching the revamped Suitcase.com in August, log files showed fewer abandoned shopping carts, the site saw a significant increase in traffic from search engines and sales jumped during the first few days of the new site, thanks largely to the new database-driven design that is easier to navigate and significantly more responsive. The jury is still out with only a few days of sales data to measure success, but Ebb believes the new site will convert more visitors into customers and bring more back as repeat buyers. On the backend, the product database is now much easier for Ebb's team to update, allowing the company to offer more products online and scale the business for rapid growth, he says.
Ebb's success as a non-technical business owner leading a technology-driven business is hardly unique, as entrepreneurs and small business leaders increasingly find that technology is the key driver of business growth across a range of industries. His experience is supported by research conducted by Cindy Phillips, a management consultant in Lancaster, Pa. Her study — which used a series of focus groups with executives at technology companies to address the question of whether high tech organizations require technical leadership — found that it is more important for managers to possess strong communication and leadership skills than specialized technology expertise. "The academic debate does not diminish the fact that complex and technical organizations demand the same high quality and visionary leadership that has led those organizations to become what they are," Phillips concludes in a whitepaper summarizing her research.
Like Ebb, Marc Roth is not a technologist. He earned a political science degree from the University of Illinois at Urbana-Champaign in 1987, and then went to work as a construction consultant and later as an options trader before starting his own company. Yet technology was critical to the business Roth founded, Home Warranty of America (HWA), which protects homeowners from the high cost of home and appliance repairs, in part through efficient warranty claims processing and a sophisticated system of matching customers with technicians from its database of more than 10,000 service providers nationwide.
When he started the business in 1996, Roth set out to automate his "gotta guy" principal: the ability to recommend trusted sources for home repairs — a plumbing guy, a roofing guy, an HVAC guy — to homeowners who buy HWA warranties. "I've always been the person my friends and family call when they need repair help or advice," says Roth. "Our business uses technology to help people find a guy in every town in the country."
But with no technology skills or expertise, Roth needed to apply his gotta guy principal to his own business, finding a trusted technologist to implement the specifics of his vision. Roth's "guy" is Scott Ruby, a longtime acquaintance who he hired as the company's chief technology officer. Initially, as a consultant, Ruby designed HWA's first system: a Windows client-server application built with PowerBuilder, Sybase and an SQL Anywhere database running on a small, five-PC Novell network. Over the next nine years, Ruby evolved and upgraded the system into an enterprise Web-enabled system with an Oracle database on the back end to process orders, contacts, claims and reports.
Though he delegated substantial technology leadership to Ruby, Roth conceived the fundamental business strategy and the pivotal role technology would play. Roth saw technology as a way to wring efficiencies out of the home warranty business that in 1996 was dominated by just four or five very large companies. "Our technology allowed us, as a very small startup company, to compete with the subsidiaries of billion-dollar companies," Roth says. And like other non-technical founders of technology-dependent businesses, Roth provided strategic leadership and investment, while delegating technical specifics to his team. That balance has helped him grow the company from negligible revenue in 1997, its first full year of operations, to its current pace that should generate about $22 million this year.
"When we were doing $0 in revenue, we were spending over $100,000 in [technology] development," Roth recalls. "When we were doing $1 million in revenue, we were still spending $100,000 to $200,000 [in development]. When we were doing $10 million, we were spending half a million dollars."
"My job is to understand the customer, document and communicate the customer requirements to the rest of the company, and then make sure the right people have what they need to execute," adds Roth.
Technology expertise is not what Tom Churchwell looks for in the leadership of the startup companies he invests in as managing director of Arch Development Partners, an early stage venture capital firm located in Chicago. His firm reviews hundreds of bleeding-edge business plans each year, and Churchwell's personal bias is to not fund companies at which the CEO is highly technical.
"We don't expect and don't want people with technical Ph.D.s running the company," says Churchwell. "We look for leaders who understand sales and marketing, how the technology works, whether they can make good business decisions and most important, that they have the domain expertise to know that the guy writing code is doing it right."
All good leaders, regardless of their technical acumen, must be able to explain how the goals of a specific project and the goals of each employee contribute to the goals of the organization, Churchwell says. His experience has proven that a demonstrated ability to delegate tasks to the right people and then clearing potential barriers to enable them to execute is more important than technical strength. "Technologies come and go. Technologies change. We want to know that the people in charge have made mistakes, have done it before, have learned from their mistakes, and have the sense to adapt and overcome whatever happens."
This opinion is echoed by Alex Walker, a serial entrepreneur and an operations expert who has bought or sold more than 20 companies. Walker knows from experience that a strong project plan and a clearly communicated strategy will serve as a roadmap for the entire company, technology included. Likewise, he believes a poorly communicated strategy can sentence an organization to failure.
Walker is the CEO of Cube Route, a Toronto provider of managed logistics services for fleet operators and field service organizations. His job is to set direction for the company. Cube Route has 53 employees, 30 of them are technical specialists.
"After 20 companies, I've learned the importance of clearly articulating the business and the technology strategy to everyone at every level," he says. "Everyone in the company should be able to apply the strategy against their own decision-making process."
That was also the leadership approach of Jared Isaacman, who after earning his GED at the age of 16, founded United Bank Card, a Hampton, N.J., registered transaction processor serving businesses across the country. He believes effective leaders demonstrate a technical understanding of the business and set the pace for the entire organization. By necessity, Isaacman, now 23, has worked in nearly every position at his company: customer service, technology, business development and technical support.
"I have the best management team in the business," says Isaacman, who admits it is sometimes difficult to let go and delegate. "I don't know if it is a major weakness, but I know sometimes my attention could be better spent on the higher-level vision of the corporation instead of micromanaging some of the smaller things. How do I compensate for it? I work a lot of hours."
For business leaders who don't want to rely on their business savvy alone, Delphi Analytic Services, an executive training company in Indian Rocks Beach, Fla., offers a half-day course for non-technologists called the "Art and Science of Leading a Technical Staff." Delphi founder David Bliesner notes that it's common for non-technical supervisors to lead project teams composed of scientists, engineers and computer programmers.
Bliesner recommends that leaders understand their own leadership style and if lacking, learn rudimentary "geekanese" to improve communication with technical teams. To be effective as a leader in a technical organization, he says, non-technical leaders must invest the effort and become conversant in the technologist's language.