INTERVIEW WITH GERMANY'S MANAGER-MAGAZIN
http://www.manager-magazin.de

The following interview was conducted by German journalist Reiner Gärtner for "Manager-Magazin" and Atlantic Research Technologies' Vice President for Advanced Technologies on 17th November, 1998. Excerpts appear in the December 1998 issue of "Manager-Magazin".

Q: Silicon Valley companies need good managers. Why is this so critical here?.
A: In my opinion, the most likely reason for the failure of so many firms in Silicon Valley is that they do not have time to develop and train good managers, and that they cannot find good managers. I am not referring to the Hewlett-Packards or the Intels, here. I am talking about the vast number of start-up firms that rise and fall in Silicon Valley. Since our firm works in the computer, software, telecommunications, biotech, internet and semiconductor industries, among others, we have seen many companies with great inventions, a very hard work ethic, and even great financial backing, collapse simply because their founders do not know how to build and run companies. You might say that most of them only become proficient in running "typical Silicon Valley start-up companies," and by this, I mean companies that NEVER will grow to be Hewlett-Packards or Intels, precisely because of a lack of management vision.

Silicon Valley is outstanding for developing new technologies, but it is very bad in keeping the companies that created those technologies. Sometimes this is intentional. Many Silicon Valley startups are built solely to make a great product, create a company in order to sell stock to the public, make the founders and investors millionaires, and then sell the product off to another firm. Many SV software ventures are considered a success if they last a year or two and then sell everything to Microsoft. The company disappears, the founders take vacations, buy big houses, then think about the next company they will create. They are driven by making their friends in technology say, "WOW! What an amazing discovery!" They don't think too much about sales, marketing, customer service, manufacturing, delivery times. These are things that might be outsourced to subcontractors or avoided altogether. It is no coincidence that computers and software are much, much harder for customers to learn how to work with, compared to TV's or microwave ovens, for example. Computer and software techies make their products for each other; that other people buy them is OK, but they don't want to have to spend time explaining their products.

The Silicon Valley's entrepreneur serves society by creating things that people could use, not by managing companies. Silicon Valley is a crossroads between state-of-the-art technological innovation and the ethic of the Las Vegas roulette wheel. The reason why people still consider Silicon Valley a great place to do business is that the Valley creates thousands of new companies a year. If 90% of them fail, that still means that hundreds of potentially viable exciting companies are surviving. Failed companies can give people ideas about how to do things right the next time. Many successes come out of the many failures. I doubt it if we could say that New York, Munich or Tokyo could claim such an enviable rate of successful high-tech company start-ups.

As with all start-ups, not just in Silicon Valley, there usually are several distinct "generations" of management a company might experience. In the first generation, imagine the founder or founders working in his or her garage or apartment with an interesting idea. They work seven days a week, often 18 hours a day. They drink a lot of Coca Cola and eat a lot of McDonalds. They may or may not have outside investors. They use every credit card they own or their family members own.. Everyone works very closely. People call each other by first names. They don't wear business suits. Eventually they develop a prototype of their product. The President graduated from engineering school three years earlier and has never worked at a company in his life. He takes out the garbage and goes to the store himself to buy the printer cartridges and pencils. The V.P. of Marketing has never sold a thing in his life. The V.P. of Operations has never manufactured anything in her life. Now they need to bring in an outside manager, who may have to wear a business suit, to approach large companies, venture capital firms or investors with their prototype in order to get enough money to keep the company alive. The person may be called a "Business Development Manager" or Chief Financial Officer.  That person may have worked at a larger firm and may have worked at several successful or failed startups. But this person must bring credibility...and an ability to bring in money to the startup.  If that succeeds, then there is a lot of money, and a lot more people with opinions on how the money should be spent.

New managers have to be hired because the founders cannot supervise everyone at once. But who would work for this little unknown firm? Typically, founders begin by hiring those people they know. Often, friendship, however, is not enough to make a good management team. The managers who were hired early to supervise the many new employees might not know how to organize, mobilize and motivate their staffs. Or they might do a very good job up to a certain stage, then they run out of ideas because they lack managerial depth. Perhaps a year or two after their hire it may become apparent that a new group of "experienced" managers have to be brought in. These new managers will be needed to create a "real" company, a company that can compete well and turn a profit, but the decisions they have to make often will make the early employees feel that the fun of the early company, its soul, is gone. Then those early employees may move on to other startups. And the cycle will be repeated. After a company has revenues of $50 million, that management team might not know how to get revenue to $100 million, for example, or with revenue at $250 million, that team might need to be replaced with people who could build, run and manage a $1 billion company. There are many generations of management, and some people are very adaptable to going from one step to another, but many people know only what they have experienced and they do not know how to adjust to new needs.

Q: What percentage of German managers whom you contact are receptive to working in Silicon Valley? Do you see any trends?
A: Under 5% of those candidates whom we contact in Germany are seriously able to consider moving to Silicon Valley, but a very high percentage of our German candidates coming to us through our website are willing and enthusiastic about the challenge. Perhaps 40%. Our website clearly shows us to be very international. There are numerous links to Germany, Japan, Mexico, Malaysia, Canada, South Africa, Brazil, etc. Therefore many of those sending us their CV's are interested in international assignments, even though we also recruit for positions in their home countries....

We see multilingual Germans who may have gotten an M.B.A. at Maastricht or a U.S. school and who want to work in the U.K., Los Angeles, Singapore or elsewhere.  We see people who for much of their careers have been more individualistic than most. They are not satisfied to wait for their boss to tell them their next assignment. They like building companies and see their career success in building companies, not just waiting for their boss to retire so they could move up one level.  The German candidates we have seen who are seriously interested in Silicon Valley and dynamic companies in general are usually young and unmarried or are older and more experienced, with grown children. The older managers have usually been posted outside of Germany and feel comfortable working overseas. They are very talented and intelligent and believe that they cannot realize their career dreams working in a large German firm. They often are not paid in Germany as much as they are worth and want to make the most of the next 15-20 years of their careers.

Q: What are the chances for German managers in Silicon Valley?
A: The chances for anyone in Silicon Valley are good, if you mean finding work. Being at a successful firm and doing well personally is entirely up to an individual's abilities and luck.

Q: Which jobs should they try to get?
A: The easiest transition for those not experienced in Silicon Valley business is to do what they do best, but with some emphasis on business relationships with Germany and Europe. Local language and common business practices can take a while to absorb, even for those managers who are fluent in English and who have worked for large U.S. firms in Germany. It might be easier to take positions at first that make use of their German and European contacts while they become more familiar with the way things are done in Silicon Valley.

Q: Do you see trends that American companies think globally?
A: Because of the size and wealth of the U.S. economy, traditionally, most American firms usually only thought of the U.S. market. Export was for the large firms. But over the last ten years, large, medium and even small firms in the U.S. are thinking globally. A Silicon Valley startup with ten employees might be doing business with Siemens or Nokia or Matsushita or Samsung. Many U.S. firms have joint ventures with European and Asian firms, and nowadays everyone tries to think of selling products globally. More and more American companies are trying to make their firms more truly international, with autonomous regional headquarters and autonomous decisionmaking authorities, as opposed to being simply "American firms with foreign employees." German Managers who think globally are extremely valuable to U.S. firms in Silicon Valley and elsewhere.

Q: How do you place European managers in companies?
A: We are headhunters. Typically a company with a very specific need hires us to find a manager and, working from our contacts in their industry, we contact people who have experience that might be suitable. We also learn about excellent candidates from our website. Often if we have a very good candidate but no opening for that candidate with our clients, we will call companies to tell them about the person. We have created many positions by doing so.

Q: What is your experience with German Managers?
A: In my experience, German Managers are no different from anyone else. People are born, they go to school, they get a job, they start a family, and they want some happiness. One thing I could say is that German Managers, especially the entrepreneurial ones, often feel torn between what they have and what they could potentially do in their careers. It is a dream versus reality issue. I am referring specifically to risks versus opportunities. People want to be rich from stock options but they don't want to consider that if they are in a Silicon Valley startup they might have to work 80 hours a week for two years and have nothing but worthless shares of stock.  They would like to run their own companies or departments, but they do not want to sacrifice their six weeks' vacation. Every German has heard of Eckard Pfeiffer's brilliant successes at Compaq in Houston. Everyone would like to repeat his success and wealth, but few would really want to take the sacrifices and chances that were necessary for him to make his successes.

Our firm is located in the suburbs of New York, home to many corporate headquarters. Most of the people working for those firms...   also would like to dream the Silicon Valley millionaire's dream, but their business culture does not prepare them to succeed in it. Individuals might succeed, but only despite their Fortune 500 experience. In my opinion, the mindset of the average German manager is not too different from the average U.S. manager in the Northeast or the Upper Midwest (Detroit, Chicago, etc.). These areas were heavily industrialized in the 20th Century. Many towns defined themselves by the one industry that dominated them: steel, chemicals, automobiles, optics, pharmaceuticals, machinery, etc. Many of the managers in German, American and Asian companies had fathers who worked in factories as laborers and machinists. Their fathers dreamt that their children some day could be bosses, in clean offices, working for the biggest, most famous firms. Well, with clean offices, big companies, secretaries and generous company and state benefits, comes comfort. Perhaps too much comfort. Once in that position, and having to deal with company bureaucracies, the average German, U.S., or Asian manager would have a hard time adjusting to being in a small company with little corporate resources, limited benefits and brief vacation time.

What I am saying is that what matters today isn't that a manager is of this or that nationality. It is his or her company experience and personal drives that determine if he or she would succeed in Silicon Valley or places where there is a similar business model, such as Austin (Texas), Cambridge (Massachusetts), or Boulder (Colorado).

Silicon Valley not too long ago was really only a few universities and vineyards. Farmland. There was no corporate ideology or tradition dominating the area. It's no wonder that the companies that would sprout from that soil would be working in new technologies and would do everything differently. The place would be very individualistic. And just as yesterday's Silicon Valley workers would be toiling long hours in the fields picking lettuce or grapes, today's Silicon Valley farmers are toiling doing digital circuit design or software programming. The big difference is that today's SV laborers get to own part of their companies, and while it is a gamble, most Silicon Valley engineers, scientists and managers know people who have become very wealthy from their stock options. So they sacrifice, because they see that in the chaos of Silicon Valley startups, many, many people get rewarded for their hard work. That has a lot to do with what Silicon Valley is and why it is a technological and economic success story.

Q: How many German managers did you place?
A: Since our founding in 1987, over 15% of our placements have been candidates of German, Swiss or Austrian origin. That includes Presidents, Directors, Managers, scientists and engineers in Europe and the U.S. Our candidates are of every nationality, from every continent except, perhaps, Antarctica.

Q: What is the "standing" of German managers in Silicon Valley?
A: There are all different opinions. Generally, everyone in U.S. industry has a tremendous respect for the thoroughness of German managers. In English we say, "They like to run a tight ship," which means that they often pay great attention to detail. On the good side, that can result in products of great quality. On the bad side, that can result in overmanagement, in "command and control" ways of running a business that might not work well in a small startup environment. In Silicon Valley that management style is often referred to as "East Coast management style,"  since many older, larger, non-Silicon Valley U.S. firms often have been characterized by managers who are experienced in running large factories of laborers rather than small, highly skilled and highly mobile professionals.  (Silicon Valley workers often work at 3 or 4 or more companies in a ten year period. And with labor shortages they are not penalized for such frequent job changes. A manager in SV who assumes company loyalty and a staff ready to take orders unquestioned could find that his staff might leave him.) Again, this is not an unchangeable national or regional characteristic. It is more of a business experience. Many people have written about IBM's takeover of certain Silicon Valley firms and the disasters that resulted due to very different management cultures.

Silicon Valley people tend not to see the world as nations. They see corporate cultures. "Microsoft people," "Oracle people, " etc. All these distinctions have tremendous meanings for them. Beyond these SV companies, there is mystery. There is Silicon Valley and then there is the desert. German managers in themselves do not matter in SV culture any more than does a manager from AT&T, General Motors, Boeing, IBM, or 3M. Silicon Valley people do not automatically recognize accomplishments made outside of Silicon Valley. They will recognize anyone from any place on earth who has accomplishments in Silicon Valley, though. So even in the SV chauvinism there is a healthy equality based on merit.

Our firm sees tremendous needs for German managers in Silicon Valley, particularly for those who could help globalize companies. They could be based in Silicon Valley itself or in Europe or elsewhere. They could be in nearly any technological industry or in high tech service firms. We particularly see needs in telecommunications, computers and electronics. In addition to their familiarity with the German market, there are many German managers with deep familiarity with Europe as a whole, or Eastern Europe or Asian, African, Latin American and Middle Eastern markets. People who have knowledge of the German market or other international markets are difficult to find in the U.S.  When they are found, they can be given very good compensation packages because they are so rare and because those firms do not want to lose such valuable employees.

Q: Do you also go to Germany to find the right people for your American clients?
A: If we are working for a German firm, a U.S. firm or a firm from anywhere else in the world, we conduct virtually all our recruiting from our headquarters, via a brilliant 19th Century invention called a telephone, and the internet. These simple tools permits us to act as a "virtually local" search firm everywhere on earth without need of field offices. We simply call candidates on the telephone and ask them if they would like to talk to or meet our clients. We want our candidates and clients to spend most of their time getting to know each other. It is more important for them to see if they can work well with each other. We believe that is the most efficient for all.

Q: Are Germans requested?
A: Our firm is a very technology-oriented firm. We place technical people and technical managers. When we are called in, a person has to know fiberoptic components, for example. Or cellular telephony. Or automotive engines. Or they have to have sold to Siemens. Or they must know how to establish a printed circuit board plant in the Philippines or a brakes plant in South Carolina. Things like that. Nobody cares about nationality. It's if the person can do the job that matters. If we are requested to search in Germany for a German-based position, naturally, the candidates we would contact would likely be German, but only those who had very special skills or knowledge, not "because" they were German.

In recruiting worldwide, we do see a much lesser interest by companies to establish or expand offices in Germany. Due to labor laws, wages and benefits, it usually makes more sense for companies to build or expand in Belgium, the Netherlands or the U.K. This means that in establishing European headquarters, many firms are choosing countries other than Germany to do so. This is only because of the cost of doing business in Germany, and it means that some German managers might lose out on good opportunities or have to go elsewhere for them. It is therefore very important for today's German Managers, for their own career safety, to try to keep up their foreign languages and to try whenever possible to gain international assignments, even to neighboring countries. I understand that the heads of many German firms have talked about moving out of Germany. These are economic decisions, not recruiting decisions.

Q: How much does it cost to use your service?
A: The costs to our candidates is free. Our client-companies pay our fees based on our degree of difficulty in finding a particular person. On average, our fee may be the equivalent of between 20-30% of the placed person's salary. In many cases our fees are significantly lower than our competitors, thanks to our efficiency.

Q: What is your success rate?
A: Since our founding in 1987, in an average year, we place one person for every three for whom we arrange face-to-face interviews. At a leading competitor, the rate is roughly one placement per ten interviews. Our internal corporate continuous quality program permits us improve our methods of analyzing candidate and company needs. The resulting efficiency permits us to expand our business while passing on savings to our clients in the form of lower fees and candidates who are well suited for their new firms. Since our founding, we have never had to return a fee to a company due to that candidate's not being a good match. We know that this is a very enviable and unusual record, and we owe it all to the quality of our candidates, whom we call "our best calling cards."

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(©1998 Atlantic Research Technologies)