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By Pimm Fox (IDG) -- George Ball, Tim Koogle and George Shaheen used to be poster guys for high-tech success, getting high marks from many quarters for guiding their companies to great heights. But according to some observers, administrative expertise in the tech sector may have hit a wall -- bouncing Ball, Koogle and Shaheen into the ex-exec category. They can be seen as victims of profit woes, withering investor confidence and a markedly altered business landscape. Indeed, as CNNfn is reporting today, departures of chief executive officers jumped 15 percent in May, with the dot-com sector experiencing the biggest CEO turnover -- that according to new data released by Challenger, Gray & Christmas, a leading outplacement firm.
Challenger reports that 84 CEOs left their companies in May, up from 63 in April. Nevertheless, these new CEO departures were 7 percent below those in May 2000, when 90 chiefs changed spots. Challenger's information indicates that 473 CEOs have left their companies so far this year -- 22 percent more than the 389 walkers tracked in the first five months of 2000. "The dot-com business structure is so new, even experienced CEO's have had trouble figuring out the best way to run them," says John Challenger. Ball has given up the reins at broadband access provider Excite@Home to telecommunications industry veteran Patti S. Hart. Koogle passed the baton at Yahoo! to former film executive Terry Semel. And Webvan, the online grocer, has been combing the aisles for a replacement for Shaheen. This is quite a switch from the days when magazine covers and industry analysts extolled technology professionals as management gurus, lauding them for new-economy insight and ability. In fact, you may really need tough, old-fashioned management smarts to clean out excess inventory, cut bloated staff and focus on making some of that green stuff. "There was a false sense that because technology could transform business, it could also transform business management," says Raj Sampath, an analyst at the executive headhunting firm Heidrick & Struggles. "It turns out, you need orthodox traits in business management in addition to technology expertise."
Webvan -- a company created with a goal of revolutionizing the grocery business using the Internet -- drew Shaheen from Andersen Consulting back in 1999, when Webvan stock went public at $15 per share. In November of that year, the company and its tech-savvy management were valued by investors at $11 billion. They may have been shopping on a different planet from the rest of us, because Albertson's -- a competing brick-and-mortar grocer with $37 billion in sales, $3.5 billion in earnings, 2,500 stores and 235,000 employees -- was pegged at the same value. Did Webvan's investors really believe they had a company of comparable value when it had sales of just $4 million and no grocery store expertise? Or was everyone dazzled by the mania for Internet stocks? Although the introduction of IT skills to business ushered in e-commerce and some new approaches to customer relationship management, the fundamentals of business didn't change. Purchasing servers and software aren't substitutes for traditional management practices -- nor is the ability to write good code a guarantee that you can run a unit with profit-and-loss responsibility. Experienced management in the IT sector might be expected to do some of these things. • Stops the techno-hype about transforming business • Sticks to nuts-and-bolts expertise and focuses on what makes money • Hires people who have an affinity for the business -- not just the financial rewards Investors in Hewlett-Packard and Cisco Systems, which have felt the pinch of slower sales, know that relying on technology systems to predict and track business is like driving forward while looking in the rearview mirror. Seasoned executives with a comprehension of IT -- even if little love for it -- may also be required. CNN Career Editor Porter Anderson contributed to this report.
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