Lesson: Product Leaders with Adam Nash

Step #9 Gretzky: Great customer insights come from skating to where the puck will be

I hope we aren't going to judge corporate-strategy teams on acquisitions because it turns out most of them fail spectacularly. I've never actually seen someone in corporate strategy held accountable for the acquisitions they led. Look I'm very cynical about it in technology because I think it moves too quickly.

When I was at eBay, the corporate-strategy team did a huge presentation on why there was no economic opportunity in social networking. Done by really smart people who looked very carefully at the numbers. To be honest looking at MySpace and Friendster at the time, it wasn't obvious where it was going to come from. Now it was obvious, to read Hoffman. At LinkedIn it was obvious. Facebook hadn't started yet, but it was obvious to a bunch of folks.

I think the problem with corporate-strategy teams tends to be that they have limited to no operational experience. They don't have the data from the facts on the ground. They aren't hearing the customers' stories. Most great customer insights, to borrow the Wayne Gretzky expression, come from skating to where the puck is going to be. I find that corporate-strategy teams tend to do a very good job, of this in traditional industries.

I think in the automotive industry, corporate-strategy teams can be really valuable. When you're trying to predict the future of macro economics of entire nation states, and supply chains that go across countries and commodities etc., those are slow-moving enough that actually having a student of history, a student of strategy, having people look into things, lets you make 20-year plans. These are also to the industries where you can make 20 year plans.

In technology you can't make 20-year plans, it's insane. You might just as well say, "Yeah there'll be jet packs and flying cars. It's going to be awesome." One day that prediction is going to be right, by the way. I'm just waiting for that moment.

I think the problem that corporate-strategy teams have in technology is that, usually "long term" in the technology industry is about five years. Usually that's how long it takes for enough accrued improvement and change, in technical capability and architecture, to invalidate core assumptions from the last generation of smart people who looked at it. So that's why actually I do like acquisitions.

I do think there's a role for people to get out there. I think that people are experimenting with different models. There's always been this flirtation with corporate venture capital, as a way to get more in touch with entrepreneurs.

I mean the guy who is running PayPal right now, David Marcus, entrepreneur. He is taking PayPal in some very interesting directions. He didn't come out of a corporate-strategy team but it's possible the acquisition of this company did. What I've seen more executives doing now, that I think is more of the pattern of success, is not thinking about acquisitions purely in terms of product. Cisco mastered that in the '90s. It was like, "We have a sales channel, we will acquire mostly technical teams for the product and plug it into our sales channel". Cisco in the '90s was known for great acquisitions. That didn't pan out ten years later, but for a while it was a really good run. I think that's the enterprise.

In the consumer space, more the acquisitions seem to be about who folks acquire, in terms of leadership. They're almost hiring decisions. It's not just that business, but that business on top of a platform you've built could get even bigger. So I actually like some of the platform thinking that's happening. I haven't found that coming out of strategy teams yet. But I may just not have exposure to all the strategy teams in the world.

I think when building a company, even the best case arguments for when a corporate-strategy team makes sense is, you've gone to such scale that you don't have faith that you're hiring the best and the brightest anymore, if you're honest about it. I had a friend in business school explain this to me because it didn't make sense to me why you would hire consultants.

Why do management consultants exist? If you want a Harvard MBA you can hire them. They also learned Michael Porter, probably from Michael Porter. So why are we hiring consultants? Why does McKinsey exist – BCG?

Actually there's a lot of companies, a lot of industries where they can't hire those people. Their economics don't let them afford that full time. They can't get that talent to convert. I haven't noticed that that's a problem in technology especially around hyper-growth companies. I mean if you look at what Marissa is doing at Yahoo!, she's getting some fantastic people to join Yahoo!. I don't think two years ago anyone would have thought that a lot of great people would join Yahoo!.

I think a lot of that change can be driven from the top. I think that's a better pattern than a team. But once again, when I worked at Apple it was 7,000 people, not whatever it is now, like 40,000. eBay was about 15,000 when I left. I think it's 30,000 now. There's probably a limit to my exposure. Microsoft now has 100,000 people, Amazon has almost 110,000 people.

I've never worked for a company of that scale and size, so I'll just admit that I don't know what I don't know about running companies at that size.