The cofounder of VeriFone explains why a virtual company calls for a different concept of management. He describes why his company went virtual and the importance of technology to a virtual CEO.
Virtual Manager: Mastering business in a networked world
Taking over a virtual company? Leave your instincts at the door--and make sure that you can type
I'll never forget our first interview with Hatim Tyabji. It was 1985, and my company, VeriFone Inc., was looking for a professional CEO to run an organization that had grown from nothing to nearly $30 million in three years. The number two guy at Sperry Corp., Tyabji was a brilliant manager who was expected to play a major role as Sperry morphed into Unisys. On that day in May he walked into VeriFone's conference room, took a seat, and waited calmly to be bombarded with tough questions.
I asked him how fast he could type.
I'd never seen anyone so indignant. "What kind of job are we talking about?" Tyabji demanded, rising from his chair. "I'm not a secretary. I have a secretary. At Sperry, my secretary has a secretary!"
We weren't looking for a secretary, I assured him. In fact, VeriFone had no secretaries. Many of us didn't even have traditional offices. We were a virtual company, I explained--a bunch of "green berets" armed with technology that would help us react faster than the competition. Tyabji got it immediately.
"I can't type," he admitted, sitting back down. "How fast should I be able to?"
If you plan to take the reins of a business soon, you may find yourself in the same situation as Tyabji. Although only a few companies are truly virtual, many more are starting to behave as though they were: spreading their workforces far and wide, eschewing conventional brick-and-mortar offices, and relying heavily on technology. And while your rÉsumÉ may be as overstuffed as a Dagwood sandwich, if you've never run an organization in which almost all communication is electronic and employees see one another a couple of times a year at most, then you don't know how to run a virtual company.
Over the years I've watched many traditional managers remake themselves into virtual-company CEOs, and as Tyabji will attest, it takes more than a quick study of Mavis Beacon Teaches Typing. So I offer here some advice for anyone hoping to succeed at the helm of this new breed of business.
Understand the business model. Understanding why a business is virtual is fundamental to understanding that business. Company founders don't adopt this model on a whim. Rather, organizing virtually may be the only way to meet the demands of a particular market or to enlist the best talent.
When, in 1982, VeriFone was launched with our first credit-authorization box, for example, we were five people in four locations with practically no money, facing behemoths such as AT&T, GTE, Matsushita, and Northern Telecom. Those guys were big, but they were also slow: because they were centralized, it took them months to make changes in software that customers had requested. We figured that if we located complete service teams--salespeople, programmers, and systems engineers--near major customers, we could make those changes in days. That strategy was so successful--VeriFone owns nearly 70% of its market--that the company has stayed physically dispersed even though it now has the resources to build giant office towers around the world.
Some things virtual companies do, such as keeping senior management as decentralized as possible, make little sense to outsiders, who often want to make changes right now. But before deciding how your new company ought to work, spend some time learning how it does work. Observe the processes and talk with the founders and longtime employees. A VeriFone senior manager once told me that during his first weeks at the company he'd thought we were all nuts for scattering our development groups around the world. But after nine months he'd come to understand why we did things the way we did, and he was glad he'd resisted his early temptation to tinker with our system.
A virtual company's culture is often as distinctive as its processes. The lack of face-to-face contact, for example, creates ample opportunity for miscommunication, so absolute candor is essential at all times. If your company offers an orientation program, go through it like any new hire. Don't be proud. Do the homework. Take the tests. Doing so may help you not only fit in but also recognize sooner whether you're fitting in.
Use the tools. Some CEOs like to boast that they don't know how to turn on their computers--it makes them feel above the petty details of organizational life. You can't do that. As the CEO of a virtual organization, you've got to be able to use technology, or you'll never earn the confidence of your well-wired staff. (Of course, you may never know they don't respect you, since you won't be able to communicate with them.)
Using E-mail is the simplest way to show your proficiency. You should check it, at minimum, two or three times a day. But you'll also need to master other technologies routinely used at your company, particularly things like videoconferencing, application sharing, and remote meeting software that let you collaborate with your employees. Find the best technology teacher in your company and get him or her to give you an intensive course. Then, once you've got the basics down, continue to polish your skills with short instructional sessions every week.
Another way to injure your reputation with employees is by constantly asking for reports that you could easily get by clicking a mouse. Virtual companies tend to store most of their data electronically so that geographically dispersed staff members have equal access to it. If you know what information is on-line and how to find it, you won't make extra work for others.
Talk to people. Even in virtual companies people resist change; the more your employees hear from you, the sooner they'll adjust to you. Try sending short E-mails to your entire staff several times a week (or even daily) for the first 100 days. Conduct videoconferences once or twice a month, making sure to provide an audio channel through which people can ask questions. Tell them your vision for the future--whether you have big changes in mind or expect to change nothing at all. If your employees don't hear from you, they may assume everything is status quo--or they may assume that the company has lost its direction or that some evil is about to descend upon them. Don't forget, many of these people are laboring in home offices without the comfort of watercooler conversations. There's nothing like uninformed isolation to promote paranoia and fuel E-mail rumors.
And get on the road. Your employees are out there, so you should be too, especially in the beginning when you're establishing relationships that will be conducted chiefly over the wires. Try holding each of your management-team meetings at a different site. (This takes planning; VeriFone arranges such meetings a year in advance.) And supplement those meetings with "all hands" gatherings that bring together employees at all levels who are located at or near the chosen site.
If you're bringing on new senior managers, schedule a retreat so everyone can get to know one another. And remember, big doses of togetherness can do a lot to cement long-distance relationships. At VeriFone, senior staffers from around the world get together every six or eight weeks for meetings that last--except for sleep breaks--from noon on Monday until noon on Friday. Academics who've studied VeriFone say that even though its senior staffers are not located at the same site, they have more face-to-face interaction than the executives at conventional companies in which everyone is theoretically on the same floor.
At that first meeting, 13 years ago, Tyabji asked us how fast he'd need to type in order to succeed at VeriFone. I gave him a ballpark of 30 to 40 words a minute, and he promised to reach that goal within six months of starting with the company. I bet him a box of fine cigars he couldn't do it. Tyabji won.
Tyabji and much of his management team have just retired. But thanks to his extraordinary leadership and vision, VeriFone is well prepared to handle this white-water transition. And I'm sure the company's new executives will do swimmingly, once they've mastered the fine points of virtual managing. Assuming, of course, they can type.
William R. Pape was cofounder of VeriFone Inc., with headquarters in Redwood City, Calif. He was VeriFone's first chief information officer and has been operating virtually for 20 years.