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Acer's Stan Shih

I Enjoyed Relinquishing Power

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I Enjoyed Relinquishing Power

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Acer Inc. stands out among Taiwanese companies not just for its world-class standing in the computer industry, but also for its stable, successful leadership transition. Retired Acer founder Stan Shih shares his experience.

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I Enjoyed Relinquishing Power

By Fuyuan Hsiao, Yi-Shan Chen, Hsiao-Wen Wang
From CommonWealth Magazine (vol. 431 )

When Stan Shih, founder and CEO of Acer Inc., began paving the way for his retirement, he successfully arranged not only to transfer his conglomerate into trustworthy hands, but also to distribute authority among more than one successor candidate. Each of Shih's long-time lieutenants who competed and sacrificed to gain the corporate throne now presides over his own fiefdom.

Under the joint leadership of J.T. Wang and Gianfranco Lanci, Acer has sworn to claim the title as the world's top notebook computer maker next year. Meanwhile, former Acer CEO Simon Lin is now CEO of Acer spin-off Wistron, which has held the distinction of being Taiwan's fastest-growing notebook contract OEM manufacturer and having the highest yielding stock per share for three years running.

Under former Acer exec K.Y. Lee, BenQ (formerly Acer Peripherals) has also turned in a brilliant performance. BenQ spin-off Qisda started turning a profit, and BenQ affiliate company AUO responded to the financial crisis by restructuring and setting up a "green energy" business.

How did the Acer Group's founder manage a smooth succession, and keep the big ship loaded with admirals steaming ahead on course?

Stan Shih spoke recently with CommonWealth Magazine on his experience in achieving a successful transition of power. Following are highlights of the interview.

I prepared a long time to hand over the mantle smoothly. My children knew back in middle school that I wasn't going to hand the keys of the kingdom to them. For me it's always been, "‘Me Too' is not my style." No one else in Taiwan is this way – I'm just different. That's my personality. That's what I was after. I wanted to hand off the baton successfully.

I want to stress that the goal of handing over the reins is sustaining the operation. But which is more suitable for sustained operations, family or professional management? There's no set answer to that. So it's not that I'm against family businesses. Rather, I just want the Chinese business community to have an additional choice.

I also feel that Taiwanese culture is not equipped at present for outsiders to take over, but maybe over the long term it will mature to the point where, like in the U.S., insiders won't necessarily be the ones to take the reins.

Twists and Turns in the Acer Succession

In Acer's experience, the handover process was full of twists and turns. Fortunately, we had a deep bench. At first I wanted to turn it over to Shih Chong-tang, but then he wanted to leave the company. So there wasn't anything I could do about that. Then it was Simon Lin. He was in command, but performance didn't turn out so well. Over the course of company restructuring, J.T. Wang emerged. Since K.Y. Lee had already split off, I let him develop independently.

Step one in a smooth succession is to take a lot of time to choose the right candidate. But flexibility must be maintained.

I'll monitor the atmosphere across the organization to get a gauge on who would be most acceptable to everyone. By that I don't mean it is like a popular political election; not everyone's vote is equal in this organization. The main part of monitoring the atmosphere is getting the opinions of key people. You need to hear from colleagues and subordinates of the successor, as well as neutral parties.

For instance, the chief financial officer isn't slated as the successor, so you ask the CFO for his thoughts on the group of candidates. Subordinates should also be asked for their views on the pros and cons, strengths and weaknesses of each candidate.

You gradually work to gather the data. In addition to insiders, you should also take measure of the feeling among outside investors and the media.

If you plan to hand over the reins to a family member, once you've made the decision, you need to make sure you're not afraid of anything. Even if all your colleagues leave en masse, you can handle it. You must have that assurance.

Step two is to clear away the obstacles for the successor. These obstacles include interference from the company founders themselves – those of us in the older generation with more seniority than the designated successor. We need to go start a second business or completely step aside and get out of the way.

I Held My Tongue

I think back to 2000 when Acer was going through momentous change and was looking to flatten the personnel structure, like a highway. The young people didn't hold back. They spoke their minds, saying, "There are some old jalopies stalled on the road blocking our way," in reference to the more senior personnel among us. It sounded harsh, of course, but I held my tongue.

I admired their forthrightness, and what they said made sense from their perspective. I restrained myself so they would eventually take a more open-minded look at themselves. I advanced by stepping back. I waited for events to transpire to my advantage.

Then to make things easier for J.T., when I handed over the reins, all the senior management around him retired from Acer and embarked on new careers at the iD SoftCapital Group. I take the approach of offering candy to vested interests. There is a lot of worth attached to seniority. Starting a new venture with iD SoftCapital, after a decade or two of effort we hope to make a different kind of contribution to Taiwan.

There are two advantages to this. The first is that the command structure is relatively simple without old generals butting in. This gives the successor more leeway. Second, the PC industry is so competitive, and these guys cost a lot (laughs sheepishly).

Set the Heading? I'm Not That Stupid!

I really enjoyed relinquishing power. It takes work to cultivate a mindset of "relaxed aloofness." I don't do any work, but I still have a stake in what J.T. and his team do. Having a stake without having to do anything – that's not a bad deal, eh?

Since handing over the controls, I only sit on the board as an officer. I don't hold back at board meetings, and I speak my mind, but I'm not involved in decision-making. What's more, I really enjoy the chance to appreciate the decision-making of others. It's not easy to cultivate this kind of personality and refrain from Monday-morning quarterbacking.

Even if I say something, if you don't listen and go ahead and fail, I won't say I told you so. Do what you will – I'm not going to second guess. All I'm going to do is remind you to pay attention to this or that, because the responsibility is yours, not mine.

I'm not going to set the heading. I'm not that stupid! I'm not going to allow people under me to foist responsibility on me when they should be accountable for themselves. I'm not that stupid (laughs).

Step three is to build the successor's credit over the course of succession – to give him a boost. During the transition you're nominally in charge, but you do what you can to let him perform, and you try and let him get credit where it's due. I outsourced work when I was chairman, but never outsourced accountability. The company's success rested on my shoulders, but I delegated responsibility. One or two years before I retired, I let the successor know he was going to step up to take over the chairmanship.

I like to show my hand as I play. Why do I show my hand? To energize the organization. Why did I announce so early that I wouldn't be handing operations over to my children? To let everyone know that each individual had a chance (to take over).

The three steps of succession were taken simultaneously. Another thing I want to mention is that I'm pretty lucky. When Acer got started the company was positioned as a fairly modern company for Taiwan. Plus it was in a new industry. People with higher educations wanted to get on board. That was the first lucky thing, as we had a lot of opportunities when selecting people.

A Stage for Each Performer

The second lucky thing was that the industry is full of opportunity, minimizing conflicts among personnel. As soon as conflicts arose, I broke the parties apart and gave them different stages to perform on. Some people just couldn't get along well, but everyone with management skills had an opportunity to move up and grow. So Acer wasn't like other companies, where everyone else abandoned ship when a successor was chosen. Acer set up different stages and let everyone perform.

Succession is an issue around the world. In the U.S. they put the entire board in charge of succession. American corporate governance has evolved to that stage. It's really all a question of corporate governance. It's about the CEO's attitude. Do you want to do things right? You're entrusted by the shareholders. Even if it's all my money (that is invested), as the CEO I'm also beholden to another me. You have to get both roles straight. When I act with minor shareholders in mind, I end up benefiting the most.

(Compiled by Hsiao-Wen Wang)

Translated from the Chinese by David Toman


Chinese Version: 施振榮:我享受大權旁落

Keywords:

好友人數