Bob Knowling is Chairman of Eagles Landing Partners, which specializes in helping senior management formulate strategy, undergo organizational transformations and re-engineer their businesses. His journey through corporate America, chronicled in his book You Can Get There From Here has made him a sought after advisor to CEOs across the globe. After working his way up the ladder in the Bell telephone system in the late 1970s and ‘80s, Knowling became a top executive at Ameritech and US West in the 1990s. In 1998, he became CEO of Covad Communications, then a highly touted Silicon Valley-based telecom competitor. In 2001, Knowling was recruited to take over as CEO of the New York City Leadership Academy, a non-profit corporation created by Chancellor Joel Klein and Mayor Michael Bloomberg to develop the next generation of principals in the New York City public school system. After much publicized success running that program, Knowling returned to the business world as chief of tech-industry up-and-comers SimDesk Technologies and Telwares. In addition to consulting, he is now the lead director of Ariba, a business commerce solutions company, and a member of the board of directors of executive search firm Heidrick & Struggles.
Always an early riser, Knowling spoke to me at 7 am from his hotel in Mexico City, where he was on a CEO-consulting assignment. Wall Street was still abuzz about the disappointing debut of Facebook on the NASDAQ stock exchange. Facebook’s Mark Zuckerberg and Knowling are about as different as two leaders can be, but I knew Knowling could relate to the young executive’s position. More than a decade ago, Knowling had overseen the IPO of Covad, which was a smoking hot broadband Internet provider back in 1999. While Wall Street cringes over Facebook’s tepid stock performance, Knowling enlightens with a different perspective. This man is as honest, smart and direct as leaders come. Check out his edited responses to five questions I asked about technology, leadership and education.
1. Bob, why have recent Internet IPOs been so unsuccessful?
Knowling: I’m not so sure that that I would call them unsuccessful. Some have been huge in the amount of capital that they have raised. (Facebook raised $16 billion, making it the third-largest IPO in U.S. history.) But the euphoria that comes with huge gains in the price is what we have come to expect in tech IPOs, and it’s not there today. (Google jumped 18% on its first day in 2004 and professional networking company LinkedIn Corp. surged 49% a year ago.) So, people say the IPOs are duds. I think we need to reset our framework. If an IPO goes out and still gets the capital it is looking for, then from the company’s perspective it was successful.
2. When you were CEO of Covad, your company and several others competed against big telecom carriers. How would you assess the competitive landscape in today’s telecom services industry?
Knowling: We have two mega companies driving services, AT&T and Verizon. Then we have T-Mobile USA and Sprint. But they are not close to the scale of the big two. The proliferation of devices such as tablets and smartphones is creating an insatiable appetite for bandwidth. So, you are starting to see that others are entering the space. Whoever thought that a Google, which once focused on search, would essentially become a telecom company and acquire a device maker such as Motorola Mobility? The thing that will drive telecom carriers such as AT&T and Verizon is the appetite for bandwidth and the need for backhaul services. It’s only going to increase.
So, who wins in the battle between the Internet/Social Media companies and the big telecoms when it comes to ownership of the consumer?
Knowling: Well, here’s the thing: Facebook, for example, has a lot of users but not a lot of revenue. And I don’t think you’re going to see them monetize that service in our lifetime. I still think the telecom company owns the customer. The social media company owns the consumer platform. But at the end the end of the day you are riding on the telecom carrier’s bandwidth (ie. AT&T’s or Verizon’s). The consumer is captive to Facebook’s service but the engine that is driving the consumer experience is the platform of the telecom service provider. You pay the telecom service provider not LinkedIn or Facebook. Until social media companies learn to monetize their services, I think the telecom carriers have the cat bird’s seat.
3. America remains woefully behind other countries in high-speed Internet delivery and access. Why? And how would you fix the problem?
Knowling: This is a simple problem. We declared victory many years ago when we established universal service for telephone service. It demanded that we offer telephone services anywhere to anybody. Having run some of those telephone companies I know that it didn’t matter who you were or where you lived. We would offer you service. The Clinton administration probably did the best job of all of the Presidents to promote incentives and education regarding ubiquitous broadband Internet service, and making it a priority topic that wasn’t on the back burner. But it has diminished as a priority since then. There is no reason for a service provider to deploy broadband service to customers in tough to reach places, no incentive for them to become the hero by providing service to everybody. They are not going to take on that burden. And it’s not just some residential users that don’t have broadband. I think the biggest problem is in the schools that lack broadband. Unfortunately, in many cases, we’re not even talking about schools in rural areas. Some of the schools are in inner-cities. There’s also the divide in access to laptops and other devices. That is a big problem. We can wire the entire country, but if people have nothing to connect with, the problem remains. So in addition to providing incentives to the telecom carriers, we probably have to offer that same inducement to the equipment makers—HP, Dell, Apple—so people have devices that will enable them to use broadband service wherever it’s provided.
4. You mentioned schools, so let’s shift gears and address education. America’s educational performance leaves much to be desired, and business suffers as a result. What needs to be done to fix public education?
Knowling: I don’t give the country good grades at all in terms of education. I believe the thing that is going to matter is not to focus on curriculum reform and teachers, although they are important. We need to focus on how we can reform the leadership that runs the school. All you have to have is a few years of teaching experience and then a Master’s degree in education to be a school principal. That is it. You don’t have to have a lot of experience handling conflict as a leader or building an effective team. There is no other profession where you can just get your degree and get the job as the top leader. In other words, principals aren’t prepared right. We have to fix that. And the business community can help by partnering with the schools. But businesses need to be involved beyond writing checks. I think that is the worst thing. They need to be a true thought partner. They need to take ownership of improving the leadership and environment of the schools.
In the New York Leadership Academy if you were a business partner you came to the academy and put in sweat equity. Dick Parsons (the now retired CEO of Time Warner) spent 40 days in our academy with 50 appointed executives. We saw double-digit improvements every year in our schools. Graduation rates soared higher, and they are still getting great results.
5. I think there’s a leadership crisis in business today. How would you assess the performance of business leadership? What change could leadership make to create more successful businesses?
Knowling: I’ve been sitting on the board of Heidrick & Struggles (a global executive search firm) for years. Heidrick and the other executive search firms only exist if there are senior level jobs open and companies that need executives placed in those jobs. The search firms have had their ups and downs, but for the most part they are thriving and filling seats because the typical tenure for top executives is only five to six years. That lets you know there are issues in leadership. Leaders from other countries look at us and say, “You guys have disposable CEOs.” I have seen a constant flow of work as an advisor to CEOs because there is such a deficit of leadership. Companies do a poor job of succession planning. The reality is they recycle many of the same white guys for top executive positions. I have seen what happens to women and people of color in the executive ranks. To do a better job requires leaders to be more inclusive, and that requires getting corporate leaders to get out of thier comfort zone in recruiting and hiring.