Steve Case: When Attackers Become Defenders, Innovation Is Lost

May 4, 2013

When Attackers Become Defenders, Innovation Is Lost


This interview with Steve Case, chief executive of Revolution, an investment firm, was conducted and condensed by Adam Bryant. Mr. Case was also a founder of America Online.

Q. What were some early leadership lessons for you?

A. The earliest ones probably related to just understanding that everybody is wired a little bit differently. Just because you think a certain way or are inclined to react a certain way doesn’t mean everybody thinks and reacts the same way. I think people just naturally presume that they look at a problem in a certain way and frame the issue in a certain way and that everybody else would look at it the same way.

I learned in my 20s that there are a lot of different ways to look at things, a lot of different filters that people put on, partly based on how they analyze the circumstance but also based on their own history and perspectives and biases and instincts and so forth. You have to be open-minded about that and listen to what’s being said — but also to what’s not said sometimes. Those discussions can lead you to different places.Q. Other big leadership lessons?

A. The core one is a Thomas Edison quote that summarizes my perspective on things, which is, “Vision without execution is hallucination.” I do believe in vision. I do believe in big ideas. I do believe in tackling problems that are complex and fighting battles that are worth fighting, and also trying to, in my case, create companies or back companies. That can change the world. The vision thing is really important — but the execution thing is really important, too. Having a good idea is not enough. You’ve got to figure out some way to balance that and complement that with great execution, which ultimately is people and priorities and things like that. You have to strike the right balance. If you have those together, I think anything is possible. If you don’t have both of them working together in a complementary, cohesive way, you’re not going to be successful.

Q. What about mentors?

A. One of the co-founders of AOL, Jim Kimsey, said something when I was about 26. My view, in the early part of my career, was that appearances mattered, that looking like you’re working hard mattered. I remember Jim saying once — and partly I think it relates to some of his training in the military — that really the art is trying to set the priorities and assemble a team so you wake up in the morning and actually have nothing to do. It’s impossible to achieve, but it’s a good goal to have the right priorities and the right team in place so they can execute against those priorities. It’s almost the opposite of how I was approaching it.

The objective should not be looking busy, but actually creating a process that allows great things to happen in a way that you can be less involved. So it was sort of a process of letting go, which is hard for entrepreneurs. But at some point you’ve got to let go and you’ve got to step back. Ultimately, that is about trusting the people you’ve got — but also trusting yourself, that you’ve set the right context in terms of the vision, the priorities, the team.

Q. With the benefit of time and hindsight, thoughts on the AOL-Time Warner merger?

A. They were both terrific companies. I think everybody saw it as a big idea to bring them together and help Time Warner move into the digital age and help AOL move into the broadband age. Well, it didn’t happen. The reason it didn’t happen is because the execution wasn’t up to the vision — going back to the Thomas Edison thing — and the primary reason was there were not the relationships and trust with people.

Ultimately, it came down to poor execution of what I thought was a good idea, and that was largely attributable to people and relationships and resentments and pride and egos. There were some substantive strategic debates, but it was mostly about people and trust and relationships. I’ve seen where it works well. It can really accelerate and animate a company to do things that nobody thought was possible. When it’s not working, you can’t get much done.

Q. On reflection, what should you have done differently?

A. It goes back to the people side. Both of the answers are probably somewhat impractical, but I think it would have resulted in a better company. One would be that if we’d brought these companies together — and I say this somewhat in jest, but it makes a point — we should have fired the top 50 executives, myself included, and hired 50 new executives who brought new perspectives and could look at this through the focus on the future, not in the rearview mirror. It would have done better. There is a reason why that happens whenever a new president is elected. They bring in an entirely new team to get behind their vision and execute that vision. If it were the same 50 people from the prior administration being asked to implement new policies for the new president, it would not work.

The second was that we deliberately positioned it as a merger of equals, because I wanted to make sure there weren’t winners and losers. But also, as part of that and to get the deal done, I agreed to step aside as C.E.O. I was just going to be chairman and not have any kind of operating responsibilities.

I actually thought that the best thing I could do, to be helpful to the merger, was then to get out of the way and not look like I’m meddling or trying to exert undue influence. So I basically said my job is to stay out of the day-to-day and just focus on the longer-term strategy — basically working with the board.

In retrospect, I think that was perceived as arrogance or maybe indifference. If I instead had spent a lot of time building relationships with people throughout the company and listened to their perspectives and shared some of my perspectives, I’d like to believe that that would have created a better context in terms of trust and relationships, and more alignment in terms of strategy. The reason I didn’t do it was because I actually thought it would undermine the ability to execute. Probably, if I had been more engaged, that would have helped. Ultimately, I think the core lesson is that it’s all about people, and so you’ve got to focus on that to understand what’s going on, what the context is and make sure you get people aligned around the right priorities. If you do that well, a lot can happen. If you don’t do that well, not much can happen.

Q. What kind of leader were you when you were younger?

A. I was pretty calm, a cool operator. Even my nickname internally was “the Wall,” which is a little pejorative, and probably that’s because there’s not as much connection with people or empathy as I would probably like. But the other side of it was that we were dealing with a lot of challenges and had a big idea. We really were trying to change the world, and there were enormous ups and downs. One day you’re the smartest company in the world, and you’re going to take over the world, and the next day you’re the dumbest company in the world and you’re going out of business.

These fluctuations happen constantly over a 10- to 15-year period. So I adopted the role of being the company’s “shock absorber,” particularly with the management team. My basic view was: We’re never as good as people say we are when times are good, and we’re never as bad as people say we are when the times are bad. What I’m going to try to do is even out those enormously volatile swings. As a result, when times were good I would tamp down on celebration — some was O.K., too much was not O.K. — and also deliberately delegate paranoia.

Q. Delegate paranoia?

A. Basically, that meant getting other people out of their comfort zone. If they felt like it was time to have a victory parade, I’d say: “Well, it’s great, but what about this and what about this? Don’t spend so much time celebrating. We’ve got to get ready for the next battle, the next challenge.” Conversely, when the chips were down and people were losing confidence and losing hope, I would bring people back up and remind them why we’re here, why this is a battle worth fighting and why it’s an important battle and why we’re well positioned to win.

I guess there are some companies that are overnight successes, but they’re few. Most are pretty choppy, and I’ve found that it’s important to recognize that and put it in a context where there’s a little bit more balance.

Q. I’ve heard a lot of C.E.O.’s saying they want to stay small, culturally, even as they grow. Your thoughts on that?

A. I think that when people talk about staying small, they’re saying they want to be big but still be nimble and creative and innovative and flexible. They also want to still feel like attackers, not defenders. As companies get larger — and I saw this with AOL even before we merged, but certainly after the merger with Time Warner — we did shift from being an attacker to a defender.

And I realized the world of business really separates into these two groups. The attackers are the entrepreneurs who are disrupting the status quo, trying to change the world, take the hill, anything is possible, and have nothing to lose in most cases. They’re driven by passion and the idea and intensity. Large organizations — and it’s true of Fortune 500s and it’s also true of governments and other large organizations — are defenders. These guys aren’t trying to pursue the art of the possible, how to maximize opportunity. They actually are trying to minimize the downside, and hedge risk. They’re trying to de-risk situations. Entrepreneurs can’t even think this way. It’s not even a concept they understand.

For the traditional executives running these large companies, of course they want to grow, of course they want to innovate, of course they’d rather have revenue grow faster than slower, but they mostly don’t want to lose what they’ve got. But entrepreneurs are deathly afraid that they won’t be able to change the world, and that somebody else will. Again, these generalizations are a little unfair, but corporate executives are all too often deathly afraid that the business they inherit will be less valuable when they leave than when they started.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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