This industry leader believes a company's best assets are its happy staff.
Companies with great leadership are up to 12 per cent more productive and three times more profitable than their competitors, according to Steve Vamos.
For superannuation funds looking to invest their members' nest eggs in some of Australia's biggest companies, he says a big focus should be on the quality of the people at the top.
"With the shift in balance sheets and market value towards intangibles as a greater proportion than physical and financial assets in the past two decades, there is an even greater imperative for investors and other stakeholders - including super funds - to get better insights into the leadership, culture and management practices of the organisations that they have an interest in," says Vamos, 53, the president of the Society for Knowledge Economics (SKE) and a non-executive director of Telstra.
SKE is a Sydney-based think tank, established in 2005, to research corporate leadership, culture and management in knowledge-based globally-connected economies.
It recently released the results of a two-year study of 78 Australian companies in the services sector, which found the best leaders prioritise people management, involve people in decision-making, enable staff to fully use their skills and generate in their staff a sense of pride and being valued.
He says the most common fault of poor leaders is they are insecure.
"You have to feel good about yourself to bring out the best in people," he says. "We need to be far more conscious of how we develop great managers."
Vamos's leadership skills have been developed over a 30-year career in the IT and online media industries.
He started out studying engineering, which he feels has been a good grounding for his corporate career.
"The great thing about engineering is you are taught to question and I think that's been helpful."
Vamos joined IBM's new "mini-computers" division in 1980, which were emerging after the first-generation mainframe computers.
In 1994, Vamos joined Apple, first as the managing director of its Australian business, then its Asia-Pacific operations. "What I learnt from Apple was the importance of focus and clarity of focus," he says, adding that when Steve Jobs returned to lead the company in 1997, he deleted about 75 per cent of the product range, developed to compete with the likes of Intel and Microsoft.
"I learnt that it's easy to say yes to doing things it's much harder to focus and say no to good ideas."
As the chief executive of the online media site ninemsn from 1998 until 2002, Vamos says he learnt the most about leadership because he had no media or advertising industry experience. "I was forced to focus on the people around me and how they were working together."
That taught him that the job of a CEO is to be a coach rather than a star player. "You have to be a lot less self-centric and a lot more focused on others.' After ninemsn, Vamos returned to the IT industry, running Microsoft's Australian business for five years from 2003, then spending 18 months in the US with Microsoft's online services group.
He's now relinquished his executive roles to focus on SKE and consulting work. "We need to build leadership, culture and management capability that is more attuned to the world we live in and not stuck in our industrial past," he says.
Vamos will speak about "Leadership, culture and management practices for a superconnected world and high-performance teams" at the Creative Innovation conference on November 16-18 at the Sofitel Hotel in Melbourne.
THE BIG QUESTIONS
Biggest break
- Joining the information technology industry and experiencing the continuous change and uncertainty that has defined it.
Biggest achievement
- Taking ninemsn from a start-up through the dotcom boom, bust and recovery and leading its development into a company that people loved working for and that attained clear leadership in the online media industry at the time.
Biggest regret
- Without question having to let good people go during the difficult information technology industry downturns I have experienced.
Best investment
- Spending time with my wife and two daughters [aged 25 and 28]. They have always helped me keep work life in perspective."
Worst investment
- Investing in businesses that I didn't understand well enough.
Attitude to money
- It's best when earned as the outcome of doing what you are passionate about and do well.
Personal philosophy
- Work with people you can learn from and trust.
Frequently Asked Questions about this Article…
Who is Steve Vamos and why do everyday investors care about his views on company leadership?
Steve Vamos is the president of the Society for Knowledge Economics (SKE), a non-executive director of Telstra and a veteran of 30 years in the IT and online media industries (including senior roles at Apple, ninemsn and Microsoft). Everyday investors should care because his work and SKE research focus on how leadership, culture and management practices drive company performance — factors that increasingly make up a firm’s market value.
How does leadership and company culture affect profitability and productivity?
According to Vamos and SKE research, companies with great leadership can be up to 12% more productive and three times more profitable than competitors. The study found the best leaders prioritise people management, involve staff in decision‑making, enable employees to use their skills and create a sense of pride and being valued — all of which boost performance.
Why should superannuation funds and long‑term investors evaluate leadership and management practices before investing?
Vamos argues that with the shift toward intangibles (like talent, culture and management capability) accounting for a larger share of market value, it’s imperative for super funds and long‑term investors to get better insights into leadership and culture. For funds investing members’ nest eggs, the quality of people at the top can materially affect returns and risk.
What did SKE’s two‑year study of 78 Australian service companies reveal about effective leaders?
SKE’s study found that effective leaders prioritise people management, involve employees in decision‑making, enable staff to fully use their skills, and create a workplace where staff feel proud and valued. These leadership practices were linked to higher productivity and profitability in the services sector.
What common leadership faults should investors watch out for when evaluating a company?
The article highlights that insecure leaders are a common fault: they struggle to bring out the best in people. Investors should be wary of top executives who appear overly self‑centric rather than focused on coaching and enabling their teams, since that can undermine long‑term performance.
How did Steve Vamos’s time at Apple, ninemsn and Microsoft shape his views on management and focus?
At Apple Vamos learned the importance of focus and clarity (he cites Steve Jobs narrowing the product range). Leading ninemsn taught him the CEO’s job is to be a coach rather than a star player, focusing on how people work together. His Microsoft roles and long IT career reinforced the need to develop leadership, culture and management capability suited to a knowledge‑based economy.
What practical takeaway about evaluating stocks does Vamos recommend for everyday investors?
The practical takeaway is to pay attention not only to financial metrics but also to the quality of leadership, culture and management practices. Because intangibles now form a bigger part of market value, investors (including super funds) should seek better insight into how companies develop managers, involve staff and sustain high‑performance teams.
What personal lessons from Steve Vamos might everyday investors find relatable about investing and priorities?
Vamos shares that his best investment was spending time with his wife and two daughters, and his worst was investing in businesses he didn’t understand. He says money is best when it’s the outcome of doing what you’re passionate about and doing well, and his personal philosophy is to work with people you can learn from and trust — advice relevant to career and investment choices.
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