Passing on the Baton--Stan Shih Prepares for Retirement

At the stockholder's meeting of the Acer Group held on June 17, board chairman Stan Shih reaffirmed that this was his last meeting as chairman and that he would be retiring at the end of the year.

Stan Shih's decision to retire caused concern among many shareholders. Some worried that the Acer Group would be leaderless. Others said that Wang Yung-ching, chairman of the Formosa Plastics Group, has still not retired although he will soon turn 90. Stan Shih looks forty-something, so why should he retire? They hoped that he would stay on or that his son would take over from him.

Small shareholders were very insistent that Stan Shih should stay at the helm, but he wouldn't change his mind, saying that company bosses had always passed the baton from generation to generation as a symbol of the company's continued vitality. According to Shih, the Acer Group's succession plans have been worked out very well. He added that BenQ's K.Y. Lee, Wistron Corporation's Simon Lin, and the Acer Group's J.T. Wang are all "pupils who surpass their teacher." Shih would like J.T. Wang to take over the post of chairman of the board and to retire at 60, to set an example and make going into retirement an established tradition.

Aspire Academy located in Lungtan, Taoyuan County will be the center of Stan Shih's life after 60. There, via teaching and training, he will pass on his knowledge to the world of Chinese business.（photo by Diago Chiu）

Setting an example

"I'm retiring from the Acer Group, but not from society," says Stan Shih. Recently, a series of interviews with Shih conducted by two journalists from the Economic Daily News were published in a book entitled Legacy: The Wisdom of Passing on Your Management Experience. In this book, Shih stresses that in Taiwan many first-generation entrepreneurs continue to exercise control behind the scenes after going into retirement. He is determined to break with this practice and not to establish a position of honorary chairman of the board at Acer.

Shih says, "I intend to devote most of my time to my family and to myself, and to share my experience with my successors in the company." At present, Shih has too many responsibilities as a consultant and too little time for himself. He hopes to be able devote himself fully to his new role in the future.

To ensure a smooth transition into retirement, Shih began to make arrangements early on. During the news conference to launch Legacy, the publisher invited 50 readers to ask to Shih a series of questions about his corporate experience. Shih answered every question and held nothing back, as if to illustrate the title of his book: passing on your management wisdom in full is what it's all about.

When Stan Shih announced in early September that Gianfranco Lanci, the Italian president of Acer EMEA (Europe, Middle East, Africa), was to be appointed president of Acer Inc., the Taiwanese and foreign media, including the New York Times, expressed their surprise that Shih was not passing on the succession to his own son.

Shih comments that there are many successful family-owned companies around the world. But because the high-tech industry is forever changing and needs the most talented people, 15 years ago he decided that he would not pass on the succession to a member of his own family.

Shih says, "I'm passing the baton to my colleagues because they haven't slaved away half their lives for someone else's benefit. And why should my own children have to bear the huge pressure of being my successors? Naturally, I do want to hand down the money I worked so hard to earn. Why should I entrust it to someone who represents a big risk to manage it?" Shih explains that he has decided to make a professional manager his successor to break with tradition, and because it's necessary. The fact is that many business tycoons feel the same way as Shih, but lack determination and only start looking for someone to whom they can pass the baton at the last moment, when it's too late to find the right person.

As for the role of his children, Stan Shih says that they will carry out their duties as shareholders to the full, and will succeed him as directors at the appropriate time. Shih explains, "If a major shareholder and the management team are at odds, in the long run the company will lose out. Multinational IT companies like Hewlett-Packard also have controlling families who own most of the shares. They give the company stability."

Shih thinks that the difference between Taiwan and the US is that "America is a mature society. In the US, company bosses can be lured away to another company with attractive offers. In Asian culture, senior executives are inseparably tied to the company they work for. Moreover, there are not that many talented people to go around, so companies have to train their own executives."

Shih says that to people outside Acer, picking a foreigner as his successor seems like an earthshaking decision, but within the company the decision was talked about for 15 months.

Planning your succession

Stan Shih was born in 1944 and his father died when he was three. As he was growing up, he and his mother stuck together through thick and thin, and he inherited from her his head for business. After graduating with a degree in computer engineering from National Chiao Tung University, at the age of 32 he invested NT$1 million in his first company. Thirty years later, his group of companies is active in the PC, semiconductor, DRAM computer memory, communication equipment, display panel, and distribution industries. Under his leadership, the Acer Group has become a Taiwanese success story.

Stan Shih's career is a mirror image of the development of Taiwan's IT industry, not only because he is one of the most senior entrepreneurs in the sector, but also, as he says himself, because he "has suffered the most setbacks, has lost the most while learning things the hard way, and has the broadest and deepest experience in industry." Self-deprecatingly, Shih says that he has lost at least NT$100 billion as a result of bad business decisions. But he has learned from his mistakes.

In 1998, Acer got into a financial bind for the second time after Acer Semiconductor Manufacturing Inc. made bad investments and was subsequently sold to Taiwan Semiconductor Manufacturing Company. Acer's own brand didn't show signs of improvement in the USA, and after changing directors several times, it almost had to pull out of the market.

When the dot-com bubble burst in 2000, the media published a barrage of news reports about Acer's financial straits. Stan Shih had given up the management of Acer, but under pressure from inside and outside the group he had to put on the boxing gloves again. Seizing the opportunity to give Acer a new lease on life, Shih went on to orchestrate a series of mergers and restructurings.

Shih says, "Having to take up the challenge when the going gets tough seems to be decreed by fate. It's not that fate has it in for me in particular, but rather that everybody's turn comes sooner or later. It's important to recognize this, otherwise you'll always blame everyone but yourself. You have to save for a rainy day and be prepared for future challenges, but unforeseeable things will always happen, and when they do you just have to face them." Shih jests that he will naturally shoulder whatever responsibility comes his way, but he will also let others share responsibility because "it makes me feel better when everyone's in the same boat."

Shih notes, "The hardest thing is that you have to be able to make quick decisions. If you have to fire someone, fire him; if you have to leave a market, leave it; if you have to give something up, give it up; and if you have to admit defeat, admit it." Shih says that it's lonely at the top, and bosses also have their blind spots. That's why it's important to seek help from your subordinates, and to build a consensus.

Lifelong entrepreneur

Since he founded Acer 28 years ago, Stan Shih has weathered many a corporate storm and put his heart and soul into the company. Recently he has had to take note of the first warning signs that his health has also taken its toll.

As a result of a poor diet and lack of exercise, coupled with work-related stress, he has had blocked heart arteries on several occasions, and also had to undergo a cardiac catheterization. His doctors have advised him not to work so much, to take more rest, and to do more exercise.

The sudden death of Inventec vice-chairman Sayling Wen at the end of last year was a wakeup call that prompted many entrepreneurs to pay more attention to their health.

Shih says, "Sometimes your time is up before you can really start enjoying life." Nowadays, when he meets old classmates and they start talking about ways to stay healthy, Shih tells them that running a company is an inherently stressful job, which is why he has resolved to enjoy transferring power to subordinates and not to work himself to death. Having worked for decades with very few vacations, after retirement he also plans to take his wife on a trip around the world.

Although Stan Shih is about to step down from management, his sense of calling is as strong as ever.

In the future, he is likely to focus his attention on iD SoftCapital, a venture capital company he founded recently to integrate the resources of Chinese investors around the world and enable them to play a more dynamic role in the era of the knowledge economy. Another pet project of Stan Shih's is Aspire Academy, where he plans to supervise the leadership program and curriculum for mid-level managers and senior executives.

Shih says, "I'm often asked two questions. The first is: can you plan your career in advance? The answer is no. If you could, I would be president of National Chiao Tung University. And the second question is: how can I start a business without capital? It wouldn't be right to start out with the intention of using someone else's money to realize your own ambition of founding a company. You first have to find a market niche and then look for investors with whom you can work. You have to share the burden with the investors, just as you also share the profits once the company is making money." This is Shih's advice to young people who dream of starting a business.

Stan Shih has been a lifelong entrepreneur and has always loved creating something where there was nothing. Never one to imitate others, he will surely continue to make history in "retirement."