Business CEOs: A New Wave Of Space Leadership

There is much romanticism about the early days of the satellite industry. The history of scientists and engineers such as Conny Kullman, Bob Berry and Steve Dorfman leading the development of such technological achievements as the first Ariane rocket, Globalstar and the Pioneer Venus program, respectively, are legendary.

It seemed a natural progression that these industry stars would go on to head the biggest satellite companies of the day: Kullman at Intelsat, Berry at Space Systems/Loral and Dorfman at Hughes Electronics.

But the path from top engineer to chief executive is increasingly left to history. In fact, the climb has become so steep that few now make the summit. Most recent appointments of CEOs to satellite-based companies are business people, not engineers.

There are several reasons for the paradigm shift, but the most common is the influx of private equity into the satellite market, says Armand Musey, president and partner at Near Earth LLC, a boutique investment banking and advisory services firm for the satellite and telecom industries.

“I haven’t heard the equity firms say ‘no engineers,’ but look at who they’ve picked,” Musey says. The list of non-engineer CEOs includes David McGlade at Intelsat, Michael Targoff at Loral Space & Communications, Patrick DeWitt at Space Systems/Loral, Matthew O’Connell at GeoEye, Jill Smith at DigitalGlobe, Andreas Georghiou at Spacenet, Matt Desch at Iridium Satellite, John Kealey at iDirect and Jay Monroe at Globalstar.

Several CEOs are quick to point out their technical experience, often in leading teams of engineers. However, a look at their backgrounds shows that companies are increasingly looking for executives with an understanding of technology but expertise in business management, development and finance. Many are graduates of prestigious MBA programs. All have proven their business acumen either by building corporate programs, overseeing the launch of new product lines or turning startups into hugely profitable enterprises. Increasingly, satellite executives are expected to have a broad understanding of all facets of the industry with an eye for possible mergers, acquisitions or partnerships either inside or outside the satellite industry. They are to be exceptional leaders with a vision for the company, and they should know how to please customers and shareholders at the same time, analysts and executives say.

“The skill set needed to be a CEO has definitely increased,” Musey says. “It’s harder and harder to run companies today with the demands investors place on you. The understanding of financial complexity you have to have, as well as the ability to manage things and deal with customers make it much harder.”

Moreover, the skills needed to be an executive are specific to each company, says Andy Steinem, CEO of Dahl-Morrow International, an executive search firm which specializes in satellite and other technology industries. “My clients are very specific about what they want. It’s A, B and C, but very distinct to the company.” Steinem sees the trend away from engineers more as happenstance than strategy. “I don’t think it ever was the case where people went out and said, ‘We want an engineer at the top.’ The industry grew up from the engineering side and they developed the business around it.”

And being an engineer is not a liability to climbing the executive ranks, especially with companies focused on technology, Steinem says. However, by opening the door to more business people, “I think it will broaden the applicant pool” of executives, she says. “They just have to have the right business credentials from the right businesses. We’re not interested in CEOs from the paper industry.”

Steinem is among many who believe the outside influences will help the industry. “This has always been an insular industry, but that’s starting to change. If you’re too insular, you implode,” she says.

Peggy Slye, Futron Corp.’s division director for space and telecommunications, retired from Intelsat in November as senior director of integration. She also sees the trend toward business executives assuming the top spots in the space industry as a positive change. “This is absolutely wonderful for the industry,” Slye says. “This should make satellites much more than a niche market.”

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