An era is ending in Taiwan. Stan Shih, one of the pioneers of the island's electronics industry, is retiring as chairman of Acer Inc. in December. It may seem a strange time to step down. Shih is only 60, and his company is riding high, thanks to a key restructuring plan he initiated in late 2000.
So why throw in the towel? Shih wants to set an example by retiring early. And he's pushing a program that could take as many as 85 managers over the age of 60 with him. "Chinese always try to work until they can't anymore. I don't think this is right," explains Shih. "I want to be a role model."
Those who think Shih himself is the secret of Acer's success consider his retirement a risk. But Shih believes it could energize the PC maker he co-founded with several other partners, including his wife, Carolyn Yeh, 28 years ago. "This way the company can have new blood," he says. "Acer is solid and stable, but a little bit old-fashioned. Sometimes we are not aggressive enough among the middle and high level managers." Acer President J.T. Wang, 50, will carry on the company's global expansion strategy with younger talent.
If the experiment works, it will be just the latest in a series of bold moves by Shih, starting from the company's early days. Most managers in Taiwan's electronics industry built their companies on the profitable business of manufacturing for outsourcing customers. Not Shih. He focused on the lucrative but risky business of building a brand while also trying to maintain a contract manufacturing business. By the mid-1990s, he succeeded in making Acer one of the world's top PC names at the same time that his contract manufacturing unit was churning out computers for the likes of IBM. Toward the end of the decade, though, it became clear that there was a basic conflict between the two businesses, as companies became wary of outsourcing to a rival.
Shih changed course dramatically. He spun off the contract manufacturing division into a separate company, now known as Wistron. And he dismantled much of the rest of Acer's empire, which included operations in consumer electronics, semiconductor design, liquid-crystal displays, and other products only tangentially related to Acer's core PC business. Finally, he put a renewed emphasis on innovative design. "Being big is not good enough," he says.
The strategy has paid off. Operating profits from its core business hit $64 million last year, compared with just $5 million in 2002 and an operating loss of $99 million in 2001. Sales last year jumped 48%, to $4.6 billion. The company has pushed ahead of Japanese giants NEC (NIPNY) and Toshiba (TOSBF) to become the world's fifth-largest PC maker, joining the ranks of Dell (DELL) and Hewlett-Packard (HPQ). And thanks to snazzy models like a bright red notebook co-branded with Ferrari, Acer is one of the most popular PC names in Europe. Not bad, given that analysts and rivals once dismissed his strategy. "They all doubted," recalls Shih, admitting that even he wasn't certain that he would be able to pull off such a major corporate shakeup.
The Acer chairman doesn't plan to slow down when he departs. He will be taking the helm at a new consulting and investing firm called iD SoftCapital Inc. -- the first two letters stand for "intelligent dragon." It will focus on what Shih calls "knowledge-based industries" such as investing and consulting around the region. He has also authored two books -- one on the reengineering of Acer and the other on international marketing. "I can leverage all of my experience for new businesses, not limited to Acer and not limited to Taiwan," he says. Retirement or not, it appears that Stan Shih will be a presence in Asian business for years to come.