SAP CEO McDermott bets on millennial leaders

Tech companies should bet on leaders in their 20s or early 30s, who may be more in touch with emerging trends than their older counterparts, the co-chief executive of business software giant SAP recently urged a Northern Virginia technology group.

Speaking at the Northern Virginia Technology Council’s annual banquet Oct. 29, Bill McDermott said his own company is turning to so-called millenials because the technology world is changing fast.

“Eighty percent of the incremental revenue [today] we get is from businesses we were not in three years ago,” he said.

“Where is the world going? It’s going to be mobile — that’s the new desktop. All the data getting created in the Internet of Things will create a complete chaotic storm of ‘how do you manage this?’ ” he said.

McDermott said he recently required SAP’s executive board to engage in “reverse mentorships” with SAP employees usually in their 20’s, who he believes can expose executives to new technology and social networking practices.

At SAP, “they’re not only going to run things, they’re going to run a really big business where a lot of things are at stake,” McDermott said in his keynote.

McDermott said his support for 20-somethings stems from his own early entrepreneurial record. The chief executive bought his first business, a delicatessen on Long Island, at 16. As a teen, he won over young customers by installing arcade games and older ones by delivering to senior citizens.

SAP is hardly alone in betting on the young. Early stage investors such as New York-based business accelerator Gen Y Cap, created by the nonprofit Young Entrepreneur Council, frequently invests in start-ups with at least one founder under the age of 35.

To draw young employees to SAP, McDermott has been emphasizing community service opportunities at the company, allowing employees to dedicate one month of the year to such projects and sometimes sending them abroad to work on them. Since launching the month of service almost nine years ago, employee retention has grown 5 percent, he said.

“Let’s come to terms with the reality that they can handle big assignments and actually put them on the spot. If we do this we’ll get the added benefit of helping more established senior managers absorb the latest innovation from these digital natives,” McDermott added in an e-mail statement.