I recently participated in a panel discussion hosted by the Greater Boston Chamber of Commerce. The topic was “The Case for Reinvention: How to Push Past the Status Quo and Think Big for Long-Term Success.” Here are some excerpts from that discussion and my insights into how Analog Devices has maintained its focus on innovation for half a century.
On a different approach to corporate structure
While ADI is a relatively large corporation, in my experience, ADI is run as a “bottoms up company.” It functions as a federation of smaller operations with some top-level structure. That has given us the ability to stay pretty mobile and agile even as the company has gotten larger.
That has been important throughout the years, but it’s even more so now. The old formula was to try lots of things and be prepared to double down on the ones that work. Today, you don’t have the luxury of trying so many things. You have to be prepared to change the business model and look at the world differently. Maybe you’re not selling products; you’re starting to sell services or change what you’re doing. You have to be able to think differently and make adjustments to your vision.
How to work with customers
Most people agree on the importance of listening to their customers, but they don’t always know the best way to do it. You can gather a lot of input, but it can be so varied that it’s hard to find what to focus on. At ADI, we look for customers who are really trying to do something innovative in a certain space and work with them. We try to figure out what works, what doesn’t. Is what they’re trying to do something that others are trying to do?
At the same time, customers are often looking to you to educate them and lend your expertise so they don’t make mistakes. You have to talk to them about their problems, but you have to understand the critical problem that they haven’t even thought about yet. As an example, consider the interface to your smartphone. No one said, “Hey, I hate all these buttons on my phone,” but when somebody gave them a touchscreen, it became, “Wow, this is really cool, how did I live without it?” Getting rid of the buttons solved a problem that you probably didn’t even realize you had.
And you can’t talk to just one customer. One of the interesting things about ADI is the diversity of our end markets. As a semiconductor company, we’re in consumer applications, we’re in automotive applications, we’re in healthcare, we’re in industrial. We will work across these different businesses and technologies to pick up fundamental themes that tend to have longer time constants. We want to avoid getting trapped in a spot market that’s really hot for a minute, but then turns out to be a flash in the pan. The major trend is what we want to ride.
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Maintaining a positive culture
Of the many things that make up an organization’s culture, authenticity is extremely important. One of the advantages of a “bottoms-up” company is that it’s less dependent on the words from senior management. While leadership from the corporate center certainly is important to employees, what really matters are the local teams that they’re in. What’s said and done there is the real proof what the organization is all about.
When you’re growing at 20%, there are plenty opportunities for employee growth. A significant challenge comes in creating a dynamic environment when that rate of growth slows. Where do the opportunities come from?
That’s where this idea of a federation of small groups has helped at ADI. A group may see about 15 percent turnover each year, and hopefully that’s not because people are leaving the company. If you hire people who thrive on solving interesting problems, they look for new challenges. So you often get people moving between groups. For employees, it helps keep their jobs from getting stale. And for the teams themselves, it does much the same thing. It means the team has 15 percent new faces, new perspectives, and new skillsets.
Larger companies vs. smaller ones
Size allows you to make certain portfolio bets. Back to the culture, employees are more comfortable with taking risks if they feel like the company can provide some overall stability. Being large helps that because you can encourage a startup mindset with the security of knowing failure won’t be lethal.
On the other hand, some of the most exciting work starts out in small places. So if your management says, “We don’t want to talk about anything that’s not going be $100 million per year in revenue,” you’ll miss all the cool stuff. So again, I think part of how ADI tries to manage that is a federation approach where financially we are a $5.5 billion company, but a lot of strategic decisions are made at this much smaller level where businesses are free to chase a $10 million opportunity that can turn into something big five years from now.
About the author: Dave Robertson is a Fellow at Analog Devices (ADI) and the director of its high-speed converter group.