Over the years, I have prepared myself and the companies I have run for what I call the Any Given Tuesday probability to capture the essence of this approach. It's a reminder and recognition that on any given day managers must expect that everything can change. In keeping with this likelihood, I have prepared our management team for changes without being distracted from our end goals.
For example, if a new alternative to how our customers test their products were announced next Tuesday, that significant technology breakthrough would cause a shift and dramatically change our entire industry. Even lesser news could send our industry, and many companies in it, into a fast tailspin.
However, by expecting and preparing for the inevitability of change in the marketplace, we are better equipped to deal with even the unpredictable changes that do happen. And then we are not surprised.
Essentially, Verigy is a young company that spun off from Agilent Technologies in mid-2006. For a firm like ours, the inherent industry volatility could potentially divert our attention at every turn.
But having established a new business model, we have created an environment and company culture that have led us to the top tier of our industry segment in technology innovation and, as importantly, stability. After our first year as an independent company, we are among the best of our peers in terms of cash flow, profits, shareholder value, and market share.
Establishing a Strong Management Team
One of the core philosophies behind our management approach is developing a strong team at every level of the organization, including strengthening the company with comprehensive succession planning. To establish the team's bench strength, it is essential to know the career goals, strengths, and weaknesses of your management team.
I interview my staff and ask them to do the same with their staffs. The people in the company are one of its most strategic assets. By knowing the management team well, we have been able to build a strong, stable organization that meets many of the critical functions and includes bench strength for flexibility and growth.
As a result, we created an effective, productive work environment that allowed our employees the security to focus on the company's successful transition. This also saved us from a common mistake made with mergers and acquired technology: Failing to consider how the new company, division, product, or technology fits into the organization and who will lead the integration and drive the success of this addition.
When we launched Verigy, we brought a number of high-level managers over from Agilent, many of whom had a long history with the company and many going back to HP. These talented individuals brought with them a very particular management style that can be traced all the way back to Bill Hewlett and Dave Packard.
We also integrated a number of new employees from very diverse backgrounds. They had somewhat different viewpoints, values, ideals, and ideas to share. This approach worked to our advantage because it diversified our company and expanded our organizational gene pool. Broad diversity brings additional points of view and collectively gives our team a unique advantage for approaching our market.
Strategic Objectives
Once the management team was in place, the next priority was setting our company's strategic objectives. At Verigy, we take a classical approach to this process.
Looking at a multiyear horizon, we ask ourselves, “Where do we want to be in five to 10 years, and how are we going to get there?”. With that vision established, you can plan the steps for reaching your objectives. I've seen many companies confuse strategic planning with operational or tactical plans. Unless the organization knows the destination target, it's impossible to take productive steps.
Clarifying the company's strategic objectives is a process involving the entire organization. The management team is responsible for setting the complementary operational plans into motion down through every level of the organization. In this way, corporate planning links directly to business operations.
With the implementation plan drawn from the strategic overview, the next step is to ensure everything is executed consistently around the world. We publish key objectives internally to make sure everyone understands and is prepared to execute on the game plan.
To launch Verigy's first full fiscal year, we brought all of our managers from around the world to our headquarters for training and discussion. There were a lot of people, and it was a major undertaking. But it was worth the investment to get everyone's buy-in.
We divided into groups, each with a designated leader to present to everyone in attendance. When the meeting was over, we were all clear about Verigy's objectives and our roles in reaching them.
Distinguishing Opportunities From Distractions
Once your plan is in place, it is critical to be able to say no to distractions and stay focused on the plan. Some companies are inconsistent with their plans and divert people and resources in a reactionary way.
For example, let's say there are some talented people working on a project. Then, another project gets in trouble. Management impulse may be to shift some of the first set of people onto the challenged project…until inevitably that same thing happens again, and these bright people are again shifted onto another project or perhaps back to the project they were originally assigned to. This problem du jour panic cycle, once started, is likely to repeat until the employees become demotivated or underutilized, which, in turn, can sink the company.
However, it is OK to say no to an opportunity when it's a distraction from the long-term goal. Verigy focuses exclusively on the semiconductor test business, identifying key market waves, critical technology disconnects, and opportunities for innovative solutions. Since we've already identified our important products and projects and committed to them, we can consider each new development within that context. This allows us to distinguish opportunities from distractions. This is a critical component of our focused operating model.
The CEO Scorecard
To measure our success, I publish a quarterly CEO scorecard to the board and top management that shows the organization's progress on our operational and strategic objectives. Each manager is responsible for certain aspects and held accountable for these objectives. This internal tool reinforces each manager's role and helps him or her instill the sense of ownership to the rest of the company as they mentor and coach their departments.
Keep it Simple and Straightforward
To summarize the steps:
• Start by developing a strong, flexible management team with enough bench strength for flexibility and growth.
• Clearly identify strategic objectives and communicate them vividly throughout the entire organization.
• Keep a keen eye on what is a real-time opportunity or market situation that requires agility vs. what is a distraction.
• Team this up with a financial model that allows for modest profitability in the downturns with a low established break-even point and good profitability in the upturns.
• Implement, move forward, do not flip-flop on important programs and projects, and reward the desired results.
This type of structure ultimately gives employees pride in the work they do and a strong sense of stability and job security. And these are the most important things in the world if you want to lead your company to a successful future. This path lets us steer steadfastly toward our strategic objectives regardless of what happens on any given Tuesday.
Whatever the industry, I believe this kind of straightforward management approach provides a game plan for the company's future and invests all employees in the company's success. By focusing on what's really important, the next time any given Tuesday arises, the management team is prepared to handle the latest impacts without wavering in delivering on its first-class products and services.
About the Author
Keith Barnes is chairman of the board, chief executive officer, and president of Verigy and has more than 25 years in the semiconductor industry. Prior to joining Verigy, Mr. Barnes was brought in as chairman and CEO for the turnaround of Electroglas. Before Electroglas, he was chairman and CEO of Integrated Measurement Systems until Credence Systems acquired the company in 2001. He also has experience in EDA as a division president at Cadence Design Systems and Valid Logic Systems. Mr. Barnes currently is involved in numerous industry associations and serves on the board of Cascade Microtech and as a regent at the University of Portland.
