To THINK BIG and to use our talent
doesn't mean we don't have difficulties on the way. We will - we all do. How we
view those problems determines how we end up. - Ben Carson
For several weeks now, I’ve been blogging about the coming
Lean Times for the High Technology market. Even smartphones and tablets are
peaking, while all other markets (with the exception of the clearly declining
PC sector) are already essentially flat. High Tech’s escape from this emerging
state of stagnation will depend in great part on revolutionary technologies
currently being researched in its semiconductor sector – technologies intended to
overcome the end of Moore’s Law in silicon and open up untapped applications
and markets.
In the meantime, semiconductor companies will need to
find a way to weather this drought themselves so as to be prepared to come
charging out of the gate when the Next Big Thing presents itself. It will take
some extraordinary efforts and preparations, including breaking away from some
of the industry’s common methods, practices and operational procedures which had
proved sufficient in the past.
Though certain old routines will need to be abandoned, there
are other more fundamental practices which the chip industry will need to re-learn.
One of the most vital lessons is a very old one indeed, and is effectively illustrated
by a famous story out of the Old Testament.
Joseph and Pharaoh
Joseph was the son of a Shepherd in
the very ancient Levant. Having demonstrated a knack for prophecy, Joseph
became both a favored son of his father and an envied sibling of his brothers,
who began to perceive him as a long term threat to their inheritance.
Consequently, Joseph’s brothers kidnapped him and sold him as a slave to a
merchant caravan on its way to Egypt.
Thru no fault of his own, Joseph got
in hot water again in Egypt and was thrown in prison. While incarcerated, he
made the acquaintance of one of Pharaoh’s previously favored servants and left
a good impression on the man. The servant was eventually restored to Pharaoh’s
favor and one day heard a disturbing story from Pharaoh himself.
Apparently Egypt’s potentate had been
having recurring nightmares – ones where seven starving cows emerged from the
Nile to eat seven fat cows and seven withered ears of corn devoured seven fat
ones. The servant recalled the man he had done time with in the slammer and
mentioned to Pharaoh the wisdom and insight that Joseph had demonstrated.
Pharaoh’s dreams were unsettling enough that he took the unprecedented step of
having the prisoner brought before him. Upon recounting these dreams to him,
Joseph interpreted the nightmares as prophetic visions – that Egypt was about
to enter a period with seven years of bounty, followed by seven years of
drought and want.
Pharaoh was deeply impressed with the
seer and his forecast, designating Joseph as his right hand man and assigning
him the responsibility of preparing Egypt for the coming lean times. Joseph was
so adroit in his planning and management of resources that not only did Egypt
pass thru its long drought successfully, it became a critical source of grains
and crops to its neighbors, thus vastly expanding Pharaoh’s power and influence
abroad.
The moral of the story is rather
straightforward: how you manage your resources in times of great stress will
make the difference between your ship foundering in the storm or sailing
through and emerging in a position of strength.
So how does this apply to the
semiconductor industry? McKinsey penned a report that concisely captures the difficulties
currently stressing the chip sector: http://www.mckinsey.com/client_service/semiconductors/latest_thinking
In an article
entitled “What happens when chip-design complexity
outpaces development productivity?”,
McKinsey makes the following salient points:
- 3P (price, performance, power) competition
continues to intensify across all chip markets.
- New product development is assessed by
complexity, TTM goals, budget constraints, value-add IP, reused IP, outsourced
IP and embedded SW requirements.
- More than ever, projects need to be predictable and
dependably meet schedule.
- Meeting TTM critically affects revenue and
margins.
- Chip firms will be continually pressured to
perform more work with the same or less resources.
-
IP design reuse has already surpassed the 2/3 threshold.
With Moore’s Law having almost run its course, the
ability of chip firms to add features and compete on value is giving way to
competition increasingly based on price. As a result, any value-add that can be
shoehorned into a chip design will have a short lifespan and therefore needs to
reach the market quickly.
But where does that value come from? Some would
say it comes from a company’s skill at integrating functionality; others would
say it depends on the firm’s native IP. Neither is correct, however. In the final
analysis, it comes from the chip firm’s PEOPLE. Their collective enthusiasm,
experience, creativity, dedication, specialized expertise and energy, combined
with all their sweat, strain and effort constitutes the sum total of the
company’s value-add.
Unfortunately, this collection of resources
also has to bear all the damaging side effects of stagnating end user markets.
There are no extra funds to hire the additional personnel that are so
desperately needed. Consequently, already overtaxed organizations are expected
to continue delivering more of everything, more frequently and in a shorter
time frame.
Difficult times separate good management from
bad. The poor management teams will find their organizations producing less
value-adding features and benefits, slipping schedules with greater frequency
and with larger milestone misses, suffering more unforced errors and making the
kinds of disastrous mistakes that cause chip companies to miss entire market
cycles. These firms will also suffer more absenteeism, health problems amongst
employees, internal friction and attrition. Such companies simply will not
survive these lean times.
Picks, Shovels and Plum Lines
The most satisfactory definition of man from the scientific
point of view is probably Man the Tool-maker. - Kenneth Oakley
Despite some protestations to the contrary, the great
majority of semiconductor firms have implemented some sort of ERP (Enterprise
Resource Planning) system without a whole lot of thought, choosing cost,
expediency and ease of use over any deeper considerations. They pull together
one or more tools which allow them to create a schedule that tracks tasks and
major dependencies, permits sharing a Gantt chart with other team members, and helps
the finance department to do some budget calculations and cost tracking. Once
the estimates for scheduling and cost are ready and team members are expediently
selected and assigned, executive management will command that the timeline be
reduced by twenty percent and the team – after using some choice words to
express their opinion of management – will suck it up and do their damnedest to
build the product to schedule.
Let me be brutally candid. This process has been and always
will be a stupid way to run an enterprise. In even the best of companies, products
that are planned in this manner will either be late, missing significant
features, or more often both.
Quite a few chip companies use MS Project as the centerpiece
for their product planning and development efforts. To be fair, MS Project is a
good tool for scheduling. However, it is often found wanting as a full project
management tool, as developing a schedule is not a particularly difficult thing
to do. The missing components of a project plan are often handled with a mix of
other tools – MS Excel, Sharepoint and sometimes a custom utility or two for
handling costs, collaboration and other issues related to group projects.
A few established software companies have seen an
opportunity in this hodgepodge selection of project planning tools. Solutions
such as Oracle Primavera and HP PPM integrate such functions and add a few bells
and whistles of their own in an attempt to make enterprise project planning
software a one-stop-shop experience.
Nevertheless, despite the herculean exertions of
experienced, talented and specialized team members, an EE Times study from 2012
indicates that 60% of projects fail to meet their revised schedules. This is because none of the current popular
solutions – whether home grown by the firm or provided by some established
enterprise software vendor – addresses product/project planning and management
in its entirety. Some solutions focus on identifying and resolving bottlenecks,
others the financial reporting part, but none of the current approaches are truly
holistic and complete.
Necessity
A moment's insight is sometimes worth a life's experience. - Thomas Fuller
In High Tech, crisis begets
creativity. So it is with the worsening semiconductor sector struggle with
product development & project management – a number of fledgling firms are
developing and bringing to market software solutions that capture a much larger
dataset and help chip firms manage their resources and development efforts far
more intelligently and comprehensively. Just as server and network
virtualization have arisen as software products that save companies significant
money and help them manage their current networking and datacenter resources
much more effectively and efficiently, so has a new “Talent Management ” sector
of the software industry emerged to maximize the potential of the most vital resources
a chip company has – its people.
Just like many of the advanced
software tools developed for the enterprise today, the most sophisticated of
the new talent management software offerings are built on a foundational
database. The database captures previous project histories in
comprehensive detail. In particular, the database reflects what it really took to get a given chip firm’s
projects successfully completed in the past, with details on people, task
completion times and materials. Consequently, the business model for Talent
Management tools companies that provide such databases is by necessity
bifurcated, as the first stage of the engagement is
perforce implemented as a service.
Once the database is populated with information, the tools can
generate what is referred to as an ‘unconstrained demand’ for a new project.
Stated differently, the talent management software identifies what a given
program’s composition, requirements, tasks and schedules are in detail,
including design, simulation, verification, layout, test insertion, fab
turnaround, assembly, test and everything in between. The building of the
database plays a particularly critical role here in that it helps to precisely identify
individuals with the right skills and matches them to a required time
commitment. In the end, this leads to a
more reliable cost structure, stated in familiar terms of resources, time and
materials. An example of such a flow combining services and software is offered
below in Figure 1.
Figure 1 –
combined SAAS/tools flow for Talent Management (image courtesy of eDevelopment
Corp.)
Effective talent management software solutions need to make
it easy for the user to identify the entire range of obstacles to successful
and timely project completion, such as sources of friction, gaps in abilities,
overstress, resource bottlenecks, dependencies and other organizational issues
for product development. This leads to an organizational understanding that
helps project execution go smoother, faster, more efficiently & effectively,
resulting in higher success rates.
There are secondary benefits as well. Defining and executing
projects successfully also helps with retention (ensuring star employees don’t
burn out and people in general don’t reach their breaking point), productivity
(people are more efficient when they use their talents effectively, find work
rewarding and have a chance to recover their strength) and recruitment (a firm
will know exactly what sorts of specific skills and talents it needs to find
for which tasks and to fill very clearly defined gaps.) The end result is
optimization of design cycle time, cost and on-time delivery of new,
value-added products.
Because of the completeness of this approach, well-designed
talent management tools actually capture the total value of a given chip
company – not only its current structure and personnel, but its institutional
history. Such a quantification serves to not only encapsulate the fullness of a
semiconductor firm’s value proposition as
a function of its people, but also reveals defects in the organization
or empty spots in the required talent pool. As such, the software serves as a
total solution for enterprise management, including recruitment, performance
management, training & development and compensation management.
Darwinian Struggle
Accounting and Finance departments normally resist such tool
investments – after all, they’re more expensive than the patchwork of software
most chip companies currently use. Going forward for the next several years,
though, managing one’s resources well will become a decisive competitive factor.
Enterprises that hope to survive the Lean times and be well prepared when a
healthy economic climate returns cannot simply focus on their balance sheet and
watch fixed costs to control quarterly financial results. As prices broadly erode
in semiconductor markets over the next several years, any chip company resorting
to RIFs to ‘square’ their balance sheet will be cutting into muscle and bone at
this point, with a consequent deterioration in operational effectiveness – they will, in other words, lose even more competitive
ground.
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