succeeding in global complex, fast changing environements• unfortunately management today has no...

Taormina, October 21st 2016

Succeeding in Global Complex, Fast Changing Environements

Andrea Cuomo,

EVP STMicroelectronics

Microprocessor transistor count 1971-2011 2

Average Transistor Cost ($)

3

The U.S Semiconductor Industry spends more on R&D as a percent

of sales than any other U.S. Industry 4

Investment in Capital Expenditures and R&D per Employee is very high

- it has increased at a rate of about 16% per year over the past 20 years

5

Semiconductor companies ranking:

after the storms 1987/1994/2004/2011

Global semiconductor

companies ranking - 1987

1 NEC

2 TOSHIBA

3 HITACHI

4 MOTOROLA

5

TEXAS

INSTRUMENTS

6 FUJITSU

7 PHILIPS

8

NATIONAL

SEMICONDUCTORS

9 MITSUBISHI

10 INTEL

11 MATSUSHITA

12 AMD

13 SANYO

14 SGS-THOMSON (*)

15 AT&T

Sources: Gartner / iSuppli (*) : In June 1987, SGS-Thomson was formed from the merger of the Italian company SGS Microelettronica (Società Generale Semiconduttori) and the

semiconductor arm of the French company, Thomson.



1 INTEL

2 NEC

3 TOSHIBA

4 MOTOROLA

5 HITACHI

6

TEXAS

INSTRUMENTS

7 SAMSUNG

8 FUJITSU

9 MITSUBISHI

10 PHILIPS

11 MATSUSHITA

12 SGS-THOMSON

13 IBM

14 SANYO

15 SHARP


Companies ranking - 2004

1 INTEL

2 SAMSUNG

3 TEXAS INSTRUMENTS

4 INFINEON

5 RENESAS

6 STMICROELECTRONICS

7 TOSHIBA

8 NEC

9 PHILIPS

10 FREESCALE

11 AMD/SPANSION

12 SONY

13 MATSUSHITA

14 MICRON

15 HYNIX



Market

Share %

1 INTEL 15,9%

2 SAMSUNG 9.3%

3 TEXAS INSTRUMENTS 4.5%

4 TOSHIBA 4.3%

5 RENESAS 3.6%

6 QUALCOMM 3.2%

7 STMICROELECTRONICS 3.1%

8 HYNIX 2.8%

9 MICRON 2.3%

10 BROADCOM 2.3%

11 AMD 2.1%

12 INFINEON 1.7%

13 SONY 1.6%

14 FRESSCALE 1.4%

15 ELPIDA 1.2%

The starting point of an atypical startup

“ I would never invest 1$ in a dead Company”, (Italian industry leader, 1988)

… actually TI offered 1$ for ST in 1991…

• Huge loss

• Huge debt

• Ranked #15

• In the wrong place

• Breakeven

• Huge debt

SGS

• Huge loss

• No debt

THOMSON Semi

7

Two stories…

• Bordeaux

• Wine • Climate

• Soil

• Great fertilizers

• Top class vines

• Proven process

• Silicon Valley

• Semiconductors • Regulatory environment

• Stanford and Berkeley

• VCs & Financial support

• Brightest students

• Proven process

What about being in

Greenland? …or in Italy and France?

In a broader context: A Great Strength in a Critical Business Proposition

Significant Technical

knowledge and entrepreneurship

Limited local learning

opportunities

Resource limitations

Source: Yves Doz, INSEAD

9

How did we get change our fate?

• …changing business model by doing what the others did

not want to do (or sometimes just imagine they could do)

• …with hard work

• …following a great leader

• … with serendipity

• ... and a few early intuitions…

Business changes - 1990’s

•Faster and more competitive market environment driving corporations to focus

on core business, outsourcing entire business units.

•Pressure on asset management discouraging non-core high capital intensive

activities such as semiconductor manufacturing.

•Growing costs of silicon fabs forcing vertical integrated companies to focus on

the open market or close down captive operations.

• Integration densities reducing the number of components, therefore of

semiconductor suppliers.

•Trend towards growing system content on ICs and first vision of systems-on-chip

requiring closer cooperation between OEMs and S/C manufacturers.

•Mixed technologies moving system design problems from customers to

semiconductor suppliers.

Storage Video

Access

Security

Automotive

Networking

Imaging

Innovative business models:

Strategic Alliances 12

Knowledge map – Print Heads

= ST

= Partner (HP IPG)

Manufacturing: San Diego, CA

Carrolton, Texas

Business Management

Phoenix, California

Silicon Technology and Design

Castelletto (I)

R&D,

Manufacturing,

Top Mgmt:

California

Manufacturing:

Ireland

Coordination: Geneva (CH)

Divisional Management: Agrate, (I)

Engineering:

Carrolton, Texas

Manufacturing:

Singapore

Manufacturing:

Singapore

R&D, Manufacturing,

Coord., Oregon


13

Knowledge map – DSC

Architecture and sensing

San Diego, CA

Sensor technology &

development

Edimbourgh, Scotland, UK

Algorithm & System Development

Catania, Italy

Design of ‘packaging’, testing and final

assembly (Back End) capability:

Casablanca, Morocco

Process Technology R&D in

BICMOS (mixed) and CMOS

(digital) : Grenoble, France

Engineering and Design skills

in fast microprocessors:

Bristol, U.K.

Coordination and strategic

capability: Agrate

(Italy)/Geneva

Lead Customers R&D and

Engineering: Japan

Division Mgmt: Grenoble, France

Customer, San Diego,

CA

Lead customer in mobile phone:

Helsinki, Finland

Mobile Phone Seed

Team: Phoenix ,AZ

Cambridge, May 17th 2012

Behind the process: a global world

Networking

Storage

Consumer

Automotive

Wireless

Computer Science

Security

Learning from the world:

Competing in the global knowledge economy

Building linkages with dispersed

‘pockets’ of knowledge, worldwide

Deepening and

broadening the local

knowledge base

Learning from the world


16

“New” knowledge transfer mechanisms

• Acquisitions: small engineering Mobile Phone team (Phoenix, AZ),

CMOS sensor Company (VVL, Edinburgh).

• Finding technology in startups (image stitching).

• Leveraging existing customer relations: DSC, Mobile Phone.

• Locating seed teams around the world (US, Japan etc).

• Developing an integrated supply chain.

• Internal multidivisional approach and information/business sharing

between Business Units.

• Still learning…

In a broader context: Competitive Leadership

Unleashing interdependent

entrepreneurship

• Building coalitions & managing co-operative relationships

Tapping into global learning opportunities

• Fostering entrepreneurial process • Achieving strategic integration • Leveraging across applications

• Transcending the home base • Reversing knowledge flows • Orchestrating knowledge melding & diffusion

Overcoming Resource limitations


18

Strategic Alliances

Mixed Technologies

Learning from the World

Two business models

• Factor-driven “competitive” advantage • Metanational Corporation

strategy

structure

rivalry

factor

conditions

demand

conditions

related &

supporting

industries

source: m. porter, 1990

Process

Technology

Process

Technology

Design of ‘packaging’,

testing and final assembly

Engineering and

Design skills

Competence on R/W

technology: Joint

Design

Engineering and

Design skills

Coordination and

strategic capability

Customers’

Manufacturing Engineering and

Design Capability/

Customer application

Joint Design

center

Lead Customers

R&D and

Engineering

Source: Y. Doz, J. Santos, P. Williamson, 2001

government

19

M6 in Catania 20

• 50k sqmts factory

• High automation

• 300 direct h/c, 1000

total

• 400M€ investment

• 6M+ panels produced

in 4 years

Japanese technology, Italian Engineering

Speed: the Macropicture

• In the rich part of the Western World the market is dominated by

induced needs and largely financed by debt. Innovation in Marketing

and Finance is the engine to artificially create needs and fuel the

economy.

• Product lifecycles are shrinking all the time..

• In Emerging Economies consumption is either a status symbol or a

way to obtain a Western style of life, but goods have to be offered at

a locally affordable price. Innovation again plays the central role.

• New markets emerge: e-vouchers in Africa…

• And the picture is blurred: China has more millionaires than any other

Country, while poverty in the US is increasing

Continuous Innovation is the engine of

growth

21

From strategy to implementation:

The “Innovation/Execution” process

Source: Insead, STMicroelectronics, Hewlett-Packard, 2004

Operations

Magnets

Mobilizing

Architecting

Engineering

Executing organizing

= focus = behavioural style = mantra

effectiveness

entrepreneurship

“time to market”

architecting

creativity

leadership

“finding gold”

execution

efficiency

management

“TQRDC” = driver

22

The art of managing innovation

L H

H

L Death

Implementation

Design

Seed

Discipline

Creativity

Balancing creativity and discipline in lifecycles

23

Complexity: Going Global

• Requires ever increasing speed to stay on the leading edge

• Introduces exponential complexity: different cultures, business

systems, management styles

• Requires capital: giving up ownership control

• Requires partnerships: sharing knowledge and benefits

• Requires propension for risk: management self confidence

• Requires empowerment: clear directions and accountability

• Requires strategic agility

Strategic Acuity: Seeing and framing opportunities and

threats in a new way – in time

Sensing

Leadership Unity: Collective decision

making

and commitment

Collective

entrepreneurship

Resource Fluidity: Fast and efficient resource mobilization,

Redeployment

Mobilizing

Perceive!

Execute!

Commit!

Source: Yves Doz and Mikko Kosonen, INSEAD, 2006

Strategic Agility in a global world


Different businesses require different characteristics

Strategic

Agility

Complexity of business

Low High

Spe

ed

of

cha

ng

e

Slow

Fast

Strategic

Planning

Operational

Excellence

Focused

Entrepreneurship

Source: Yves Doz and Mikko Kosonen, INSEAD, 2006

26

Corporations need diversified Management Styles

Strategic

Agility

Complexity of business

Low High

Spe

ed

of

cha

ng

e

Slow

Fast

Strategic

Planning Operational

Excellence

Focused

Entrepreneurship

Management

Leadership

Individual Collective


Management Management

Leadership

Collective Impresario

27

Production

New ventures

Asset management

The Management challenge:

permanent 360º Innovation

• Navigating among competing and fast changing ecosystems.

• Continuously reinventing competencies, business models and

organizations.

• Managing an unlimited number of variables in an unpredictable fast

changing world. Consequently, taking fast decisions without enough

fact based evidence and being exposed to making mistakes.

• Unfortunately management today has no clear interpretation map to

help us face the challenge. Creativity and entrepreneurship

(sometimes just "guts") are the sole effective resources.

• Going against the generally accepted paradigms without sufficient

evidence requires a leadership team with strong self confidence.


.. And focus on processes

• Competiveness in the end is a mix of the knowledge embedded in a

Company, that resides in people, with the ability to bring this

knowledge to the market.

• Processes are the way people interact with each other. In other

words processes are the way Companies "meld" their global

knowledge (technical, marketing, relational, whether tacit or explicit)

to achieve the objectives of the firm and win in the market place.

• The most important asset (in my opinion at least) of a Corporation

is the matrix among people and processes.

29

And this is what the impresario has to master in each

moment of his business life

Looking at POWER

• Speed and volatility require adaptive behaviours, defensive reactions

command rigidity.

• Agile organizations reward influence, rigid structures reward power

and control patterns. Typically you have dominance of leaders in one

case, of managers in the other.

• Power is control over resources:

• Knowledge (people and communication patterns)

• Budgets (dollars)

• Assets (factories, territories etc)

• Resource fluidity MEANS continuously reallocating resources,

therefore POWER.

• Clearly defensive reactions are what we call resistence to change,

difficulties to reallocate resources, bureaucratization, politicization

etc.


Management Culture

Source: Manfred Kets de Vries, Insead

an educational tale

The tribal wisdom of the Dakota Indians, passed on from generation to generation, says that:

When you discover that you are riding a dead horse, the best strategy is to dismount.

However, in any modern company more advanced strategies are often employed, such as:

1. Buying a stronger whip.

2. Changing riders.

3. Appointing a committee to study the horse.

4. Arranging to visit other countries to see how other cultures ride dead horses.

5. Lowering the standards so that dead horses can be included.

6. Reclassifying the dead horse as living-impaired

7. Hiring outside contractors to ride the dead horse.

8. Harnessing several dead horses together to increase speed.

9. Providing additional funding and/or training to increase the dead horse's performance.

10.Doing a productivity study to see if lighter riders would improve the dead horse's performance.

11.Declaring that as the dead horse does not have to be fed, it is less costly, carries lower overhead and

therefore contributes substantially more to the bottom line of the economy than do most live horses.

12.Rewriting the expected performance requirements for all horses.

13.Hiring McKinsey to retrain the dead horse.

32

The Global Corporation

•Companies are becoming a unique combination of competences bound together to achieve

a set of objectives. These competences range from the ability to reinvent themselves (IBM)

to the ability to build knowledge (Google) or lead an ecosystem (Apple). These

combinations change over time as business ecosystems change.

•Few years from now Companies will be different, flexible combinations of values and

cultures rather than combinations of infrastructures. Management excellence becomes the

ability to combine people and teams on clear objectives rather than create structures,

procedures, policies (Nonaka in Fontainebleau ten years ago).

•This implies on one side stronger management teams able to anticipate change and

manage ambiguity and on the other stronger enterprises based on a very different set of

values compared to the present. From hard assets to knowledge management.

•Soft dimensions become the most important asset of a Corporation and the strongest

management lever.

•The key issue facing Corporations is understanding the change and Managing the

Transition at all levels (shareholders, board, management, employees, suppliers,

stakeholders etc).


Backup

35

The importance of cloud

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Cloud

Need to be filtered and analyzed

to provide valuable information

Zetabytes of data are collected

every year.

90% of all stored data have been

collected in the last 3 years.

2,5 quintillion each day!

1.7MB per person per minute!

80% are unstructured, dark data

Will rise to 93% by 2020!

Data Information

Presentation Knowledge

Copyright Sergio Bertolucci CERN

Psilocybin (psychoactive drug)

treated subjects

“normal subjects”

Dark data: Analytics

The underlaying force: Technology

Watson – a Workload Optimized System

• 90 x IBM Power 7501 servers

• 2880 POWER7 cores

• POWER7 3.55 GHz chip

• 500 GB per sec on-chip bandwidth

• 10 Gb Ethernet network

• 15 Terabytes of memory

• 20 Terabytes of disk, clustered

• Can operate at 80 Teraflops

• Scales out with and searches vast amounts of unstructured information

• Linux based

39

Cognitive Computing:

Machine Learning + Analytics + Natural Language

40

Ingest

variety of

(big) data

Respond

with

degree of

confidence

Learn with

every

interaction

Generate

and

evaluate

hypothesis

Understand

natural

language

Provide

supporting

evidence

Offer

contextual

guidance

and insights

Support for

decision

making

Scale in

proportion

Technology evolution: Watson…

• Operates at 80 teraflops. The human

brain is estimated to have a processing

power of 100 teraflops (100 trillion

operations per second).

• Has the equivalent in memory (RAM)

that the Library of Congress adds in

books and media over a 4 month period

• Can process 200 million times more

instructions per second than the Space

Shuttle’s computers.

• Parses within 3 seconds the equivalent

of the number of books on a 700 yard

long book shelf…and pick out the

relevant information, and create an

answer.

41

Huge power required to operate (several MW)

The Future is ..

The replication of the oldest computing architecture 42

The human brain has 100 billion

neurons,

1000 trillion synapses and consumes

only 20W.

It structures unstructured data, cleans

up noise, compares new data with past

information, decides action.

The brain integrates sensor processing,

data conversion, transmission and

storage, analytics, cognitive computing

and even intuitive thinking!

Photovoltaic market potential

succeeding in global complex, fast changing environements• unfortunately management today has no...

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