succeeding in global complex, fast changing environements• unfortunately management today has no...
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Taormina, October 21st 2016
Succeeding in Global Complex, Fast Changing Environements
Andrea Cuomo,
EVP STMicroelectronics
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Microprocessor transistor count 1971-2011 2
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Average Transistor Cost ($)
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The U.S Semiconductor Industry spends more on R&D as a percent
of sales than any other U.S. Industry 4
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Investment in Capital Expenditures and R&D per Employee is very high
- it has increased at a rate of about 16% per year over the past 20 years
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Semiconductor companies ranking:
after the storms 1987/1994/2004/2011
Global semiconductor
companies ranking - 1987
1 NEC
2 TOSHIBA
3 HITACHI
4 MOTOROLA
5
TEXAS
INSTRUMENTS
6 FUJITSU
7 PHILIPS
8
NATIONAL
SEMICONDUCTORS
9 MITSUBISHI
10 INTEL
11 MATSUSHITA
12 AMD
13 SANYO
14 SGS-THOMSON (*)
15 AT&T
Sources: Gartner / iSuppli (*) : In June 1987, SGS-Thomson was formed from the merger of the Italian company SGS Microelettronica (Società Generale Semiconduttori) and the
semiconductor arm of the French company, Thomson.
Global semiconductor
companies ranking - 1994
1 INTEL
2 NEC
3 TOSHIBA
4 MOTOROLA
5 HITACHI
6
TEXAS
INSTRUMENTS
7 SAMSUNG
8 FUJITSU
9 MITSUBISHI
10 PHILIPS
11 MATSUSHITA
12 SGS-THOMSON
13 IBM
14 SANYO
15 SHARP
Global semiconductor
Companies ranking - 2004
1 INTEL
2 SAMSUNG
3 TEXAS INSTRUMENTS
4 INFINEON
5 RENESAS
6 STMICROELECTRONICS
7 TOSHIBA
8 NEC
9 PHILIPS
10 FREESCALE
11 AMD/SPANSION
12 SONY
13 MATSUSHITA
14 MICRON
15 HYNIX
Global semiconductor
companies ranking - 2011
Market
Share %
1 INTEL 15,9%
2 SAMSUNG 9.3%
3 TEXAS INSTRUMENTS 4.5%
4 TOSHIBA 4.3%
5 RENESAS 3.6%
6 QUALCOMM 3.2%
7 STMICROELECTRONICS 3.1%
8 HYNIX 2.8%
9 MICRON 2.3%
10 BROADCOM 2.3%
11 AMD 2.1%
12 INFINEON 1.7%
13 SONY 1.6%
14 FRESSCALE 1.4%
15 ELPIDA 1.2%
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The starting point of an atypical startup
“ I would never invest 1$ 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
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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?
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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
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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…
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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.
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Storage Video
Access
Security
Automotive
Networking
Imaging
Innovative business models:
Strategic Alliances 12
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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
Source: Yves Doz, INSEAD
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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
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Behind the process: a global world
Networking
Storage
Consumer
Automotive
Wireless
Computer Science
Security
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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
Source: Yves Doz, INSEAD
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“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…
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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
Source: Yves Doz, INSEAD
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Strategic Alliances
Mixed Technologies
Learning from the World
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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
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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
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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
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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
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The art of managing innovation
L H
H
L Death
Implementation
Design
Seed
Discipline
Creativity
Balancing creativity and discipline in lifecycles
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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
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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
Cambridge, May 17th 2012
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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
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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
Source: Yves Doz, INSEAD
Management Management
Leadership
Collective Impresario
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Production
New ventures
Asset management
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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.
Cambridge, May 17th 2012
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.. 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.
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And this is what the impresario has to master in each
moment of his business life
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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.
Cambridge, May 17th 2012
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Management Culture
Source: Manfred Kets de Vries, Insead
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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.
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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).
Cambridge, May 17th 2012
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Backup
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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!
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Data Information
Presentation Knowledge
Copyright Sergio Bertolucci CERN
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Psilocybin (psychoactive drug)
treated subjects
“normal subjects”
Dark data: Analytics
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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
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Cognitive Computing:
Machine Learning + Analytics + Natural Language
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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
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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.
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Huge power required to operate (several MW)
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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!
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Photovoltaic market potential