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Fixing the Malaise in U.S. High Tech

5 min read

Fixing the Malaise in U.S. High Tech

In my four decades as a senior manager, CEO, and corporate director of American high-tech companies, I have never seen the state of innovation in the U.S. in such dismal decline. What is most telling is the restrictive and uncreative cultural climates created by CEOs and other senior managers.

By Wim Roelandts.

In my four decades as a senior manager, CEO, and corporate director of American high-tech companies, I have never seen the state of innovation in the U.S. in such dismal decline.

What is most telling is the restrictive and uncreative cultural climates created by CEOs and other senior managers.

Yet at no time in American history has it been so important to come up with innovative solutions. What has kept our standard of living one of the highest in the world is our ability to find new ways of doing things; invent exciting and disruptive technologies; and create captivating novel products, processes, and services that delight customers.

Innovation is the use of creativity to solve real customer problems. If you want those new creative concepts to come forward, you must foster a corporate culture that incorporates five leadership principles of innovation:

1. The majority of employees want to do a great job

I have found that employees will go to incredible lengths to contribute even when they are discouraged to do so.

Let me tell you about one example. Xilinx invented a product in the early 1980s called the Field Programmable Gate Array (FPGA). These are integrated circuits designed to be configured by the customer or designer after manufacturing.

While I was there, a team of engineers had implemented some of the standard microprocessor architectures on the programmable logic fabric, but the performance was not very good. Two engineers proposed an architecture optimized for the FPGA. Because it would not have been compatible with existing architectures, I turned them down.

But they had such faith in their product that they worked 72 hours over a long weekend to build a prototype. They desperately wanted to make a contribution and were passionate about their invention. The next work day they demonstrated it to me. I was amazed at what they did on their own, without any encouragement. Their implementation was about 10 times faster than our existing product. I authorized them to continue their work. The result, the Microblaze, became one of Xilinx's most successful products.

2. Work must have meaning and value

Early on in my career I wondered what made people put their whole hearts and souls into their work. The stock answer was: "Pay them more and they will contribute more." But I have found that is not the case. What really motivates people is the idea that they are doing something useful and meaningful. Doing something useful and making meaningful contributions imply that you can be a leader, that you can decide on what to work on, and that you can influence your work — and can make a difference.

As a young HP employee in Belgium, I was one of the first repair engineers for computers back in the late 1960s. Since I was the only one who could repair this new phenomenon called a computer — and they were as big as refrigerators in those pre-PC days — I had free rein to do whatever made them work. I loved that. I brought the computers home, took them apart to learn more about their innards, and how to repair them. It was so exciting, so creative. I felt very strongly that I was contributing to HP's success.

To make each individual's job more meaningful, I have always stressed the importance of the company's mission and each individual's contribution to it. Communication is central. People need to understand where the company is going, how it will get there, and how they fit into the big picture. Extraordinary and innovative results are possible when employees are passionate about their job, team, work, and the company.

If employees feel their employer is not doing something meaningful and useful, they should consider moving on.

3. Community matters

Creating a sense of community is a must if you expect innovation to take place at every level.

The power of being part of a robust community came home to me in the darkest days of the collapse of the dot-com bubble. In 2001, Xilinx's business drop like a rock. In just a few quarters our revenue plummeted by more than 50%, and with it went my heart and my spirit. I was up night after night wondering what could be done.

We kept hoping business would improve, but orders just didn't materialize. We weren't alone, of course; others were experiencing the same phenomenon. Companies in our segment started laying employees off. From both a personal and business point of view I didn't think this was a good idea. Our company was noted for its state-of-the-art semiconductors. We had built the company on a spirit of innovation, and we wanted Xilinx to be the company with the leading, most avant-garde products. My fear was that if we let our innovators go, our business would suffer terribly in the long run.

So we decided to keep everyone and be creative in reducing expenses. We asked our employees around the world if they would consent to a reduction in their salaries on a progressively sliding scale (the lowest paid employees were not cut at all and managers' salaries were reduced by more than 10%). All but one of our 2,700 employees agreed. We closed our offices one day every two weeks. We offered early retirement, granted sabbaticals, and gave employees $20,000 a year if they wanted to go back to school or do community service.

When business improved eight months later, we restored full pay. It turned out that we had won considerable market share during this period because all our projects stayed on track. On a human level, it brought all the employees of Xilinx together. In fact, for five years we were near the very top of the Fortune's list of the 100 best companies to work.

4. Be better tomorrow than you are today

I am a proponent of the central message of Peter Senge's book The Fifth Discipline: "The only sustainable competitive advantage is an organization's ability to learn faster than the competition." Senge's concept of learning is not just sitting in a classroom. It's learning from your customers, the marketplace, from your team and, most importantly, from your failures as well as your successes.

Here's an example. Soon after I joined Xilinx in 1996, I discovered that one product nearing introduction did not fit into the strategic direction that we were setting for the company. Yet Xilinx's engineers had spent many months developing it.

While we canceled the product, we learned a great deal from the failure that we could apply to other products. And we honored the engineers who spent so much time bringing it to market. We gave them stock options and put them to work on a very important R&D assignment, which turned out to be the next "big thing" in semiconductors and incorporated the lessons they learned from the failed product. It's called Virtex and is still the flagship of Xilinx's array of products.

5. All employees should act as owners

This means more than helping employees own stock and allowing everyone to participate in profit sharing. It's taking ownership for customer problems rather than passing them along to others. It's spending money wisely, as if it were your own. It's representing the company to the outside world as if it belonged to you. Owners act differently and with more passion. Owners are more innovative and involved.

So how do you instill that feeling in a Fortune 500 business?

Reward those at every level who act responsibly as owners. Encourage employees to step up and make decisions, and make it easier for them to do this by eliminating red tape. Honor employees whose actions imply that they are best qualified to fix a problem and take responsibility for owning it.

I realize that these principles may appear to be obvious. Yet so much of American business today seems to have forgotten how critical it is to create an innovative environment.

Knowledge workers make up a huge proportion of today's work force. They are highly educated, have ideas and opinions of their own, and want to contribute and be recognized for their efforts. Creating a space where they can fully express their creativity is a manager's responsibility. Only if managers of U.S. companies do so will American organizations and the country continue to lead.

About the Author

Willem (“Wim”) Roelandts was CEO of Xilinx for 12 years until he retired in 2008. Before that he was a senior vice president and a longtime employee of Hewlett-Packard. He is currently a board director of Applied Materials, Aruba Networks, and IMEC, a Belgian research organization.

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