Readings Corporate Fantasies ISSI Chapter
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ISSI: a Cutting-edge Silicon Valley Companyt I. Company History/Situation Integrated Silicon Solutions, Inc. (ISSI) designs, develops and markets high-performance ARAM and non-volatile memory integrated circuits to customers worldwide. ISSI was founded in 1988 and now employs approximately 330 people. ISSI is an international firm, with headquarters in Silicon Valley, CA. Its global infrastructure includes subsidiaries in Taiwan, Hong Kong and the People's Republic of China. A substantial portion of the company's operations is located in Taiwan, where ISSI's facilities are used as a base for marketing and sales to Asian customers, manufacturing coordination, and product testing. ISSI targets high-growth, large-volume markets requiring high performance memory. ISSI's products serve the diverse and rapidly growing markets for networking, telecommunications, personal computers, multimedia, wireless communications, consumer products, and industrial instrumentation. ISSI markets its products through a direct sales force, manufacturers, representatives, and distributors. Sales are diversified geographically across the United States, Taiwan, greater Asia and Europe. The company's customers include such notable names as Cisco Systems, Compaq, Dell, Hewlett Packard, IBM, Bay Networks, Picture TCL, Creative Labs, Diamond Multimedia, Motorola, SCI, Rockwell, Seagate, Solectron, Sony, 3M, and US Robotics. ISSI sales in fiscal 1995 doubled from fiscal 1994 and their profits increased 543%, from $4.6 million in 1994 to $29.7 million in 1995! Sales in 1995 were $123 million, up 102% from 1994's $60.8 million. In addition in 1995, no single customer accounted for more than 7.5% of overall sales and the ISSI quality assurance program received ISO 9001 certification. These outstanding results are even more dramatic when you compare where ISSI was just four years before. Sales in 1992 were only $29.1 million compared to 1995 sales of $123.2 million. Profits rose from a very modest $0.5 million in 1992 to $29.7 million in 1995. Certainly part of these astounding sales and profit increases can be attributed to the fast growth rate and increased demand for high-performance memory circuits. However, it would be inaccurate to place all of the credit there. In studying this picture of success, a critical element emerges. Though the management team is well educated, experienced and talented, before 1995 they had not been working cohesively toward a clearly defined, mutually agreed upon company vision, mission and values. President and CEO Jimmy Lee stated his reason for bringing in an outside consulting source was simple: "To be honest, I didn't have the experience in getting a team to articulate its vision, mission and values, as this is my first time as a CEO. I think the most effective way is to bring in an outside consultant. We needed tools put into place so everyone here could focus. I knew my vision, but not how to communicate that to the team and get them to buy in. This was a good process for us and helped to really imprint the vision, mission and values in their minds." Another significant reason for embarking was well stated by Robert Shen, VP of Corporate Planning. "We wanted to become a better company—not just in making a profit—but to really improve our culture. Going for excellence was a driving force." He added, "The company needed a breakthrough to improve its management efficiency and our internal communication. We realized that working hard was not enough. We needed someone objective to give us guidance." II. Challenges “Been there/done that” syndrome: "Whenever you talk about doing training in an organization, the standard response is, “training - that's a good thing”, but when you talk about management training, that's a good thing for somebody else. There always seems to be a resistance to taking the time to “learn something you already know.” Most people think: ”I don't have time to do this, and besides, I already know that stuff.” These comments from various members of the management team reflect the common obstacles to many internal and external training programs. The challenge is to get the team to actively buy in and participate long enough to be able to facilitate a true culture change. This is best summarized in a quotation from Bob Cushman, Vice-President of Marketing: "With any training program, managers need to realize that though they may have heard some or all of this information in the past, the key thing is remembering to implement it. Hearing it again really helps do that.” Management buy-in: "The biggest challenge I saw to the program was getting the management team to buy in. When we get our team motivated and see a common goal, we are so effective! It's just getting us to that point that's difficult," said John Unger, Vice President of Quality Assurance. Time pressure is almost always a major challenge for most executives. "On any given day there are so many things vying for your time," asserts Thomas Doczy, General Manager of the Memory Division. "There is so much to do. So when you have a new program for upper management, they don't want to take the time to go to classes to hear things they think they already know! People don't always understand how to do this—-how to integrate an outside program and meld that with what they have to do." This was reiterated by many of the staff, who said initially they were reluctant to go because of time pressures until they saw the benefits for them. Lack of interest in processes: "In a technical environment, often people are not interested in processes, just results. To get them to be interested in and commit to processes is always difficult at first." John Unger, VP Quality Assurance. Seeing the need for and accepting 'advice' from an outsider: Aptly stated by Gary Fischer, Executive Vice President, Office of the President and Chief Financial Officer: "You and your team (Jack Hradesky of NSG Inc.) were the first ‘designated gurus’ we ever brought into ISSI. It was a real challenge for you to get credibility and not be resented for trying to be the 'Experts of the Day.'" III. Approaches Taken Phase One Organizational Dynamics/Culture Phase Two "Survive and Thrive” Phase Three "Internal Customer Satisfaction System"
Establishing the company vision, mission and values - clarity of focus "This process of establishing our vision, mission and values was so important for our company. I pass the values down to all engineers, so now everyone talks the same language and our mission is very clear to us. Seeing the big picture, the global view, and knowing the vision is so helpful!" Chie-siang Hong, Director of Engineering. One member of the management team, Dr. Chung Wang, VP of Technology Development, who came on board after the strategic planning retreat where the vision, mission and values were written stated, "I think the entire company is now very clear about our vision, mission and values. They were very clearly communicated to me and we really live by them. The management here shares the same vision and this has been communicated most effectively to our people." On a final note, many of the management team expressed views similar to John Unger's regarding the continuation of the process: "Even though we benefited so much from this, it needs to continue. This should not be done internally. I am convinced you have to bring in an outside facilitator, who has no ax to grind, can be objective, and who critiques ideas rather than people. I feel we should do it quarterly now that our building blocks are in place." "A company needs to have an outside counselor. It is essential to make it work." Gary Fischer, Executive Vice President. Culture change - living the values At ISSI, the vision, mission and values are not merely slogans on a wall. They are principles that are lived by and adhered to. New staff, as well as those employed prior to the establishment of the vision, mission and values, testifies to management 'walking the talk' when it comes to ISSI values. "Our values are very important to us" explained President and CEO Jimmy Lee. "I know we’re focused now and we are able to make a much more cohesive effort. Our people are pulling together." "There is not a week that goes by," stated Gary Fischer, pulling a copy of the values off the wall, "that I don't take this down and use it to coach one of our team members on behavior that exemplifies our values. We really prioritize them and take disciplinary action when they aren’t adhered to. These values are embedded in this company and extend to our representatives and customers, so our values and integrity are utilized on a day-to-day basis." "The employees really like that we wrote out what we stand for. Now they clearly know what we believe and what values we live by. We gained the respect of the staff and of all the people who work for us," asserts John Unger, VP Quality Assurance. He added, “there is much more to creating a culture change than having an executive retreat and writing up values. You have to live by them to create the culture change. And you develop a new sense of humility. You understand there’s a lot more to this game, a lot you don't know. Just because you’re smart does not mean you’re a good manager. You have to walk the talk.” Commenting on the culture change, Tom Doczy, Marketing VP, states, "I think the concepts that have stuck in the culture of this organization from the training are: “We still use this format at ISSI: We determine the objectives and desired results, set the plan to accomplish it, establish measurements (time, quantity, quality) and check the status regularly." Improved interdepartmental communication/understanding One of the major impacts in the company came from the Internal Customer Satisfaction System (ICSSI) program. When properly implemented, this system creates a structural framework for clear communication among departments as well as measurable objectives and deliverables that are agreed upon by all involved departments. "The value of good communication cannot be understated. We are far more responsive now and have really improved our performance" asserts the Director of Engineering, Chie-siang Hong. "By using the Internal Customer Satisfaction we improved communication among different departments. We know what we want and what others want. We’re far more efficient and responsive now! Our engineers have always worked very hard but some things turned out to be not that important or weren’t essential. It was very frustrating. By using ICSS, it became easier to convince my engineers what is most important, and makes it much easier for me to pass the requirements to my staff. I get far more output from people now because they’re stating what they need. It makes it easier to manage, and much simpler." "People really need this kind of support. This really drives you internally— you can be effective, get positive feedback and feel productive!" Robert Shen, VP of Operations, explained how ICSS improved interdepartmental communications, "People wanted to better serve others, but were not always clear how to do it. The Internal Customer Satisfaction program helped us to understand exactly what others need and the actions are required. ICSS provides a very focused communication process and helps you set priorities. It also helped build better relationships with employees. People are saying 'Wow, what an improvement in the conversations we have with other departments. Communication is more important than anything else—knowing your customer's needs and wants. We’re very happy with the communication improvements and we use these ideas constantly to make great things happen at ISSI." "We developed strong unity because we are better able to understand and communicate clearly with each other," explained John Unger when describing the effect he saw from ICSS. "We’re more sensitive to other departments and their problems. This process allowed us to tackle sensitive issues because we learned how to talk to each other clearly." "A big eye-opener for me was learning how to communicate with people and their varied learning styles. Now I appreciate and better understand the different learning styles of our team and how to communicate with those styles. I modify how I speak with the different individuals in my organization to be most effective," says President and CEO Jimmy Lee. Alignment of management team - Becoming a team "A big, big discovery made because of this process was that we didn't know each other well," stated John Unger. "As we progressed in the program, we began to see each other in different lights, to know each other better. Getting each person to talk, to express himself, really helps everyone to work together so much more effectively. In terms of results achieved this was extremely significant, because we truly transitioned into a team." "We really improved our teamwork; it’s not just a slogan on the wall for us. We didn't start out that way,” stated the President and CEO Jimmy Lee. "During this process, my staff realized that establishing a common objective is not that easy. It isn’t what one individual thinks, because the group may have a different idea. This process helped the group communicate better and to become aligned. The group discussions helped people realize that everybody is so different. The learning process and the way people receive data are very different for each person. Realizing this helped us to become a stronger team. Now people are more open and they express what they need. I think it's really enjoyable to learn to work with people. We are successful not just because we have a successful technical product but because we have a team that works together. It takes the whole team to make it happen." "You need this process to get to know your peers. You have to get to know them outside of the normal working environment, and this process does that. Getting to know your peers is a key to running an effective organization." John Unger. "Not only did we learn to work together as a management team, but we learned how to work within my department and with my staff as a team. This was a major learning point for me, and it spread to other aspects of what I do." stated Chie-siang Hong. "Now I bring everyone together and we come up with a plan. Because of my technical background, my old paradigm was "just go do it!” This process allowed me to think from a different angle. Now I realize how important it is to get everyone's input, how important it is to ask for feedback—then everyone agrees, then he or she buys in! People are much more motivated because they are involved in the process, and the group ideas are often so much better than mine alone.” With participative management it is much easier to get results. Understanding the importance of planning One of the segments of the training program done at ISSI was long-term planning. Several executives expressed that an important impact of the training was people understanding how critical long-term planning is to the future of the company. Tom Doczy, GM Memory Division, summarized this well: "Very often. companies are just looking at getting the next order, not seeing the big picture. The training really forced us to look at the long term and put structure to it. We now better understand the importance of why things are working and of planning for the future. The challenge is how to keep it fresh. What you decided in a meeting 12 months ago may not work as well today—you have to keep breathing life into it." Chie-siang Hong reflected on the process he went through. "At first, I could not understand how this training could help us. It seemed so complicated. But soon I was very impressed with the importance of strategic planning as I realized I had been thinking only about what I had to do. This opened my eyes to consider other departments as well as the global view. Before, I hadn’t realized the big picture and the importance of long-term planning. It helped me to understand what the company wanted. It helped our whole department work smarter, not just harder." "If you don't know where you’re going, any road will get you there. The benefit of this program is that it gave us the road to get there. The long-term planning was and is very important, as was determining our strengths and weaknesses, and then determining a plan to address our weaknesses." Terry Trumbull, Vice President. Utilizing three management tools— MBO, CBSF and ICSS—to become part of the structure The company was able to take three systems from the training processes that are still in use (as of this writing) on a daily basis. They are in the front section of the 1997 Corporate Operating Plan binder. This 'three-legged stool' includes: the use of Management by Objectives (MBOs) "We now have three formal management tools at ISSI to drive us toward our goals. We review the ICSS results on a quarterly basis. Every person has to tell the rest of the management team what they have done and I publish those score sheets. If they have a low score, they have to tell the group why and how they plan to recover. All I want are the results! I would say we pretty much learned all this from the training program," states President and CEO Jimmy Lee. "Without results we can pack up and go home. We like to empower people—to define authority, expectations, guidelines, provide resources to do the job—but then they have to deliver results. No excuses. No finger pointing." We review Management by Objectives on a monthly basis. "The MBOs are very important because they focus us on what is important and establish measurable objectives. When there is a clearly defined, measurable objective you can hold someone accountable to that. Here at ISSI, you are responsible to your boss and your peers. The second thing that really helped us was the Critical Business Success Factors. These are key because they helped the company focus! We always wanted to do everything. We now cut out some projects." Robert Shen, VP of Operations. "Before ICSS there was no formal effort to support our internal customers. I have only been here a short time, but now we tell engineering why we are doing these experiments and give feedback to the design and product groups. Before ICSS they got partial or no information. I was actually rated very poorly by my internal customers, but at least I discovered what my customers need, so I know what to focus on. I go back and readjust my priorities to fit their needs. This gets the whole company aligned and cohesive." Dr. Chung Wang, VP of Technology Development. "In terms of results achieved, it’s not just one big thing, but many smaller things. There is an established structure now to be able to tell the other guy how things might not be right, without it turning into a schoolyard fight. ICSS provides a structure to work through all the problems and still remain friends. Another key thing is that training like this gets you to implement things that you know how to do, know you should do, but haven't been doing. It’s also very important to have training that extends over longer periods of time. The longer the involvement the better, because it brings things to the forefront of your thinking for a longer period, which will increase the probability of implementation." Robert Cushman, Vice President of Marketing. Improved program solving When asked about learning points from the training, Gary Fischer, Executive Vice President, provided an important take-away: "Our people learned to problem solve as a team, across disciplines! We used to solve problems individually or we would wait for Jimmy's (Jimmy Lee, President ISSI) solutions. This process taught our guys to problem solve with an interdisciplinary methodology—to help our groups communicate across functional areas." Explosive growth attained relatively painlessly "If you just look at where the company was before and after the program, I think the biggest result achieved was that we went through this rapid growth period relatively painlessly. We had real growth in people, products and markets. These are major points when you think about it!" Robert Cushman, Vice President of Marketing. "Good leadership, systems and the training we went through are keys to our successes. The training really improved our management systems and allowed us to grow and expand quickly," Robert Shen, VP of Operations. The most significant organizational change or outcome was not found in the movement of management positions and personnel, but rather through openness regarding the company philosophy with respect to organizational change. The company learned through this process that their organization was going to have to continually change in order to keep up with the rapidly changing global business environment. The organization at ISSI will change annually. The organizational structure at ISSI will not be in cement. In order to prevent anxiety and to decrease resistance to this philosophy, ISSI will teach the organization that ongoing changes will occur— and to expect change. A major element in the development of this "change philosophy" was the desire to establish a global presence. Now ISSI has established the authority and responsibility by functions around the world, while allowing policies and procedures to be established locally. For example, sales staff in Taiwan report locally, on a day-to-day basis. However, functionally they report to corporate in Santa Clara or Silicon Valley. A final aspect of the organizational change came through the establishment of the "Office of the President." Prior to the establishment of this entity, everyone reported to and depended directly on the CEO for answers and management—at times a "bottleneck phenomena.” Thus, the Office of the President was born. It consists of three individuals, the CEO who manages engineering and strategic marketing, an Executive Vice President who manages sales, administration/finance and tactical marketing, and a Vice President who manages manufacturing, quality assurance and Asian Operations. VI. Learning Points A CEO is the engine that drives his company to execute the vision, mission and values that have been determined by consensus. If he does not have the drive or does not fully commit to the changes to reach the highest potential of his company, no one else will buy in either. When values are an integral part of a company’s daily structure, rather than words on paper, the uplifting impact is far-reaching and dynamic. Clear communication between individuals and among departments is crucial to company function and cohesion. Diverse cultures in the workforce may require particular training in communication skills, particularly in a worldwide marketplace. Simple, workable concepts which are implemented daily have far-reaching consequences in business success. It isn’t enough to “know” something; effective execution requires constant awareness of company goals and personal skills and limitations. Effective management is a result of clear communication and motivational skills, and is augmented by frequent enhancement through training that addresses current changes in the marketplace, products, and personnel. When the company vision, mission and values are appreciated and lived at every level of the company, a deep cultural change takes place which accelerates growth and success.
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