No Risk, No Gain
reed-electronics.com
By Ed Sperling -- Electronic News, 9/17/2004
The meek have inherited the electronics industry.
One year into what is clearly a sustained recovery -- minus some glitches in the supply chain that have created hiccups in second-half earnings -- top executives are still behaving like they’re neck-deep in a devastating and perpetual downturn.
Considering this industry used to be run by a bunch of cowboys who were willing to take risks and fix problems if they didn’t get something right the first time, this is a rather sad state of affairs. And it’s going to cost companies dearly in the long run.
Evidence of this tentative behavior is all around us. Companies aren’t hiring new employees. They’re wearing out their existing staff by letting them do the jobs of three people. The result, as you would expect, is overworked employees with tired ideas.
On top of that, companies are wary of overspending on research and development, and they’re holding back on even necessary travel. In short, they aren’t thinking like entrepreneurs who can cut deals and carve out their future with new opportunities and a brand that sticks in everyone’s mind.
While this kind of behavior may make sense to lawyers and accountants, it doesn’t make sense in a global business environment where innovation and competition can spring up from anywhere on the map. It’s one thing to be responsible about controlling costs. It’s quite another to be irresponsible about staying competitive.
Ned Barnholt, president and CEO of Agilent Technologies, hit the nail on the head when he said that the electronics industry has become “risk-averse.” He said the industry has to take risks, think out of the box and not accept “incrementalization.”
IBM’s legendary Thomas Watson Jr. said roughly the same thing a half century ago when he admonished employees to do something, even if they don’t get it right the first time. He said products can always be fixed in the market, but if they don’t get out the door the opportunity is already lost.
With the expensing of stock options now on hold and steady growth in the economy, it’s high time that companies started taking risks again. They need to be receptive to ideas of start-ups and they need to encourage new start-ups, either through seed money or equity investments.
At the same time, they need to take advantage of some of the new tools that have come along since the last boom, namely a better understanding of what’s in the supply chain and how demand is shaping up. This is good business management, and businesses should always be run using the best practices available.
But they also need to run with an element of controlled risk. You have to spend money to make money, and you have to invest in new ideas to figure out which are the right ones. It’s not the venture capitalists who are holding up a recovery in the electronics industry. It’s not even the lawyers or the accountants. It’s the top executives themselves, who need to see their way clear of the past and plot out a future for growth. |
