Balu Balakrishnan is the president and CEO of Power Integrations Inc. (NASD:POWI), the San Jose, CA-based $709.9m market cap semiconductor company. Even as the chip industry is trying to recover from the market turmoil, Power Integrations’ stock chart shows an upward trend. Power Integrations is in the high-voltage analog integrated circuits providing AC to DC and high-voltage DC to DC power conversion solutions, delivering agility and remarkable portability. Balakrishnan has had the honor of demonstrating his company’s technology to President George Bush, after which the President issued an executive order that all federal electronic products have a standby requirement of less than one volt. “I retire with confidence that the company is in the hands of an extremely capable visionary leader,” said Howard Earhart, the former CEO and chairman of the board who retired in January 2002. How has this leader performed in the past year and a half?

Beginnings
I came to the U.S. in 1975 for my master’s at the UCLA and continued to work at the university for a year and a half, after which I joined National Semiconductors, starting as a design engineer. Eleven years later I left as the product line manager for the networking and advanced group of products. In April 1989 I joined Power Integrations, which was a startup at that time. Overthe last fourteen years I have handled a range of responsibilities—VP of engineering, marketing, operations and so on. I was president and COO till January 2002 and took over as the CEO when Earhart retired.

On the Change in Role
I was always involved in the business-side of the company, even at National. While I didn’t have a marketing degree I was conducting customer surveys, researching market trends and was leading the marketing initiative. At Power Integrations too I was involved in more than just the technology. As the CEO, I now see myself dealing with the Wall Street-side of business everyday. With new regulations stipulated for public companies, there are new responsibilities and accountability for a CEO. While I always knew how much we had in the bank and how we were performing, I tend to study these issues more closely now. I still get to work in the technology, defining new products and solutions, but this is the most challenging and exciting role I have had so far. It can’t get better (laughs).

On Managing Risks
We are a very conservative company, born before the Internet era, and continue to be so. Our technology is proprietary and there is not much competition. Many of the large semiconductor companies have attempted to foray into our space, but our strong IP (over 60 patents in the U.S. and 58 worldwide) has kept them at bay. We believe that leading edge technology need not be bleeding edge. We have very good cash balances and have remained profitable since we went public. Husbanding these cash reserves is critical to successful risk management.

We are in a market which cannot change overnight—3 to 4 billion power supplies are built every year, and we have a 7 percent share of that market. Today, energy issues are driving the market to build solutions that can deliver better efficiencies in power usage and we see this market driver benefitting our solutions. At the same time we remain cost-effective—there is no penalty in using our products. Identifying key markets and driving technology to capture the markets have been key to our risk negotiation.

We grew 15 percent last year and continue to be on track, projecting an earning on the higher end to be close to 100 percent. We are a market leader, but the trick is to figure out how to expand the market and constantly staving off competition.

On Leading An Enterprise
People come to spend 8 or 10 hours of their most productive time in an office. To gain maximum benefit from this large pool of talented time a company should create an atmosphere condusive to innovation, dialogue and transparent transactions. That said, it is also critical that the team is aligned to the company’s vision. This vision sharing comes by delegating responsibilities. At Power Integration, I believe in trusting people with responsibilities and expect them to share in the job of running the company.

At the end of the day, we are all here to make money. Since this is the common goal, I think it is very easy for the entire team to have fun while we go about doing it. I trust people to be careful about the way we spend money, we are very transparent in our policies. We have a large market space for growth, exciting technology that matches the market forces, and a team of excellent talent.

On CEO Longevity
I have been here only a year and a half (laughs). I think that if a CEO were brought in from outside, he or she will be executing a job. The contributions could be very limited. Someone like myself, who has come from within the company, knows almost everything that happens inside the company. I feel I contribute directly and in many direct ways too. It is more than just a job for me.

In such a scenario, I handle crises with ease and reduce risks by making core changes in the business philosophies or models, thereby delivering satisfying results to the stakeholders. Setting the right directions and delivering more than the expectations are very important. Long term vision needs to be sufficiently shared with the stakeholders so that they are aligned to the company’s vision. The balance between short term and long term strategies will reflect a good CEO’s capabilities.

On Motivating the Troops
At Power Integrations we have developed a successful model of setting tangible goals for the company and the employees. We have five year plans, yearly plans and monthly targets whereby each employee can work towards personal goals. And when these goals are clearly shown to be aligned with the company goals, every employee sees immediate benefit in working towards achieving them. This, I think, has been key to the bubbling team spirit within the company. Goals don’t exist in isolation.

On the Future
Simple. Increase market share, reduce costs, stay profitable, return stakeholder profits. Most important of all, keep the company team spirit charged. We have almost no attrition, and we’d like our people to like coming back to work everyday!