Wanted – Entrepreneurs in a large semiconductor company
Date: Wednesday , February 06, 2008
All large semiconductor companies look for entrepreneurs within their workforce and try to create an environment to nurture entrepreneurial behavior. However, they often do not clearly articulate where and how the entrepreneurial spirit is needed within the organization. In my opinion, product marketing is where entrepreneurial skills are most needed and should be nurtured. Product marketing is where interaction with customers takes place to decide on the next-generation products and their features. Entrepreneurship in product marketing involves a deep understanding of the system that the product fits in to, the value proposition that the product provides for that system, and the longevity of that value proposition to the customer.
Business planning at cypress
At Cypress Semiconductor Corp. every product launch is accompanied by a business plan. This plan outlines the system level application of the product (which includes silicon, software, and reference and demo board). The business plan goes into the details of how the product will be manufactured and its cost, including a cost analysis of major features and its competitiveness in the market. It is the responsibility of the product marketing group to understand the competitive environment when the product is expected to be released. We avoid the ‘kitchen-sink product’, which includes all the features of all the competitive parts available in the industry at the time of the launch of the business plan. We typically question the value proposition of the product in the system and expect product marketing to know the die cost of every feature and the expected price that customers are willing to pay for those features. This approach keeps product marketing honest (unnecessary with entrepreneurs, but necessary within large semiconductor companies). I’ll come back to the role of product marketing after an overview of the business plan which drives every new product launch at Cypress.
The business plan includes the product’s die size estimate, yield, wafer costs, assembly and test costs, and timelines for its delivery for different purposes, besides engineering samples, pre-production samples, production and full production. This represents an alignment between groups responsible for marketing, manufacturing, test, assembly, and design within the company. Further, it captures the product’s strategic position within the long-term roadmap and the portfolio of the product line. There are several metrics to gauge the relative merits of each product within the portfolio and the long term roadmap of the product line.
The business plan also captures the revenues that the product line management is committing to deliver to the corporation for a particular product. This represents an alignment between the product line and sales force. It makes sure that the product definition has been vetted with customers and that customer demand exists for the features of the products.
With all this information captured in the business plan, the product marketing management can now assess a return on investment on this particular product and the return on investment on the family of products to which this product belongs. Both metrics are important, as they illustrate the value of platform architectures from which derivative products can be created with quick time-to-market requirements. Each area of this business plan has the need for entrepreneurs – people that can move quickly, are focused on a goal and are willing to do everything to achieve that goal within the timeline necessary to create a successful product for customers. Product marketing, however, is responsible for creating and driving platform architectures, and therefore being a product marketing entrepreneur (delivering to short term within the realm of long term plans) is especially critical for the success of semiconductor companies.
The detailed business plans at Cypress also include several key metrics that are essential for the management to make a launch decision on a product. It includes all the assumptions about the market, competition, and macro-economic landscape that affect and or govern the overall business. Once a product is launched, people committed to the product are deployed to create everything outlined in the business plan. The business plan is a living document and is constantly updated to reflect the current status of the design, marketing, customer engagements, and revenue outlook. It lives until the end of the life of the product.
Entrepreneurs in product marketing
Product definition is a critical function of product marketing. It entails not only a clear understanding of the systems that the product will go into, but also a clear understanding of how this product can be created and how it fits into the existing product portfolio and strategic roadmap. For a particular product line, products are either completely new or derivatives. If they are completely new, a lot more product marketing work needs to be done to ensure business success. A new platform, from which multiple products can be derived, needs to be created for the product which entails a longer term view for the product line. In addition, the value proposition of every feature added to the product has to be identified and quantified so that the right trade-off can be made between the cost of the product, the time to get the product to market, and the features that are critical for the customer’s success (the features that the customer is willing to pay for). This trade-off is where most large companies make mistakes to end up with a ‘kitchen sink’ product or one that does not meet customer requirements.
The decision on what product to build needs entrepreneurs who are willing to trade-off value added features with time-to-market and convince the customer that the product has the right set of features for the customer’s system level application. The product will live or die by these trade-off decisions, and these decisions set the stage for the product portfolio as well. For example, in the West Bridge business unit in Cypress’ Data Communication division, we had to decide whether we wanted to include an MLC (Multi-Level Cell) NAND interface in the first product called Antioch from this business. Every customer we talked to wanted an MLC NAND interface, and wanted the product in six months. We, however, had time only to include an SLC (Single-Level Cell) NAND interface (MLC NAND requires ECC (Error Correction Coding) protection which requires more work to design and verify). As a result, we included only the SLC NAND interface, got the product into customer designs and created the next product, Astoria, which has the MLC NAND interface. Customer needs for MLC NAND had been delayed a couple of quarters and we were able to meet their requirements with the Astoria product. The West Bridge team treated the first product as a platform on which it built both Antioch and Astoria. The platform enabled us to design derivatives in a time-efficient manner and service our customer needs along various metrics like power, die size, scalability of design in both dimensions, increased scalability (ability to add more features quickly), and decreased scalability (to de-feature products for the right price point) to provide products that allow us to maintain the pricing floor for the product line.
Successful businesses within Cypress have always been driven by the entrepreneurial spirit the ability to make trade-off decisions about products and take them to the market in a timely manner to service a specific customer requirement. Although large companies demand a certain amount of discipline and rigor, these qualities are actually beneficial to all enterprises and the experience gained working in this environment is invaluable to all marketers. The entrepreneurial spirit does not need the umbrella of a startup, it can be found in large semiconductor companies that create the environment for the spirit to flourish
The author is Executive Vice President, Data Communications Division, Cypress Semiconductor