Browse by year:
“Don’t Look Over Shoulders!”
Karthik Sundaram
Thursday, January 30, 2003
When today’s road warriors swap gripes on the longer sales cycles and scarcer client dollars, one company in southern California is not. In contrast, it is finding that requests for quotations are converting to orders in a shorter time frame. OSI Systems (NASD:OSIS, market cap $229m), a Hawthorne, CA company, is capitalizing on the increasing homeland security infrastructure boom. EPS in first quarters of 2002 have been positive, despite the diving bourses. Leading this company is Deepak Chopra, President, CEO and director, since its inception in 1987. With a history that includes hostile take-over bids, fall-outs with boards, and a series of post-public acquisitions worldwide, Chopra brings a unique definition to leadership. What makes him tick at the top?

On his beginnings
I came to the U.S. in 1971 for a master’s degree in electronics, at the University of Massachusetts. When I graduated in 1973, I found it was a bad year for finding jobs. I finally found one in the R&D group of a semiconductor power devices company, in New Jersey. I didn’t like the “big company” atmosphere, nor did I like New Jersey. In November 1974, I came to Los Angeles for a technical conference; fell in love with California, its beaches, the climate, people, and those American images of Archie, Jughead and Veronica, which I had only seen in comic books till then. I quit my job in New Jersey and landed up in the west coast, without a job. Luckily, I found one in a fortnight at TRW, again in semiconductor research. And in two years, I grew tired of yet another “big company” atmosphere, and went on to join a small startup in Santa Monica, United Detector Technology (UDT), a company involved in electro-optics devices. After three years, in 1979, I fell out with my boss, who wanted to shift the company from Santa Monica, and I quit to join Intel.

While at Intel, my claim to fame was in bipolar testing, and I was into my third year there, when I heard of UDT’s closing down. I wasn’t surprised. DeKalb Agricultural Research from Illinois bought over UDT and put it on the block for sale. I was 29 years old, an Indian, and with absolutely no chance of raising capital in the conservative decade of the early eighties, when venture capital was unheard of. My friends introduced me to a company in Santa Clara, ILC Technology, who were interested in buying out UDT. They bought out UDT, and sent me in to head it.

I fired my boss at UDT, moved the offices to Culver City, tightened belts, and started making money. In the fall of 1983, ILC went public, but in 1985, the space shuttle disaster occurred and ILC was in trouble. In the overhaul at the top, I was made the president and CEO. Two years later, I fell out with the board and I left. The biggest mistake ILC made was in not making me sign a non-competitive clause.

With an angel investor, who was also a major shareholder at ILC, I began Opto Sensors (subsequently renamed OSI), in May of 1987. In 1988, the PanAm disaster happened, and our company was put on the mark, as we were key suppliers of electronic components to AstroPhysics, a contractor for the aerospace industry. We suddenly found ourselves growing.

On OSI Growth
Our fundamental technology has been in semiconductor opto-electronics, and we have been constantly acquiring companies that have products or technologies that will add to our business strength. This has been our key strategy and I think we have done well in this. We would like to be the end manufacturer and supplier in the chain, and this has been key to any acquisition. In 1997, after the TWA air crash, the security industry was in great demand, and we thought it a good time to go public. We raised sufficient money to make some more buy-outs, in U.K., Singapore, and here in the U.S. Our acquisitions have been very focused. While more companies lean towards the outsourcing model, we look at our customer needs and make judicious acquisitions that would help us supply these outsourced needs. And our customers have been happy to outsource from a single source.

In many cases, our acquisitions have been companies that have been our customers. We understood the markets, understood the company’s needs and products—in many cases, we helped the company design them—and simply captured the market and company from a mutual understanding that the acquisition would help in a more efficient dealing with the market.

On Motivating Troops
I think the bottom line is that you have to be fair. This is a clear, very simple, and yet, the most ignored facet in management. We have acquisitions in Malaysia and Singapore—3,000 miles away from the parent company—and the company is profitable there too. People don’t wake up everyday thinking, “Today I will go to my office and screw up.” They want to work. They want to grow. Management needs to understand this fundamental, and very natural need of the human being. In many cases, companies view smartness and self-motivated initiatives of employees with suspicion. Why?

Secondly, if the company can communicate to its people that with power comes responsibility, people will be wise in wielding their power. We have made this culture go down to the last man in our company. The operations in our companies worldwide are totally decentralized, yet the companies are mature enough to realize that the power of independence comes with the responsibility to perform and grow. There is a fine line between holding hands and looking over the shoulder. Management should never transgress this line.

On Choosing His People
People should be able to reason. They should be able to stand by what they are doing, and not be afraid of making mistakes. I always tell my people that a mediocre decision made at the right time is far better than a good decision made at the wrong time. If you believe in what you do, I think you will work harder. Mistakes are bound to happen. If your belief in yourself and your work is strong enough, you will be able to overcome the mistakes. This is very important at OSI. At the cutting edge of technology, our company needs people who are totally convinced of their reasoning.

I also value self-starters. If people cannot innovate, they will only be cheating themselves. We encourage self-starters to build on their intuitive ideas. These are people who grow richer because of their ideas. In hiring these rich people, the company is bound to grow. I can attribute our low turnover to this rich culture that we have nurtured within OSI.

On OSI’s Evolution
We remain focused in opto-electronics. There is much we can do in this space, and we are expanding from security to medical devices, aerospace and so on. The security market is led by national events and thus emotions, which will mature into a planned necessity soon. This will open up bigger markets for us, and I see this need translated worldwide. Possibly, we are the only company that has the international presence to cater to such a need. Recently, our medical devices have also obtained FDA approval and we see this as another venue for growth. In all this, we will remain in the end product category.

We see India as a potential market for manufacturing and marketing our products and have been investing increasingly in the country for the last 12 years. We will continue this and increase our involvement in the market, with the years to come. We understand the culture, we understand the needs, and we have sufficient staying power to pervade the market.

On His Management Style
I am fundamentally an engineer. It is very difficult to forget that. I have developed the ability to let go, and allow people to run companies and divisions. At the same time, I have learned to bring on the bad news as fast as good news, sorting out mistakes and going ahead. I think I am also fairly quick in getting off my laurels.

I built my own house, which I think taught me a lot of lessons. How do you become your own customer? This project was an excellent learning board on user-experience. I also collect cars. I think there was a lot of passion that are very deeply embedded into every bolt and nut of these machines, which I can feel even now. I believe in getting into a project with a whole heart, or not at all. I expect my people to be that way too.

On The Succession At OSI
Being an engineering company, we tend to remain flat in our management organization. That said, we have also consciously cultivated the culture of diverse learning. Our CFO is now an operations man, we have moved people from security to medical business, from operations to management and so on. This diverse learning has produced a team of thoughtful, experienced, and motivated people at OSI. I think this has made us stronger, and I have no fears of succession. We think there are enough people at OSI who can take over my role.

An outside person will have difficulty in appreciating the idiosyncrasies of this company. We have relationships with our customers that go back two decades and more. We prefer somebody from within who has been with us. We have many who will fulfill this role.

Share on LinkedIn