Does a Good Idea Always Need Strong Execution? Lessons from Micrel’s Strategic Turnaround

In the world of semiconductor technology, particularly in the analog domain, the adage that great ideas require strong execution is often overlooked. This article draws from the experiences of Prasad and the author, who navigated the challenges of turning a struggling division of Micrel into a profitable powerhouse. The journey is a testament to the importance of strategic execution in the highly competitive tech industry.

The Landscape of Micrel

Prasad, previously a key player in Maxim Integrated Products (Micrel's larger rival), joined Micrel as the General Manager of the Communications Technology Division. The meeting to discuss process technologies brought to the fore the stark reality of Micrel's position: they were at least a generation or two behind Maxim in terms of process node capabilities. This was a challenging situation, especially in a field where technological prowess is the primary differentiator.

Realism and Reality

The team's attitude towards overcoming these challenges was encapsulated in the phrase "we're Micrel." While this sense of pride and identity was commendable, it was a dangerous illusion. Realists like Prasad understood that despite Micrel's reputation, the company could not compete head-to-head with Maxim’s superior technology and better engineers.

The Product Showdown

A prime example was a 10Gbps Transimpedance Amplifier (TIA) project Micrel was developing. The design of such products is relatively straightforward, with the differentiation coming from the process technology. Micrel's inferior process technology meant they had no chance of competing with Maxim. This was a critical realization, as it turned the product strategy into a non-starter.

During a meeting with CEO Bob, the author presented the case for scrapping the project due to poor performance. However, Bob could not accept reality, illustrating the old saying that “you can’t fire an employee when the company is doing well.”

The Alternative Path

The solution was not sexy but it was practical. Micrel teed into an area with less competition: high-speed logic gates and level shifters. This was a shift from their original strategy and required courage to implement. The focus on high-speed logic gates was not only less glamorous but also required a different approach to execution.

Transforming Strategy to Execution

The challenge was to effectively communicate the strategic shift to Bob and the CFO. The author's approach was to highlight Micrel's strengths and weaknesses. This direct and no-nonsense approach was met with resistance and ultimately led to a dramatic meeting where Bob’s reaction was particularly telling.

Note his emphatic statement: "I never want to have another meeting like this again.” This underscored the difficulty in transitioning from a traditional corporate mindset to one that embraces change and strategic execution.

Lessons from the Turnaround

The author's strategy, despite being "dull and boring," was ultimately successful. In three years, the division was transformed from Micrel’s biggest money loser to the most profitable division of the company. This proved that with the right execution, even the most mundane tasks can yield extraordinary results.

However, the author also notes that this success came at a cost. Bob's termination of the author’s employment highlighted the delicate balance between empowerment and accountability in a corporate environment.

Conclusion

The story of Micrel underscores the criticality of execution in translating good ideas into successful outcomes. The semiconductor industry is intensely competitive, and while innovation is crucial, it must be accompanied by strong execution to make a lasting impact. Striking a balance between ambition and realism is where true success lies.