ESI: Drawing on a Deep History to Create a Vision for the Future
I had an opportunity to sit down for a chat with ESI’s Vice President and General Manager Michael Darwin at the recent HKPCA show. Darwin shared some of the challenges that come with managing the culture of a 70-year-old company, and a little about where they plan to focus their efforts going forward.
Barry Matties: Michael, as the VP and GM of the industrial products division at ESI, tell me what your typical day is like.
Michael Darwin: Besides herding cats? I'll leave out all the fun and exciting stuff, like meetings and making sure we're on track. Basically what I'm responsible for is making sure we have the right vision, and that we're set up operationally to execute the mission of the company.
Matties: And what is the vision for ESI?
Darwin: There's the vision for ESI, and then there's the vision for the individual businesses or divisions within ESI. Before I answer your question, let me explain how ESI is set up. There are actually three different divisions within the business itself (4 if you include service, but will ignore for a moment). I run one of them—the industrial products division. Then there are two other general managers—one manages our laser products division, where we actually manufacture our own lasers, and the other who manages what we call the consumer electronics, or micromachining, division. The way we separate the divisions, at least between micromachining and the industrial products division, is around form factor. The components within a consumer electronics device would be considered an industrial product, whereas the micromachining division deals more with the external components, like marking or some of the more aesthetic designs on a phone.
So of those three divisions, I’m in charge of industrial, which are components. We sell laser-based manufacturing equipment to companies that basically manufacture components for consumer electronics. It could also be for automobiles and aerospace, but predominantly it is for consumer electronics. Our tools are predominantly laser in origin, but we have some inspection and we have some test equipment as well. The laser fabrication equipment mostly is focused on laser drills. However, we've been looking at other business.
Matties: We spoke recently with some of your colleagues with the ESI equipment and the flex lasers, all servicing the PCB industry in this particular case. That's all under the industrial division?
Darwin: Yes, that’s within my division, under industrial. Within the industrial products division, we have three major market segments we serve: the PCB, SEMI and SMT or surface module markets. We have products that are focused within each one of those market segments. Our biggest thrust right now from a mission or vision point of view is the PCB market, where we think we have a lot more value that we can add to the customer's process flow. Much of what we've done over the past two years is focus on having a strategy to fill out our product portfolio in the PCB space. Adding the HDI component to our flexible circuit via drilling system makes a lot of sense, as well as adding our Cornerstone product in the packaging space. It makes a lot of sense for us because we're already either visiting those customers or we're selling product that's similar enough that it's not an invention. It's more of an incremental improvement on our end.
Matties: You have these products in place and you have a mission, but there must also be a vision. The mission is to introduce these new products, but what's the vision?
Darwin: The vision of our division is basically to provide better cost-of-ownership products for the customers we serve. We are focusing on cost of ownership because our customers operate on very small margins. To provide a better cost-of-ownership product or two will only excite them more because they'll be able to make more money and boost their profits.
Matties: How do you execute that?
Darwin: That's a good question. Part of it is having the right product at the right time, but it's also partnering very closely with key customers in the industry. For us to test our value proposition to those customers, we need to have very close customer partners, and we need to validate that our product actually either meets better cost-of-ownership targets or is more productive or has better reliability than, say, the competitors in that space. Partnership is important, but then at the end of the day having good engineering to accompany that partnership is key.
Chris Ryder is a new addition to our team. I purposely went out to try and find someone with expertise in the HDI market—customer expertise, customer vision—who could bring that into ESI and help us formulate not only our strategy but our forward-looking thinking. That's on the product management side, but on the engineering side we've done the same thing. We've tried to make certain that we have engineers with the right expertise and background in systems and control architecture to enable us to basically build tools that are more productive than our competitors. Having that right mix of people, with both engineering and industry experts, gives us the ability to execute our vision.
Matties: It sounds like you guys are doing well, and you've been around for 70+ years?
Darwin: Yes, 70-something years. For 40 of those years we’ve been delivering laser-based solutions to various industries. We were one of the first to industrialize lasers in the global market. Those were our trim-based systems back in the ‘70s. We've built on that base over the years with our memory repair, with our micromachining products, and more recently with our via drilling systems.
Matties: The thing about being a 70-year-old company is oftentimes the past gets in the way of the future.
Darwin: Yes, it does.
Matties: How do you combat that?
Darwin: Every company has its own culture. When you're dealing with a 70-year-old company culture, it has benefits as well as challenges. One of the benefits is the degree of connectedness that the employees have with one another. For instance, I've only been with the company a little over four years, but I've had people retire from ESI that have belonged to part of my team, who worked for ESI for 40 years; those people have a 40-year history of what works and what doesn't work. That's the positive thing about a culture like that. The challenges associated with the 70 years of history is making certain that we're always contemporary and that we're a learning organization. Ensuring that means part of the executive management's team is making sure that we are on the cutting edge and we are doing the right thing.
Matties: What tactics do you use?
Darwin: It's a challenge, but I think part of it is bringing in new blood, like myself and Chris. Part of it is also recognizing the strengths of the culture and being able to utilize those strengths to project us forward. The ability for a well-honed, very experienced team to execute on new equipment development and new process development is pretty impressive when you see it happen. Recognizing that and being able to leverage that into well-established markets is critical as well. But, of course, being a 70-year-old company, there are lots of systems and lots of history and processes that are ingrained in the culture. I think as a responsible executive we have to go in and challenge ourselves. Does it make sense to do things in the same manner or fashion as we've done historically?
Matties: How does it seem to react to change?
Darwin: I think it depends on where you are in the organization, each team reacts differently. Guys who are on the front line building products like consistency. They like to be able to say, “Okay, here's the forecast. This is what I need to do tomorrow.” Change is a little bit more difficult when you're talking about operations, and rightly so, because I think changing operations introduces disruptive risk. Engineering and product management, though, enjoy the challenge. They want to see change and they want to drive change forward. In general my team, which is product management, engineering, and process development, embrace change. They want to see the change happen.
Matties: What sort of demands do you get from customers that you then have to process and do something with?
Darwin: You asked about challenges of a 70-year-old company. One of the challenges of a company that has a history is that a lot has happened on previous watches, even two generations ago. I think some of the challenges with respect to our forward-looking mission and vision come from some of the legacy issues that we may have had over time. These could be legacy issues that are 15 or 20 years old. One of our challenges is being able to address those legacy issues promptly, but put in place changes or mechanisms or processes that help us correct those historical issues going forward.
Matties: It's not just the equipment that makes this premium. It's the people that make it premium, right? Because what I keep hearing is team, team, team. The result of a great team is a great product.
Darwin: I like to think that you need to have the right team. You need to have the right game plan. Then you need to be able to have the flexibility to adjust your game plan depending on the changes in the environment. Yes, the output of the team may be a product. It may be service. It may be the value proposition that we've provided to the customer. But you're right, at the very core of that is the team, and to make sure you have the right players on the team in the right positions is extremely important.
Matties: From a corporate or higher-level perspective, what's the vision of the company?
Darwin: It's really all about customer solution and customer focus. Even though we have these three separate divisions, our intent is to work towards providing the customer with the best cost-of-ownership solution in their respective markets, whether that's in the micromachining space for the aesthetic purposes or on the component side.
Part of that vision of being able to provide the best cost of ownership or the best solution is actually utilizing some of our own lasers. We made a specific strategy to invest in lasers to build on not only our differentiation, but also our long term supportability of our products. Again, the mission is all about the customer and providing value to the customer from a cost-of-ownership perspective.
Matties: Great, thanks for your time.
Darwin: Thank you.