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Cypress Semiconductor-final ppt.ppt

  1. Cypress Semiconductor Vision, Values, and Killer Software Presented by: Taiya Brandon Vendall Dollarhide DeMarqus James Kiran Kumar Puneeth Ramaiah
  2. T.J.Rodgers and Cypress DeMarqus James
  3. Thurman John (T.J.) Rodgers  T.J. Rodgers on being named one of America’s toughest bosses by fortune magazine in 1993: “For 24 hours I was totally pissed off. But I read it again, and I didn’t mind it. In fact, I have the cover mounted on my office wall.” T.J. Rodgers  President and CEO, founder of company at age 35.  Bachelor’s Dartmouth physics and chemistry  Master’s and PhD at Stanford University in electrical engineering  “labeled cocky, brilliant, committed, brash, tough, charismatic, outspoken, and an egomaniac”
  4. CEO cont’d  Devoted Green Bay Packer Fan  Began working at AMI in 1973 where the company was a relaxed supportive, nurturing environment were people weren’t held accountable.  A memory in Silicon Valley  “It is the hypocrisy of warm and fuzzy cultures that don’t deliver” Winning is what matters. And if winning means being tough, demanding, impatient, then that’s what you have to be.” T.J. Rodgers
  5. Background  A Semiconductor design and manufacturing company  Established in 1982, headquartered in San Jose, CA (Silicon Valley)  Cypress has manufacturing plants and design facilities all over the United States, the Philippines, Belgium, India, and Ireland.  Cypress debuted its first product, a CMOS memory chip, by the beginning of 1984.
  6. Products  PSoC mixed-signal arrays  High-Brightness LED solutions  Clocks & Buffers  USB Controllers  RF/Wireless  West Bridge  Programmable Logic  OvationONS Laser Navigation Sensors  Memory  Image Sensors  Physical Layer Devices  Control Communications  Professional Videos  Software
  7. Products  General Purpose Clock generators  Control Communications  Image sensors  Memory  Optical Sensors  PSoC Mixed-Signal Controllers  Physical Layer Devices  Programmable Logic Devices  Solar Cells  Universal Serial Bus  West Bridge Peripheral Controllers  Wireless
  8. Cypress  Public Company Incorporated: 1982 Stock Exchanges: New York Ticker Symbol: CY NAIC: 334413 Semiconductor 334210 Telephone apparatus
  9. CYPRESS CORE VALUES  Cypress is about winning  Cypress people are “only the best”  We do what’s right for Cypress  We make our numbers  We invent and make state-of-the-art products Are the vision, core values and systems congruent with success?
  10. The Cypress Model Puneeth
  11. The Cypress model “Be realistic, Demand the Impossible” -Former employee  What do you think are the main aspects of the Cypress business model?
  12. The Cypress model  A self-contained economy with a federation of small companies “each small enough to maintain its intensity, together big enough to matter – a system of perpetual entrepreneurship” - T.J. Rodgers  “Cypress: We eat nails”  Created Subsidiaries  Goal was to become a big company with the speed, discipline, and energy as a start-up  Following Rodgers original model the company operate solely within niche markets, those with sales less than $40 million
  13. Subsidiaries of Cypress  CYPRESS SYSTEMS  Cypress Systems is a subsidiary of Cypress Semiconductor – a leading producer of innovative technologies such as Programmable Systems-on-a- Chip mixed-signal arrays, CapSense solid state touch  SILICON LIGHT MACHINES  Silicon Light Machines (TM) delivers innovative products for a variety of advanced applications - from fiber-optic communications to high- performance print systems and high-resolution digital display  SUNPOWER  SunPower (TM) manufactures and markets high- efficiency PV (Photovoltaic - solar electric) panels that generate electricity from sunlight for residential, commercial, and remote power applications.
  14. The Cypress model  Revenues shrunk to $272 million and the company posted its first loss in its history as a public company to the tune of $21 million  Slashed some 700 jobs  Cut product portfolio almost in half  Sold its Ross subsidiary to Fujitsu for $23 million “…was a good way to get from zero to $1 million, but ran out of gas in 1992 ” -Rodgers  1992- The Big Crash
  15. Reasons for downfall  Rather than “niche-ing” its competitors, Cypress was “niche-ing” itself  Prices falling with increased supply  Shrinking market facing a worldwide recession  Retaining the assembling and testing facility in US costs $17 million more than moving overseas “Nothing at Cypress is Free”- T.J.Rodgers
  16. Restructuring the model  What were the changes seen in the business model after the downfall?
  17. The Three Systems  Rodgers “Success Mantra”  People Management  Performance Management  The “Killer” Software
  18. The People Systems Vendall Dollarhide
  19. The Art of Dealing with Employees: A Military Exercise “Great people don’t guarantee corporate success— but no company can succeed without great people.” T. J. Rodgers
  20. The Art of Dealing with Employees: A Military Exercise Hiring: SWAT “… hiring is a process, not an event.” T. J. Rodgers Is this belief based on short-term or long-term vision?
  21. The Responsibility: Changing the Rules  HR is viewed as merely a database operated by “drones” not officers  Hiring managers “officers” are the center of the hiring process  “Hiring Book” Is this a good policy? Are there negatives and positives to this philosophy?
  22. The Raiding Parties: SWAT Team Precision  Stage 1  land in city  Stage 2  scout out the top few hundred engineers and managers  Stage 3  leave with the top 10
  23. The Raiding Parties  Reconnaissance —RECON  Loose and Informal  Scout out few hundred engineers and managers  Hire headhunter to pass advance notice of Cypress arrival  Search for “fatal flaws” in resumes “If someone was not ‘in the loop’ enough to know we were coming to town, he or she was, by definition, not our kind of person.” T. J. Rodgers How would this statement effect those just entering the job market?
  24. The Interviews: Hand-to-Hand Combat The Principles  Use big guns  Interview team (usually): Rodgers, 3 VPs, a couple of technical people, a secretary First Message for Candidate “We’re Cypress, we work hard, and you’re not going to get a raise to join up. Should we continue?”
  25. The Interviews: Hand-to-Hand Combat The Principles  Make interviews demanding  No backslap interviews  “pack of wolves” interviewing strategy
  26. The Interviews: Hand-to-Hand Combat The Principles  Probe for technical skills and work ethic  Several technical interviews  Knowledge?  Dependable and dedicated? Could you float or bluff your way through these interviews?
  27. The Interviews : Hand-to-Hand Combat The Principles  Require detailed written assessments  The “Cal Tech” effect  All interviewers must submit  Strengths and weaknesses  Shared with candidate regardless of employment result Would this be helpful?
  28. The Interviews : Hand-to-Hand Combat The Principles  Probe carefully for cultural misfit  The career-path questionnaire  Explores motivation, character, aspirations  Hard-to-quantify issues Does it matter why someone wants the job?
  29. The Interviews : Hand-to-Hand Combat The Principles  Take references very seriously  Not usual shallow checks  Results reported back to candidate  Intention: keep candidates anxious and interested
  30. The Interviews : Hand-to-Hand Combat The Principles  Speed  Demanded  Hire/no hire decision within 1-2 weeks Would this be a good practice?
  31. The Ceremony: Preparing the Candidate  2 Functions  Create emotion in the candidate  Create important psychological break from old company  Coach recruit on how to quit Coaching how to quit?  Review process for future “We treat these matchups like judo: We know our opponents, we know how they are going to react, and we turn their reaction to our advantage.”
  32. Controlling Headcount : Preparing for Future Battles The Art of Dealing with Employees: A Military Exercise Reason for Controlling Headcount “Because directly or indirectly, people drive all costs in a company.” T. J. Rodgers
  33.  Benchmarking against competitors  Quarterly presentations by all managers  Make case for added headcount  Request and justification  Microperformance index  Intent: reduce layoffs during downturns Method of Controlling Headcount
  34. Retaining People : Fortifying the Stronghold The Art of Dealing with Employees: A Military Exercise Erect Barriers Win Reversals
  35. Performance Management Kiran Kumar
  36. Performance Management  Designed to attract best people.  Motivates and evaluates employees.  No salary raise for 3% of employees.
  37. Compensation  Every group of peers in the company regardless of organization level receives the same average percentage raise.  Outstanding performers deserve outstanding raises.  Merit and Equity must remain distinct.  Precision matters.
  38. Phase – 1 Performance Ranking  Selection of Focal Groups.  Rating on Merit (not on potential).  Performance driven salaries.  Mayonnaise Effect.  Solid-citizen Raise.
  39. Phase – 2 Merit Raises  Monotonic Distribution.  Minimum Range.  The Forbidden Gap.  Reasonable Raise Relative to Recommendations.  Borders (not to cross 7% raise).  Average Raise (not to exceed or save budget).
  40. Phase – 3 Equity  6 weeks for adjustments.  guidelines for average, required & solid raises are made in late January.  Rodgers is paid no more than the highest paid VP or 25 times pay of entry level worker.
  41. Stock Operation Grants  Stocks granted through focal-review process.  Rewarded for future potentials.  1 Million stock options annually.  Focal Groups are allotted portion of stocks.  Options vests for 4 years.
  42. Result of Performance Management  Top performers tend to stay in company.  Opportunities for growth.  Equal raise regardless of organizational level.  Stocks reduces the turn over ratio.  Low turn over ratio, less than half the industry average.
  43. Debate Does the goals and performance management system produce the desired results, both in the short term and the long term? PRO – Team 1 and Team 2 CON – Team 3 and Team 4
  44. “Killer” Software Taiya
  45. “Killer” Software  System designed to monitor goal attainment  Management by objective  Basis is one of a goal system  System focuses attention on bad performance, doesn’t guarantee great performance  Runs on the corporate network using basic database and spreadsheet technology
  46. “Killer” Software “Your area has been shutdown by killer software” What does that mean? Mutually agreed upon goals (performance metrics) have not been met. The target performance was missed and corrective actions too late.
  47. “Killer” Software  Killer software in action…. What happens next? Item is 5 wks overdue
  48. “Killer” Software Dashboard Way to gauge performance metrics
  49. Cypress – “Killer” Software  Cypress success is tied to the commitment to three main system:  People Management  Performance Management  Killer Software “Ultimately, the goal system is only as good as the people who implement it” T.J. Rodgers
  50. The Future of Cypress Puneeth
  51. The Early 90s “tough and fast moving….not an environment for everybody”- T.J.Rodgers “like being in the Marines….” “When something doesn’t work right and the job can’t be done, it feels really bad....” - Employee
  52. Benefits at Cypress  Medical Insurance  Stock Option Plan  Employee Stock Purchase Plan  Vision Service Plan  Personal Time Off (PTO)  Employee Assistance Program  Accidental Death & Dismemberment  Stanford Instructional Network  Short-Term Disability Insurance  Author Incentive Program  Long-Term Disability Insurance  Patent Award Program  Payroll  Prepaid Legal Plan  Flexible Spending Reimbursement Accounts  Credit Union Membership  Long-Term Care Plan 401(k) Employee Savings Plan  New Product Bonus Program  San Jose On-Site Services  Business Travel Accident Insurance
  53. Rodgers [“Matrix”] Offer
  54. The Turn Around 1992: Cypress brought its subsidiaries back into the company as divisions 1993: Revenues touched nearly $305 million and regaining profitability, with net earnings of $8 million. 1996: Acquisitions and licensing deals bring Cypress into leadership of booming USB chip market. 2000: The company's sales pass $1 billion. 2000: The new personal computer market presented a double opportunity for Cypress, which began designing chipsets for Pentium 2002: Cypress was developing components for the latest generations of mobile phones
  55. Awards and Recognition  Financial World magazine named Rodgers CEO of the Year in 1996.  In its October 2001 issue, Upside Magazine cited Rodgers as one of the "100 People Who Changed Our World.“  2002, "Top 100 Chief Executives" by Chief Executive magazine.  2005 inducted into the Silicon Valley Engineering Council Hall of Fame.  One of the "100 Best Corporate Citizens" for 2005 by Business Ethics Magazine.  Ranked 38th among the nation's 100 elite companies for its achievement in serving the needs of its stakeholders
  56. Principal Competitors:  Advanced Micro Devices  Integrated Device Technology  Samsung Electronics  STMicroelectronics  Xilinx  Motorola  Micron Technology  Toshiba  Fujitsu  Hitachi
  57. Primary Cypress Customers Alactel Hewlett-Packard Ericsson Lucent Nortel Compaq 3Com IBM Cisco Sony
  58. Cypress Today  #2 American supplier for SRAMs  #1 in USB and clock chip markets  Principal Subsidiaries: Cypress MicroSystems; Cypress Semiconductor (Minnesota) Inc.; Cypress Semiconductor (Texas) Inc.; Cypress Semiconductor Technology, Ltd. (Cayman Islands); Cypress Semiconductor Philippines Inc.; Silicon Light Machines Corporation; Silicon Magnetic Systems.  Principal Divisions: Memory Products; Data Communications; Timing Technology; Personal Communications.  Principal Operating Units: WAN (Wide Area Network); SAN (Storage Area Network); WIT (Wireless Terminals); WIN (Wireless Infrastructure).
  59. Key financials for Cypress Semiconductor Corporation - 2006  Company Type - Public (NYSE: CY)  Fiscal Year-End - December  2006 Sales (mil.) - $1,091.6  1-Year Sales Growth - 23.1%  2006 Net Income (mil.) - $39.5  2006 Employees - 5,800  1-Year Employee Growth - 13.7%
  60. Annual Income Statements (CY) All amounts in millions of US Dollars
  61. Interactive Chart (NYSE: CY)
  62. Cypress  Should Cypress modify any of their practices and philosophy to stay a contender in the highly competitive industry?
  63. The GOOD The BAD & The UGLY