Creating a Mission to Drive Business Objectives
by Paul Dhillon, VXI Technology
When VXI Technology, Inc. (VTI) was
incorporated in 1990 and started business as a custom
engineering house, our initial focus was high-performance
instrumentation, specializing in precision low-frequency analog
and digital solutions. The culture within the organization was
to partner with our customers to address specific
test-application requirements by designing and developing
hardware not available in the market.
While a custom engineering group with small
manufacturing capability provides a significant value for its
customers, it does not allow the business to easily scale and
grow. And while customers are prepared to pay for custom
engineering projects, this alone does not offer the financial
return necessary to establish a worldwide manufacturing, sales,
and support infrastructure. Custom engineering groups or
companies typically remain local small businesses.
On the other hand, leveraging the
organization’s engineering talent could develop products to be
sold year after year to multiple customers. This would allow
forecasting of returns, which can be used to establish the
infrastructure required for growth.
Both business models have conflicting
cultures. The custom engineering model minimally invests in
sales and marketing and depends on creative design engineers
that intimately understand the customer’s application. Close
customer partnerships are critical. This is in sharp contrast to
the product manufacturing model where investments in sales and
marketing are much higher, market research defines the product
direction, and engineering is focused on designing the product
with minimal customer interaction during development.
The financial models for both types of
organizations also are quite different. For example, with a
focus on custom engineering, product engineers often are taken
away from new-product design programs to solve an interim
customer-application problem. While this may generate short-term
returns for the organization, it removes those resources from
developing new market-driven products that may be a key element
to acquiring future business. However, by moving those engineers
who have the ability to develop custom solutions to product
development, the organization shifts short-term returns to
long-term investments and spreads those returns over multiple
years.
Although a custom engineering group or
manufacturer of low-volume products can create a great small
business where customer requirements for specific products fuel
cash flow, this organizational model is difficult to grow above
the $5M mark. The culture within a company at this level is
centered around designing products quickly, without focus on
documentation and processes required for long-term or
high-volume product manufacture.
When business is slow, and income is low, the
company takes on multiple design challenges, often overloading
engineering to achieve financial stability. Many times, this
overload makes it difficult to fulfill customer requirements and
meet delivery commitments because of lack of resources.
For VTI, the challenge was to determine how
to develop market-driven products with long product life cycles
without abandoning the custom engineering service we currently
were providing our customers.
The first challenge was to change the
corporate culture within the company and invest in instituting
an infrastructure in which we could develop those long-life
products. We needed to reduce the time required to design a
custom product as well as create documentation and a design
process that could scale for high-volume manufacturing. We
recognized the importance of developing a corporate culture that
would provide the service and consulting relationship of a
custom engineering facility while possessing the engineering
depth and infrastructure required to market, support, and
produce standard products.
Creating a Centralized Mission
We started the transition by expressing our
corporate philosophy in a mission statement that would drive a
culture change and become the focus for every part of our
business. This corporate philosophy, 15 years later, still is
the driving force in determining the markets we engage; the
attributes of the personnel we hire; and the innovations,
products, and services we offer to our customers.
So what is it, and why? In words, it is
deceptively simple:
Measurement Integrity
Measurement integrity drove the focus of the
company, its products, and its customers. It also defined the
type of engineers, sales, and marketing personnel we would hire
and the processes we would put in place.
Modularity and Density
Modularity and density provided an underlying
philosophy for every aspect of our business, which included the
manufacturing processes, documentation, and product developments
that enabled us to provide scalable test solutions with
extensive feature sets. Standard products then could be
customized to provide optimum solutions.
Product Longevity
Product longevity drove the need for us to
standardize, or create, platforms and technologies that would
have broad market acceptance. That, in turn, drove our internal
business strategies to leverage developments over a long period.
The result gave our customers the confidence that we would
provide test instrumentation that could outlive the products
they were testing.
Total Cost of Ownership
Every capital asset created or acquired,
infrastructure developed, or tool selected needed to match our
top three objectives and, in turn, provided the best total cost
of ownership. This also culminated in the product offerings we
developed.
The Strategy and Focus Created by the Mission
The mission drove the decision to focus on
specific business disciplines and develop standard and custom
products only for that discipline. We selected functional test
and data acquisition, and our engineering group was tasked to
develop a strategy where we could produce market-driven and
custom products and create an infrastructure to support both. It
also required us to hire the right personalities in sales and
marketing—those who could sell and support both standard
products and custom solutions.
We created a corporate strategy to modularize
our internal hardware and software products so that we could
leverage engineering in a building-block manner. This required
engineering to document designs in greater detail and create
processes to support the volume manufacture of standard and
custom products, allowing us to develop products quicker and
more cost effectively.
Within the organization, we hired team
members who had customer application domain knowledge as well as
product development knowledge. All key contributors had to have
the abilities to multitask and think outside the box.
As the company grows, this becomes more
difficult but still is an underlying attribute of our team. This
allows us to work very closely with customers to define standard
products that can be cost-effectively customized. A customized
commercial-off-the-shelf solution provides our customers
with a more efficient test solution.
Every product we introduce has the same
market differentiators that are driven by the mission of our
company—measurement integrity, modularity and density, product
longevity, and total cost of ownership. They are the basis of
our overall business objectives. The culture created by a simple
but well-thought-out mission statement helps drive the corporate
business strategy and ultimately benefits our customers and the
company.
About the Author
Paul Dhillon is CEO and president of VXI
Technology. He has been involved in test and measurement for
more than 22 years and instrumental in bringing industry
standards to the VXIbus and LXI markets. Prior to joining VTI,
Mr. Dhillon led product development and sales teams at Racal
Instruments (EADS). VXI Technology, 2031 Main St., Irvine, CA
92614, 949-955-1894.