It’s not always clear which technologies are winners until it’s too late, so Mattera’s job is to assess the risk and the opportunity.
“What I have found in my career, including at Bell Labs for 20 years, is that no matter how smart the people are around you, somebody has to shoulder the risk,” he says.
Mattera is often reminded of two things an II-VI board member once told him:
The most difficult thing to do in life and in business is to see the opportunity.
The best thing you can do is allow people to make small mistakes, while making sure they don’t make big ones.
Go around the problem
Mattera assumed increasing responsibility in the company’s diversification strategy and acquisition-related integration activities in the U.S., Europe and Asia.
While II-VI bought materials-based businesses at first, Mattera identified a track where the company could participate in the fiber laser market without going head-to-head with IPG Photonics, which had developed and commercialized the technology.
II-VI participated at both a higher level and lower level of integration in a Sun Tzu-type strategy. Mattera says, “The Art of War” teaches you to go around the problem to avoid consuming all your resources and energy.
“We went around it, and we started building up a business, and then lo and behold after 10 years, we found out that our 1-micron — that’s the wavelength of light of this fiber laser — laser component business was as big as our carbon dioxide business that we were trying to defend or find opportunity for,” he says.
When the Great Recession threatened II-VI’s 20-year history of 20 percent annual growth in the public markets, the company looked to China, which still had strong growth rates.
In 2010, it acquired Photop Technologies. The Chinese company had $66 million in trailing 12-month sales. Today, that business has more than $600 million in sales.
“II-VI from 10 years ago wasn’t even in the communications market. Now, it is one of the most important players, providing components and subsystems for every major network operator in the world,” Mattera says.
“These are incredible transformations, but they do take place not overnight. “They take place every single day, step by step.”
II-VI’s 2013 acquisition of a distressed Switzerland-based semiconductor laser business from Oclaro Inc. was viewed by some as too risky. Mattera sees it as a way to gain access to the consumer market with applications for virtual reality, augmented reality, machine learning, artificial intelligence and more.
However, some of II-VI’s best acquisitions were the ones it considered, but didn’t actually do, Mattera says.
In other scenarios, a downturn in the market after it bought a company slowed down II-VI’s ability to achieve certain levels of performance. But II-VI has always gotten to where it wanted to go, even if it took longer to get there.
“Everybody talks about strategy and they write books about it. But at the end of the day for us, it’s really simple — decide,” he says. “We’re constantly confronted with decisions that we need to make about capital allocation, resource allocation, which markets to invest in, which customers to say no to, which acquisitions to say no to.”
