Positive thinking Featured

8:00pm EDT July 26, 2009

Mohan Maheswaran admits that he wasn’t natural management material.

The Sri Lanka native is an engineer by trade, and he preferred tinkering with technology.

But during a decade-long stint with Texas Instruments, a mentor showed him tinkering could come from the executive suite.

“One of the things that he said to me was any good business must drive its own energy,” Maheswaran says. “In other words, it has to drive the energy to move itself, and it took me a while to figure out what that meant. Well, he showed me how it works in practice, and it’s really a wonderful thing when you see it working. Essentially, what you do is you put in place the systems, the processes and the people and, as the leader, you facilitate the business. But by virtue of the systems, strategy and the execution model you put in place, the business should have the energy to drive itself. So I’ve always taken that philosophy and applied it to everything that I’ve done in business. I say, ‘Hey, I can’t spend all of my day, seven days a week, focusing on the business.’ I have to be able to see it growing and scaling, even if I wasn’t there.”

So while Maheswaran became management material along the way, taking the post of president and CEO at Semtech Corp. in April 2006, he realized that not everyone shared his vision of a high-energy culture that could carry the day. In fact, the culture at Semtech was in direct opposition to this. The supplier of analog and mixed-signal semiconductor products was still performing — it posted $252.5 million in fiscal 2007 net sales — but that number was its second straight year below its record sales in fiscal 2005, and it was rife with signs of a struggling, fear-based culture.

“A lot of employees were somewhat afraid to take risks, unwilling to make decisions, and for me, a no-decision-making culture is doomed to failure in this competitive environment,” Maheswaran says. “You have to make fast decisions. You have to make well-balanced decisions, but you have to make them quickly, and that doesn’t come from a fear-based culture.”

So Maheswaran changed that culture by putting top-flight managers on the job and instilling systems that let people build their own expectations to fit his vision.

Start at the top

Maheswaran realized he alone couldn’t change the culture of a global company with nearly 1,000 employees, so he decided he wouldn’t.

“For the leader, the No. 1 task is to put into place a management team that can get the job done,” he says. “I can do all the talking and waving and define the vision all I want, but if I don’t get the management team to go execute it, it’s nothing.”

If you have a vision of a culture that can drive itself, you have to have self-starting managers. Finding those people is twofold. They have to share your vision and then you want to make sure they have the winning attitude to carry it out.

“That winning attitude can drive high motivation even in downtimes,” Maheswaran says. “So the people with the can-win and can-do attitude, despite the environment, are the ones that differentiate themselves.”

How do you find that attitude? It starts with a passionate person who matches your drive and has values.

“Give me a passionate individual, someone who really wants to work hard and wants to achieve something, (someone) not looking for money, not looking for recognition, they just really want to achieve and do something great and different,” Maheswaran says. “The second thing is somebody with values. If you have somebody with a lot of integrity who is a good team player, they look to motivate rather than demotivate people.”

Since resumes and interviews can be misleading, you have to tune your ears in for some keywords to make sure you get what you ordered. Here’s a phrase to look for: earning it.

“Some people think that rewards and bonuses and equity are entitlement,” Maheswaran says. “Well, in my world, they are not. I find it amusing when I see all the news out there on executive bonuses and I see people getting massive bonuses when the company is in dire straits. I sit back to myself and say, ‘How would I feel if I got a bonus and the company is not making any money?’ That doesn’t make any sense to me. So I want people who come on board and say, ‘Look, if we perform well and deliver results, we want to be rewarded. If we don’t, we don’t want to be rewarded.’”

For the record, these people don’t come in any one shape or size. Maheswaran’s executive team is from all over the world and is composed of people he’s worked with before, executives already in place at Semtech and new hires. But he says you personally need to spend time doing interviews to ensure that each one meets this leadership litmus test.

Maheswaran also refused to take second best, getting permission from his board to do broad searches, extensive interviews and give the incentive-based compensation models that would befit the person he wanted.

“It’s the only way,” he says. “If you settle for anything less than that, you are really saying to yourself I’m going to have to not be as aggressive in pursuing the vision.”

Once he brings these people in, though, he doesn’t just trust that they’ll be 100 percent there on day one. He has them work directly with him during their training to share the culture of empowerment at Semtech.

“If I made the decision to bring in an executive, it’s my job as their manager and their leader to give them the tools and show them the way,” he says. “What I find is that when people have spent some time with me, they develop that passion and that culture because I have it and people who work with me develop it.”

Build accountable systems

Maheswaran doesn’t use euphemisms when discussing the biggest challenge he had in reworking the culture at Semtech.

“The execution of the company was just not where it needed to be,” he says. “At all levels and all areas of the company, I found the execution to be poor at best.”

So before he could completely empower people to make their own path, he had to make sure they understood the new direction.

“That was a big challenge because this is not only a cultural shift, but it’s also behavioral and a people shift,” he says.

Semtech didn’t have any systems in place that pushed for higher efficiency or risk-taking. The result left processes feeling stagnant. When you’re dealing with that type of cultural idle, you can’t just give people marching orders and expect them to change course.

“The main thing is really enabling the people to shape the vision to help them see that in their own roles how they can help create a great company, so not only communicating the vision but communicating the shared common purpose,” Maheswaran says.

In order to involve them in that process, you simplify it and let the energy build by explaining what individual results mean.

“Break it down for the people,” he says. “When you’re trying to bring out the best in people, you really have to simplify things to show them how to get from A to B.

What you do is you set the vision and break the vision down and say, ‘If we can achieve at the end of this year this milestone, and the end of next year this milestone, we’re on our way.’ It’s the road map of how to get from A to B. There are always choices and there are different paths you can take, but which is the right path for the company? That’s really where the leader and the management team play a very important role in defining that road map.”

So you create an overarching vision and then ask people how they’ll step up and perform to it over whatever realistic time frame you set for significant change. Then, you measure that.

“The first thing you do is you start to measure things and you start to set milestones and you put metrics in place and you start to measure people and hold them accountable,” he says. “So I asked people, ‘What are you going to deliver next quarter?’ You tell me I’m going to deliver A. Well, if next quarter you deliver B, I want to know why, what’s the difference?”

Many employees will be enthused to set their own targets and take on new challenges. But when people don’t perform right out of the gate, give them time. Remember that people will still be a little shell-shocked by the adjustment from a stale culture.

“The trick is to watch out for the people that are actually very good and can execute well but they’ve been demotivated for so long that they don’t actually get there,” Maheswaran says. “So you don’t want to throw the baby out with the bathwater, right?”

So when they don’t perform you ask them what left them out in the cold and help them adjust so they know something like coming up short of stretch goals isn’t the problem. If they come up short again, you repeat the conversation but not ad nauseam.

“One quarter, two quarters, three quarters, you give people opportunity to take charge and you try to help them,” he says. “But, in the end, if it’s a continuous story, you end up saying to yourself, ‘Well, maybe the issue is not the company anymore; maybe the issue is you.’ I haven’t tried to build a culture of if people don’t execute one time that they’re out. It’s more of a, ‘Hey, look, this is not working. Here’s how we’re going to improve it; if that doesn’t work, let’s try something else,’ approach to get better execution. But, in the end, if you’re not delivering on a consistent basis, then something has to be done.”

During this time, you’ll have some changeout of staff right away because, frankly, accountability isn’t for everybody. But this is a double gift: You’ll lose underperformers and new people will help cement your systems.

“When you bring in somebody new with the right excitement level and the right passion, that is somebody who doesn’t know the old systems, the old culture, the old people, they don’t know the old constraints,” he says. “So, essentially, bringing in new blood is its own catalyst for change.”

Once you mix new blood and start seeing some refreshed experienced employees, you’ll get a second batch of people that self-select career relocation when the systems stick.

“Eventually what happens is the people who can’t (meet expectations) start to realize, ‘This is too tough for me’ or ‘This is too stressful for me,’ or ‘I’m obviously the weak link here,’ and they leave,” Maheswaran says.

With managers cascading a winning culture and employees owning their own goals, things have come a long way at Semtech, as a downturn hasn’t stopped a culture where people set their own internal stretch goals.

“The company has started to become more of an empowered culture where employees know they will be held accountable for poor performance and poor results, but they also recognize that they are part of a team that’s working toward a common purpose and that the rewards come from taking some risks and trying to do that something extra,” Maheswaran says.

The financials bear that out. The company posted a then-record $284.8 million in net sales in fiscal 2008, and then pushed through to post a new record of $294.8 million in fiscal 2009.

“There are still areas where we can do better,” he says, “but I feel good about it, and the proof is in the pudding. ... Last year was a record year for us, the year before that was a record year for us, in terms of revenue, and so by delivering results on a continuous basis, you start to get a feel for are we really executing the way we want to execute, and that, to me, is the right sign.”

How to reach: Semtech Corp., (805) 498-2111 or www.semtech.com