Breaking up these four areas into small independent groups along product lines is a bad move. Corporate marketing loses its power of action and the overall company can lose its mind share presence as several small marketing teams move in different directions. Its power is destroyed as its message fragments. Even operations and account management are compromised, for as marketing moves to address individual markets they are left without support. At the same time, they cannot gain the economies of scale from having a single operation focused on supplying tools or addressing an account’s needs with a single face. Having fully independent product marketing and development teams has a similar effect. They will develop their own messages and tool platforms, taking away the leverage that a larger entity can gain from having common messages and platforms. It is important to have individual product marketing and development teams focused on a single product and market. But the key is that they are not independent and that they have corporate level oversight with a marketing focus, not a market/product focus.
Lam Research made this move in the late eighties. They had individual business unit directors for CVD, Oxide Etch, Metal Etch, and Poly Etch. Underneath these were independent operational, marketing, and development groups. Sales was off to the side, also at the corporate level position. By the mid-nineties Lam had lost its message of high reliability and simple efficient systems developed by its founder, David Lam. Even executives inside the company had forgotten it, or had never learned it. At the same time its CVD group was dying for lack of support, while its etch group had split into several platform architectures - - each being sold with a different message. Manufacturing costs and inventory levels rose, as things became too complex to keep track of. As these groups became more independent, internal civil wars broke out leaving the customer out of the picture. The company lost its leadership position in etch as a result. It took years for new management to recover the company.
General Signal tried to enter the industry in the eighties by acquisition. It was seen as a white knight, pumping money into companies and largely leaving them alone. At one point, they were one of VLSI’s Top Ten largest equipment companies. However, the portfolio of companies was never integrated into a cohesive market force. Manufacturing was never rationalized. As a result, problems that these companies had before their acquisition continued to fester after it. The eighties was a time of great consolidation that was driven by globalization of the industry and rapidly escalating customer demands for support. General Signal’s lack of an integration strategy left them unable to address these strategic trends. So their portfolio withered, just as if they had never acquired them. Ironically, the companies that were strong before their acquisition continued to thrive long after General Signal had given up and exited the market.
