Jeff Waters: Isola Updates

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Matties: You stepped into the organization when it was in pretty rough shape. How's the morale and the culture of the organization now?

Waters: I don't want to send the message that people are dancing in the streets, hugging me, and giving me their babies to kiss, but we're making good progress. One of the changes we made approximately six months after I joined was we moved from a regional organization to global one. We had a president of Asia, Europe, and North America. We wiped out that structure and went with one global structure. This has been tough, but was necessary to help improve corss-regional communication. I heard repeatedly from customers that we were very difficult to do business with when business and opportunity crossed regions. 

We needed to clean a lot of that up from sales communication to R&D communication—it was a lot of silos that were built from regions that were effectively competing with each other. We made the change to a global organization, and it was absolutely the right thing to do. We're seeing significant gains and efficiencies from it, but I'd be lying if I said it wasn't a painful change. As an example, our people in Hong Kong used to work normal eight to five days, but now they sometimes work from early in the morning with calls to the US, until late with calls to Europe. That said, we’re getting better at coordinating global communication and the challenges are getting less. It also helps that people are seeing the benefits of being a global organization.

The other ongoing morale challenge was in Arizona, where our corporate headquarters, R&D and factory are located. People saw that factory being utilized at about 20–25% capacity, and were expectgin a closure of it, and were concerned about the implications for their jobs. With the move that we made with the factory now, by the beginning of November, we'll be able to start talking to people specifically about what the address is and where we will be in the Chandler area. The factory that we’re building with also have the headquarters and a new R&D lab co-located with it. This sends a message to all of our employees in Arizona that we're there to stay.

The other announcement is we have a new CFO, Troy Ruhrer, who was our VP of finance. He's a long-time employee with Isola based out of Chandler, Arizona, so it's another indication that we're committed to that location. This is already starting to help with some of the uneasiness.

As for the other areas, we're starting to see more stability in the company. We've been able to stabilize revenues and profits, and that more than anything helps with morale.

I tell the story about how it's hard to get people excited when you're still sharing with them that revenues are shrinking and profits aren't growing. I likened it to the Golden State Warriors basketball team, which we’re very familiar with in the Bay Area. People would talk about their high morale and great culture, while they were winning at historic levels. They then had a brief period where one of their stars, Kevin Durant, got hurt. After on ly a few losses the team members fought with each other, and things began to fall apart. If you're not performing well, it's hard to keep morale high—even when you have a great culture.

Isola is starting to consitenly win, and we’re seeing more people get on board with where we're going. That is bringing a lift to morale.

Matties: I think it makes a big difference when there's clear alignment in a direction that people can start counting on and trusting. Your words are turning into actions.

Waters: When we came out with a corporate set of values, one of them is “be courageous.” It's something I've been harping on since I joined the company; it was part of the culture change. Historically, changes have been very hierarchical. We've tried to create more of a bottom-up culture. The “be courageous” piece is that if you see something that could be done better or something that we're doing that you disagree with or is wrong—especially if it's coming out of my mouth—we urge and expect our employees to speak out. We demand that. We're starting to see this happen now in the company. It's a slow boat to turn, but we're getting there.

Matties: Supply chain management is a big issue. Would you like to give any advice to manufacturers on how to best manage supply chain issues?

Waters: There are a lot of crazy things going on in the world with natural disasters and trade disasters. Being a company that has a global footprint, we must have the ability to be flexible, shift production, and do a variety of things to help keep our customers up and running no matter what the circumstances. I was in the semiconductor industry and living in Japan at the time when the tsunami hit in 2011. I saw firsthand the impact those kinds of events can have on the supply chain.

The beauty of Isola is that we are everywhere. We're in Europe, both coasts of the U.S., China, and Taiwan, so we can and will take care of you. If you had a bad experience with Isola three to 12 years ago, come back and try us again. We are improving and making things better every month. We’ve made enormous progress.

Matties: Thank you very much, Jeff.

Johnson: Great to hear from you.

Waters: Thank you.


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