IPC President John Mitchell on the Past, Present, and Future, Part 1
Along with newest IPC Hall of Famer and I-Connect007 Editor, Patty Goldman, I sat down with IPC President John Mitchell on the show floor at IPC APEX EXPO to discuss the event, the changes on the IPC board, and the key metrics that IPC uses to measure their own performance and effectiveness. John also invites the industry to a unique challenge.
Barry Matties: First of all, great awards ceremony. We are so happy that Patty Goldman is now an IPC Hall of Famer.
John Mitchell: Yes, our newest Hall of Fame member. Patty has been wonderful. She has been an active IPC volunteer for 35 years.
Matties: It's nice, and we've known Patty for nearly 30 years as well. My goodness it's been a long time. We were much younger when we got started.
Mitchell: Fifty’s the new thirty. That's what I'm going for. I turn 50 this year. I'm going for 150 so I figure I'm one-third done. I've got to figure out what to do with the next two-thirds of my life.
Matties: It's not completely unrealistic.
Mitchell: It's crazy with the advances in technology on all fronts. We heard a few of them from the Tuesday keynote. Dean Kamen is doing some good stuff. I got to know him a little bit when I worked at Bose. Bose and Dean’s group, DEKA, had a lot of bright people moving back and forth. In fact, one of the icons of Bose worked for him for a decade afterwards. He left Bose and went to work for Dean. In the early history of the Segway, I met him because I was working in the automotive group. There was some exploration about putting sound on a Segway…always cool things happening around Dean and Bose.
He’s just a good guy with a great vision. I love what he's doing for the future of engineering in his FIRST program, and actually it’s not finalized yet, but hopefully by summer IPC will be an interesting part of that.
Patty Goldman: That's great to hear.
Matties: Bringing young people into the industry and getting them when they're young is the right move for sure. This man is committed and passionate about it, there's no doubt.
Mitchell: Yes, and then our Wednesday speaker, Peter Singer, was also great. He talked about a derivative topic from what we heard during the previous day’s keynote, which was how technology can be used. We all go into it starry-eyed and say, “This is a cool, neat thing,” but you've got to be thinking about how somebody is going to try to use that in different ways than what we might have intended for that technology. He talked about the Internet of Things and how 70% of all devices deployed are vulnerable to hacking.
Goldman: Yeah, used and abused.
Mitchell: Exactly. It’s a paradigm shift because, as he was saying, medical companies, for example, that provide things like tongue depressors, just need to know if it fixed your problem. That's all they've had to think about. If it did, great, we’ll license it and go out. Now what they have to think about is, “Can I hack your body and into your pacemaker,” —which has a Wi-Fi or Bluetooth or other connection to your device so you can monitor it. Yet, somebody else can come in and go, “I think I'm just going to stop that.”
Matties: It changes everything.
Mitchell: It's a whole new world. He said he was going to talk to us about some scary stuff, but we’ve got to think a little bit about security and we just have to get better. Then, he talked about how it used to be the defense segment that led development, and now it's really the private sector that leads it because the defense groups don’t have the budgets or the turn-around time.
According to Dr. Singer, the British Air Force, or their defense contractors, apparently built a drone and we all know how long and expensive a process that can be. However, a group of college students said, “We think we can build a better drone. Let's see how fast we can do it and actually make it work.” They did it in seven days—from design to production prototype—and then flew it.
Goldman: They flew it on the seventh day.
Mitchell: Think about how long our aerospace groups take to develop something like that, and these college students did it in seven days. That's doing 3D printing and all that good stuff.
Matties: It's amazing what you can accomplish when you really try.
Mitchell: Isn't it?
Goldman: And you don’t have a lot bureaucracy around you.
Mitchell: No barriers. Do whatever you want, however you want to do it, just make it work. In Dean’s discussion of specs, he said, “Normally there are all these specifications that take forever to create.” When discussing the spec for a human arm replacement, Dean shared that the spec was quite simple for the customer to describe to him. He continued, “Here’s the definition for the robotic arm [for a human]: pick up a raisin and eat it; pick up a grape and eat it. There’s your spec.” That's all you need to do.
I love the practical aspect of this because it spoke volumes to the complexities that we trying to create a spec and get it exactly right. They said, “No, this is just what you want to do. We’re done. When you can do that, come call us.”
Matties: Also, during the awards program yesterday there was some shifting of board members going on. How's that going to change?
IPC APEX EXPO 2016 SHOW OPENING CEREMONY VIDEO (abridged)
Mitchell: We’ve brought on three new board members, one of whom is sort of new. Two have never been on the board before. The first is Tom Edman, president and CEO of TTM, the second largest PCB company in the world now. IPC is very pleased to see him involved with the IPC Board because he has a pulse on PCB across the globe. PCB is an important segment to our industry and we want to make sure we have board representation for that segment. We've also got Nilesh Naik on there, who is a different type of board manufacturer in that realm. He's more a specialization, rapid prototype, smaller shop, so we get a couple of different views of the PCB industry on the Board now.
Then, the other new board member is Robert Feuerstein. Robert is out of Continental Automotive, Gmbh, so again we're getting European representation on the board. As you know, Continental is very automotive-focused and they've been very active in IPC recently. One of Robert’s employees at Continental, Stan Rak, has been very active in helping us get more involved with both Continental and the automotive space, as well as getting them involved with IPC. Just yesterday, Stan won an IPC Rising Star award. This is the first year we’ve had this award.
Matties: That is also an interesting award.
Mitchell: Yeah, we wanted to start recognizing people who are new to the IPC world…who have really just stepped up within the past five years. We should recognize their contribution. We don’t have to wait 30 years before we say ‘good job.’ Let’s recognize them right now. He’s led several committees. Just the day before the awards, he walked up to David Bergman, our VP of Standards and Technology, and said, “I've got an idea for a great European standard.” He shared his idea and Dave’s response was, “I've been trying to get somebody interested in this. I'm glad you're interested. Let's get a committee together.” He’s already doing great things like that.
Matties: And there are a few more changes.
Mitchell: Yes, Steve Pudles is coming back on the Board as well. We’ve restructured the executive committee, so for the next two years Joe O’Neil will be our chair, which is great. Joe knows the industry. Joe is like the picture story of what you can do in this industry. He started off as a line worker and ended up in an ownership position of his company. That's pretty awesome.
Matties: We’ve known Joe for many years, what a great success story.
Mitchell: Mikel Williams is our Board vice chair. Mikel was formerly with DDI and now he's president and CEO of Targus. Mikel’s a brilliant guy as well. We’re looking forward to continuing to work with him. New on the executive committee is Shane Whiteside, formerly COO of TTM. He’s now on a couple of different boards in the industry and he has his own consulting company as well. He’ll be taking over as secretary-treasurer.
It’s just a great group of people. Marc Peo will move from the Chairman to the Immediate Past Chair. He’ll still be involved on the executive committee.
Then there is Tony Zhou from RayVal of China, Bob Neves from MicroTek China Labs, and Mike Carano from RBP Chemical. The three of them finished their first term of four years and wanted to stay involved. They were elected in and will be on for another four years. It’s just great.
Matties: It's a good team for sure.
Mitchell: It really is. They care about this industry. They want to see IPC help the industry grow and help the industry be more effective and efficient. That’s what we spend all our time talking about on the Board—how can I, as the operational leader, take our team and fulfill that vision? It's a big vision and I hope you have a chance to interview some of them and ask them how it’s going.
Matties: I'm just curious, how might the dynamics of the board change the direction or purpose?
Mitchell: The board has always done a really good job of taking off their corporate hat and setting it aside to look at what's best for the industry. That’s really what they try to do, because IPC is trying to serve this $2 trillion industry…and that’s a big job. So we have to be focused and aligned in our mission. In the Board meeting that we just finished, we did a brainstorming session for much of it. Where would we like to see IPC in 2020? We call it our 2020 Vision, like 20/20 vision.
We looked at each of our aspirational goals and just let the board talk. That gave some fodder for the staff to then go back and try to build plans around that so that we can say, “We can't do the 733 ideas they came up with, but here's the three or four that we think are going to have the most return for the industry and make the most impact and help us move it along.”
Matties: How do you measure that return? I've heard is IPC is really driven, and the key measure is the revenue that they make. Is it just about money?
IPC FIVE KEY MEASURES
Mitchell: We have five measures that we get reviewed with by the board. Obviously, there are business measures. We have two in that area. The primary one is, did we hit our budget? And that's in terms of the net. This year we have a budget to break even. Of every dollar that we bring in basically we're spending it to serve the industry. We had that same goal last year and we did a good job. We met that budget.
The previous two years, the board strategically invested in the industry. IPC ran a budget deficit during that time. We were making investments in various things that we thought would help the industry, and the Board approved that. They're willing to have IPC go out there and do that.
Matties: How did those investments pay off?
Mitchell: Some of them are programs like CQI (Certification Quality Initiative), which we think is paying off very, very nicely for the industry. We’ve improved the quality of the certification testing, bringing it up to a modern online testing format. We were using paper tests, and we knew there were people not abiding by the rules. The new system gives us analytics. We can sit there and say, “Patty happened to teach a class and her whole class struggled on this one module on the test.” We can reach back out to the teacher and say, “You might look at how you're teaching this because they're struggling in that portion of the test.” We could never do that before.
Matties: You get good feedback.
Mitchell: We get good feedback. Additionally, if, for example, 76% of the people on a particular question are missing it, either there's a problem with the question or we're not covering it in the materials. We can then improve the whole process in that way. We get some great analytics we've never been able to see before. That's been an investment that we feel has really panned out.
Similarly, we're investing in Validation Services, which is a little slower going because it takes a while for industry-wide acceptance. Regardless, we keep moving forward. We're looking for increased OEM buy-in to ensure the benefits are felt everywhere.
Matties: This is a tough area to get buy-in from, isn't it?
Mitchell: It is, and it’s tough because the whole goal of any program that we launch is to reduce the overall burden on the industry. If it's costing people more to do this and the overall return is down, we don’t even do the program. The idea of validation is that some people will say, “It’s just another audit and we hate the word audit,” but I used it so forgive me. That's how a lot of board shops and assembly shops may view it, but we're trying to work with the OEMs and say, “If we do this, and you're coming in four times a year for four days each, can we cut that in half?”
If they sign up for that, now suddenly they've got six OEMs coming in, and if all of them cut it in half and we only have to come in ourselves and do it, now everybody’s saving money. OEMs are going less, so it saves them money. EMS companies, in that case, have less down time because if they're doing ours and the OEMs are checking the box, they are there only half the time. Those are the ideas that we're trying to implement, but it takes some time on some of these.
Generally stated, if customer audits can be reduced and supplier downtime can be reduced while maintaining, or even improving quality, IPC owes it to the industry to strive to bring those advantages from theory to reality. That is what Validation Services is striving to do.
Matties: How do you take a program like that and put the line in and say we're going to continue or kill it? Is there a critical measure on that?
Mitchell: We're asked that by the Board. How long are you going to invest in this before you say it’s either been accepted or not? Let me use the example of the certification program. It took a decade for it to really get accepted. We're willing to take the long road on some of these things. Other programs, we're trying to find ways to accelerate because we think the benefits are there. We put a little bit more “oomph” on it, but really in this industry, if you find the OEMs will accept something, it's pretty much done.
When your customer says, “Do this because it's going to save us money and save you money, but you have to take the longer view.” That's a tough thing, so we try to present longer view solutions because saving money this year is nice. Saving this money over the next three decades…now, that's really nice.
Matties: One of the key measures is budget. What are the other four?
Mitchell: One we call standards influence. It’s the propagation and utilization of standards, and that includes standards as documents, as well as standards in certification programs. We even include events like this one where we're doing standards participation. That’s a very complex thing to measure, so we actually just measure that in dollars that the industry spends on it. That’s where our revenue ties into that.
Another one is membership growth. We measure that by how many new members we have.
Matties: Interestingly, I recently conducted an interview with Phil Carmichael [IPC president of Greater China] and was learning about the increase in members in Asia and China…which is significant growth in a very short time.
Mitchell: I think he's close to 800 members now in all of Asia. Just in China, he's doubled the membership in the last couple of years.
Matties: What about Europe and the Americas?
Mitchell: Overall, the trend is up. Globally we are continuing to grow, which is great. We’re growing faster outside of the U.S. than inside of the U.S. because it’s newer. We've got a good base here in the U.S.
Matties: But you're going to plateau at some point?
Mitchell: I think at some point, yes, but I think that point is something like 50 years down the road.
Matties: We take the long view here at IPC (laughs).
Mitchell: I'm not worried about it (laughing). There are a lot of opportunities for us to show the value of IPC membership and IPC standards, etc., to lots of organizations, and to show them how by becoming members they can enhance their financial success and operational excellence. That's the mission.
Matties: I can't see that growth going on here in America.
Mitchell: No, it’ll shift though and change. We’ve had a consolidation of PCBs, right, so you now have very few companies compared to 20 years ago. We might see that happen in EMS in the U.S. You never know.
Goldman: But they aren’t all members, by a long shot.
Mitchell: No, right now only 50% of the PCB companies in the U.S. are members, about 150 out of the 300 or so PCB companies are IPC members.
Goldman: How can you reach those other 50%?
Matties: Why aren’t they members?
Mitchell: We actually talked about that in one of the Hall of Fame meetings and in a recent Board meeting. One idea at the Hall of Fame meeting was to just try to use other people’s networks to show the advantages. Some people just aren’t interested. I'm not going to push anything on anybody. I'm not into the hard sales for IPC membership; we just try show the value. We’re trying to have events, and if they don’t come to the events…well, that's their choice.
If we try to provide a program and they don’t use the program, that's their choice. If nobody comes to those programs, eventually we have to use our resources somewhere else where people can come. That's the challenge of that.
The next goal that we are measured on is IPC’s retention rate or renewal rates, in terms of membership retention. That's a satisfaction measure that we use. Not only do we see is it growing—and it is growing—but what’s the membership retention rate? The Board is challenging us to grow that retention rate every year.
Matties: Do they give you a target percentage per year?
Mitchell: We have a target for all of these things.
Matties: What's the target for growth? I think 100% retention would be always the target.
Mitchell: It's always the target, but right now we're targeting 88% retention rate for the globe.
Matties: You have to be realistic.
Mitchell: The challenge is as the developing regions grow, they don’t know or appreciate all of the advantages of IPC membership. We have a higher retention rate than that in the U.S., but in Asia there are not as many programs or an established history there. They don’t have this show going on there, so their retention rate is lower. We're having to balance that, and as the percentage of members grows in developing areas, that pushes down on the overall rate. It's a challenge.
Matties: I'm sure it is.
Goldman: Sometimes companies will join so they can exhibit because there's a great advantage in exhibiting. They’ll join and then maybe they don’t exhibit next year so they think, “Why get a membership?” Then, they also join so they can buy all the standards. They get all the standards for five years and then think they don’t need the membership anymore. Some companies do that, but they're not recognizing the true value then, because it's not like the membership cost is exorbitant.
Mitchell: Those are some of the rationale, exactly.
Goldman: What is your cost of membership?
Mitchell: $1,200 per site is our standard membership cost. If a company has additional locations, it's discounted from there. If they're under a $5 million organization, we actually give them a discount at around $650 or $700.
You talked about how can we get more? It's not a price barrier.
Matties: It's a value perception.
Mitchell: It's a value perception. Some of the other 150 board shops are still mad that China exists. I joke that if I wanted to win all of the hearts and minds of the entire PCB industry in the U.S., I can picture it in the Wall Street Journal: “IPC closes China.” That one headline would win them back. They'd be happy and they'd all join again, but it's not going to happen. The world’s changed a little bit.
Matties: And your fifth key measure?
In Part 2, John explains IPC’s fifth key measure, and then he challenges IPC member companies to do something very interesting. Will there be any takers?