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Principles towards success
"John F. Kennedy stated: “I am an idealist without illusions." Such is the Tower DNA. If one relentlessly pursues high ideals, treats friendships as the treasure most dear with the understanding that friendship and loyalty are synonymous, such a person has a deep fountain of power," writes Russell Ellwanger, CEO of Tower Semiconductor
In over four decades in the semiconductor industry with the accumulated learning based upon doing, observing and from internalizing in-numerous personal cycles of learning, I believe that the principles that drive success can be distilled into three related themes:
(1) Vision and staffing.
(2) Understanding the obligations of leadership.
(3) Being the person “in the arena” taking bold and decisive steps.
1) Vision and Staffing
The principles that define and produce fulfillment, security and achievement (e.g. success) apply equally to the business world as well as in one's personal life. Perhaps the singular most important principle is: Vision and Staffing
A vision defines required staffing. Correct staffing enables the initial vision, and gives input for the vision to evolve. As the vision evolves, the staffing may be refined and/or added to. This cycle is continuous for those who relentlessly drive towards excellence.
Vision & Staffing in your Personal Life
At a young age, and then continually throughout one’s life, everyone should create a vision for themself by asking:
• What values do I wish to adhere to? What "brand” will be attached to my name?
• Who should I emulate to develop these values and brand?
• What are my joys? What hobbies, activities and sports excite and inspire me?
• Who can I talk with, be mentored by, or imitate to better understand the principles underlying these activities? What videos/presentations/articles/books should I study?
• What activities and thought groups provide me peace?
• Which acquaintances and friends inspire me?
• With whom are interactions natural—leaving me uplifted, confident and desirous to learn? What interactions leave me empty or anxious?
• How can I add value to my family, to my community, to the world?
• What are the skills that I NEED to develop in order toproduce value?
• What do I need to do to develop these skills?
The "what" answers to the above questions should form a person's vision. The “who” and “how” answers should form his or her staffing.
As skills are multiplied and achievements to personal goals and targets are attained, self-confidence grows. As confidence grows an individual will take on greater levels of challenges and as a natural consequence their circles of association begin to change and migrate towards those people who are also growing through the elixir of positively confronting big challenges. Personal security and peace is a strong function of one’s self awareness and self-confidence. The greater the degree of personal confidence, the greater is one's belief and consequent actions to be self-determinant, rather than being an acted upon element of a large system with little or no say over the outcomes.
Vision and Staffing in the business world
When an individual receives the opportunity to lead a business enterprise, it is critical that he or she develops and expresses the vision. The vision defines the value that the enterprise will produce and the culture the organization will implement to produce it. The value proposition is nominally aligned to serve a market need – either one that exist or one that you are creating.
Once an initial "vision" is formulated, careful consideration must be taken to create the correct staff to fulfill the vision based on individual personality traits, corporate needs and cultural behaviors (such as the Adizes PAEI profiles). A proper staffing should well cover all these profiles with some flexibilities to have certain traits overpower the others according to shifts in market conditions and corporate growth cycles.
What I have found of unique importance, in addition to a conventional staffing, is having a person in the staff who the leader can turn to as a consigliere. A most trusted staff member with the insight and strength to a) hold a mirror to the CEO on his/her own performance, actions and behaviors and b) provide an unfiltered view of the company.
It is said, "The only leader who should not be replaced is the leader where most everyone in their staff is capable to replace them". It is most critical to staff with strong people that not only execute to an initial vision, but also challenge it and, most important, bring new ideas to the table.
A solid company with strong vision and excellent staffing has very few projects that have a cradle to grave life cycle. Good activities staffed by capable, passionate people in an environment that allows such employees to flourish will most always, if not always, drive derivative, inspired activities. A correct vision and excellent staffing (including customer partnerships) should ensure that all activities are 'cradle to cradle'.
At Tower, we have benefitted from an outstanding staff. However, a staff is not just those who report to the CEO. It is also who the CEO reports to. No one should allow themself to be in a position where their boss determines their failure. The Tower staff was completed when Amir Elstein became Chairman of the Board. I cannot overstate the importance of the relationship between a CEO and the Board, and especially the Chairman of the Board to enable the evolution and fulfillment of the company’s vision.
2) The obligations of leadership
Those who by inheritance, chance or merit, or some combination of the three, are in roles of business leadership are in a strong position to balance the inequality of familial and societal birthrights by giving opportunities to impassioned people of high potential and strong performance. The French concept of Noblesse Oblige expresses the responsibility of those of privilege towards those of lesser position and opportunity. This concept should be applied liberally as a driving force behind business leaders.
Of the many opportunities presented to a business leader, the greatest is perhaps the ability to set a value-based corporate culture in which employees grow ethically, socially, financially, and in skills, knowledge and confidence. Yes, shareholder value is critical, but it is maybe only long term sustainable through creating a culture with implicit focus on individual development and growth with a rewards system that recognizes the same. In such a value-based company the long hours that impassioned employees dedicate to create value serves in parallel as a laboratory for all aspects of personal growth through the pursuit of excellence.
Strong, value-based businesses can do more for the communities and hence the nations in which they are located than most any other organization. Men and women who return home at the end of the workday, fulfilled and confident by having created value are better partners, fathers and mothers, brothers and sisters, friends, and citizens.
Recognizing needs and giving opportunities that enable others to grow and reach their potential is a touch of Godliness. Being in a position to do so is a blessing. Doing so is an obligation— what I believe is a part of the human contract with Deity.
3) Being the person in the arena taking bold and decisive steps
From an oft quoted portion of his speech given at the Sarbonne in Paris, France, U.S. President Teddy Roosevelt stated: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
It is not possible to be buoyed by the confidence of the full spirit of the company unless the leader, themselves, is fighting the good fight, putting everything on the line in the “arena”. The “great devotion and enthusiasm” spoken of by President Roosevelt comes only from doing, and an organization is only sustainably inspired by a leader who they can follow, rather than one who just instructs from the sidelines. Such leaders that go into the arena and boldly pursue the great cause with the confidence born both of personal capability and also of the knowledge that the employees are with them fully, perform miracles. The degree to which the leader is involved in the difficult activities, facing them with confidence and capability and boldness, will inspire, attract and maintain the best of the best employee talent and, as well, inspire their best achievements.
The quality of the initial vision will determine the quality of the staff that will be drawn to it. The leader’s decisions on who to hire projects their ability to judge capability and character, and their self-confidence to surround themselves with people who are as, or even more, capable than him/ herself. The degree to which a leader takes joy in identifying and developing talent and hence creating a spirit of growth and dynamic movement will reflect quickly upon the quality, capability and engagement of the entire employee base. In the big picture all is related to vision and staffing. It begins with the leader- who is it that he/ she wants to be, what shall be his/ her personal legacy? This is the single most important question to determine an abundant life replete with success, and when tied to consequent actions, the such is ensured. However, one thing is still needed- The strength to persevere.
The strength to persevere
There is a saying, “Drink deeply at the fountain of knowledge, for in knowledge there is power.” A knowledge of one’s relationship to God, replete with a hope that the math of the eternities is just and fair is a deep fountain of power. This tied to the knowledge that my wife is with me always, no matter what, provides power to say, do and act in accordance with what I believe is correct and good regardless of outcome or consequence. Of course such knowledge is requisite on behaviors from me. I will never do anything, intentionally, that would deface my relationship with my wife or my faith in God. In addition, to the knowledge of unswerving loyalty, backing and friendship from my wife and children, now grown, is the great strength that I receive from the knowledge of other close friends, most of whom are my Tower colleagues- a knowledge that I will always be given their full support and receive the benefit of the doubt. With such knowledge, nothing that the multiple fully independent variables that “life” consistently hurls at all individuals can be ultimately daunting. I will refer to several pivotal times at Tower.
After joining Tower in 2005, we began to change the direction of the company from being a 2nd or 3rd source for trailing digital technologies, to being a first and primary source for state of the art analog technologies. Our two largest customers were on a digital technology node roadmap and we suffered with continual price decreases to keep their business. We made a decision to separate from our largest customer, but being wise to never simply stop a bad habit without replacing it with a good habit, our direction was to replace this low margin, high revenue customer by buying Jazz Semiconductor with their strong RF technology. It was not an obvious move to strengthen a negative net profit, negative cash flow, circa $600M net debt company, by purchasing another negative net profit, negative cash flow, net debt company, but I felt it not just correct, but THE correct thing to do.
The transaction to buy Jazz, would require not just approval from the Tower banks, but also a creative and large restructure of the debt. We worked with the two largest Israeli banks, Hapoalim and Leumi. We received their cooperation and a trusted friendship ensued with Rakefet Russak-Aminoach, whose advice we benefit from to this day. This Jazz acquisition was the single most important transaction that enabled Tower to be reinvented. It was challenging beyond what can be expressed in writing, but after having met Dr. Racanelli and his team, I was sure it was the absolute correct path. With the confidence born of the above stated knowledge, we changed the normal course of heaven and earth and got it done!
Since this time, we have faced our share of headwinds and opportunities. On the positive we structured a true win-win with Tower buying 51% of three factories of Panasonic Semiconductor with ~$2B, 5 year contract with ample open available capacity to enable Tower to grow our organic businesses and enter into 300mm, and we did so for a less than $8M purchase price. We bought the Maxim factory in San Antonio for an all-in cash neutral purchase, and again this was and remains a win-win. Such bold and creative steps can only be accomplished with the power of an extraordinary team that is 100% with you. To the negative, we faced a false short report that drove a class action suit and we also faced a cyber attack. For the former, I was able to state from day 1 “we will not settle, we will defend in full”. This was enabled through the power derived from intrinsic business and personal integrity from our CFO, Oren Shirazi, and our SVP IR, Noit Levi, and the full and complete backing of our Board. Indeed, the cases were dismissed by the courts. The cyber attack was quite intimidating, at first, but immediately we disclosed it, hired the best advisors (Sygnia), and through a “24x7” team effort unmatched by any other I have otherwise seen in my career, recovered operations within days.
John F. Kennedy stated: “I am an idealist without illusions." Such is the Tower DNA. If one relentlessly pursues high ideals, treats friendships as the treasure most dear with the understanding that friendship and loyalty are synonymous, such a person has a deep fountain of power. Such power enables one to stay committed, to persevere through the very darkest of times, until the first light of dawn inevitably breaks through and continues to grow in intensity to the brightness of the noon day sun. If one ties such perseverance with vision and staffing, with understanding and fulfilling the obligations of leadership, and with being in the arena taking bold steps, any and all enterprises will flourish over time.
Russell Ellwanger has served as Chief Executive Officer of Tower Semiconductor since May 2005.