Move forward
Previous management had focused on just making Lam a fun
place to work, so Newberry had to redefine the word fun by making everyone understand that losing market share and losing
money wasn’t fun.
To continue educating managers, he met with 50 at a time, twice
a year, for the next three years to reiterate the plan. He also had
quarterly meetings with employees during this time.
“People need to hear things seven to 10 times before they
really absorb it and understand it,” Newberry says.
If you think you can just create a plan, roll it out in a two-hour
meeting, and everyone will understand it as well as the team that
created it did, then Newberry says you have another thing coming.
“You have got to break it down and really go into detail, piece by
piece, and you have to have the patience to recognize that it’s not
going to happen overnight,” he says.
During the next three years, Lam began to thrive, but it was hard for
outsiders to see this because revenue dropped below the $1 billion
mark because of the downturn. With financial pressures facing the
company during 2001 and 2002, it had no choice but to cut the employee count from 5,300 to 2,000.
“When times are good, it’s easy to be upbeat as a manager,”
Newberry says. “It’s when times are horrible that you really have
to step up and be able to see where things are going and get people to believe that we see the light at the end of the tunnel, and it
isn’t a train coming.”
That light was a realization of a better system than hiring thousands of great people and then laying them off. Newberry decided
to instead outsource the transaction-intensive operations — parts
of human resources, IT, finance and other departments — and
instead focus on core initiatives — research and development,
sales, and customer service.
“That made us more cost-effective, but it also allowed us to
tell the employee group that those who are Lam Research
employees are core employees, and we will be retaining you as
employees through thick and thin and ups and downs because
we knew the industry would remain cyclical,” Newberry says.
Since the downturn, revenue has climbed, hitting $1.6 billion
in fiscal 2006. Net income for that same period was $336 million, compared to a net loss of $90 million in fiscal 2002.
Additionally, Lam has become more efficient and effective with
what it does have.
“When we combined all of that with our new product capability, then we were able to grow our market share,” Newberry
says. “We had dropped to as low as 24 percent, and we were
now up to 49 percent.”
On top of that, the values and strategic objectives haven’t
changed since they created them 11 years ago, so the direction
has stayed the same.
“Don’t be short-term tactical when you’re talking about where
you’re trying to go with a company,” Newberry says. “Stay the course
with well-thought-out strategies and allow people the time to understand them, align to them and begin to execute to them. … Don’t
change direction just because you haven’t had time to give it enough
time to develop and actually come to fruition.”
That patience has been the key to Lam’s turnaround.
“You always read that if you want to change a culture of a company, it takes three to five years,” says Newberry, who assumed CEO
responsibilities in 2005. “Well, it does, and it takes a lot of time and
a lot of effort, but what happens is, if the senior management team
is consistent enough and stays the course and stays focused on the
same messages — in that those messages are right and they’re working — then it starts to take on a life of its own.”
He says now when people come to interview for jobs, interviewees talk about what Lam stands for and behavioral objectives for potential employees.
“The culture in the company today and the core values in the company today are owned by the employees, and it’s embraced by the
employees,” Newberry says.
“You know that you’ve been successful in changing the culture when basically the employees are the ones that now do all
the talking about it.”
HOW TO REACH: Lam Research Corp., (510) 572-0200 or www.lamresearch.com