Tales from the Strategy Vault
Contributed by Steve Rutan

Top of the Heap

In its January 9^th edition, Forbes Magazine named Seagate Technology ''Company of the Year'' for 2005. It may not be much of a shock to see yet another tech company at the forefront of media attention - especially since Seagate is a hard disk drive manufacturer. After all, we are constantly awash in the hype over everything from video iPods to digital cameras to feature-rich cell phones and PDA's. It may seem perfectly obvious that any company involved in information storage should be thriving in today's data driven marketplace.

The choice would not seem so obvious if you roll the clock back five years. As recently as 2000, the market value of the Seagate disk drive business appeared to be below zero. Margins for drive manufacturers were abysmal due to the crushing forces of industry over-capacity and the commoditizing trend of more gigabytes for the dollar. Seagate's manufacturing operations and product configurations were the costly result of independent design teams and inflexible, dedicated production lines. Nobody outside of the company projected superstar status for Seagate anytime soon.

So how can one explain the turnaround from industry dog to media darling? In Seagate's case, there are at least three major factors in play:

1. Product design and production overhaul - The current portfolio of products share at least 75% of their components and can be made on any line in any factory.
2. Commitment to technology innovation - Tripling their R&D budget has lead to three major innovations which offer the potential of extending the advantages of their products over competing technologies
3. Market surge in demand - Our digital world has an insatiable appetite for compact, cost-efficient storage

For our management journal, we can take away valuable lessons from the first two items on the list. Identify the critical factors for a successful business model and pursue them to the point of excellence. Item three is a fortunate turn of events that is usually out of our control, but it is up to us as managers to be ready to ride the wave when the market turns for the better. In the words of current Seagate CEO Bill Watkins, ''My biggest challenge right now is that we're good. Good is your enemy...We need to be great.''

If it isn't broken, you still might want to fix it

Also on January 9^th, BusinessWeek's cover story featured the monumental announcement of Intel's intention to transform itself from a company focused on microprocessors for PC's to a company providing technology to consumer electronics, wireless communications and health care. This re-direction of corporate strategy is not a mild course correction for one of the world's top companies. It is a dramatic departure from the company's phenomenally successful business model, one that intends to shift corporate attention and resources to place branding and marketing on equal footing with engineering. Surprisingly, this upheaval has received the approval of the legendary Andy Grove. His quote: ''...this program strikes me as one of the best manifestations incorporating Intel values of risk-taking, discipline, and results orientation I have ever seen here.''

His comment, although applied specifically to the potential of Intel's current makeover, is good advice for all of us: a concise recipe for what every company needs in order to look to the future with optimism - risk-taking, discipline and results orientation. While profits still hover around $1 billion per month, Intel is hardly broken. With a bold vision for the future and the passionate commitment of the entire organization, it is a good bet that Intel's success will continue in the years ahead.

Steve Rutan is a Consultant with Center for Simplified Strategic Planning, Inc. He can be reached via e-mail at rutan@cssp.com.