Interview of Dan Maydan

Former President of Applied MaterialsSilicon Valley, California.Interviewed on Voice America Radio on July 28, 2012

From a forthcoming book, “ADIZES IN PRACTICE”, to be published by AdizesInstitute in 2014

Dr. Ichak Adizes: We are interviewing today a very dear friend, a client of the past, Dan Maydan, who was a former president of Applied Materials, a very large and successful company. At the time that he retired, it was a company that brought in more than 10 billion dollars in revenue. Hello Dan, how are you?Dan Maydan: I'm fine. How are you, Ichak?Ichak Adizes: I'm very good. I'm in Moscow and understand you are in Silicon Valley the recording is in Arizona and the audience world wide in real time. Modern life.Dan Maydan: Yes.Ichak Adizes: When you joined Applied Materials, how large was the organization?Dan Maydan: When I joined Applied Materials, which was in September 1980, the company was doing somewhere between 30 to 50 million dollars revenue, though at the time it was coming down. It had had some difficulties, and in 1976, James Morgan was called to the company to try to see what could be done. He solved most of the problems and then, in 1980, I and my group, which formed in New Jersey, joined the company.Ichak Adizes: You joined in 1980. I don't know which year I joined. All I know is that James Morgan who at the time was the CEO of the company; and also chairman of the board, heard my lectures in Japan, and came to me after the lecture and said, "Dr. Adizes, we are a 400 million dollars company, we aim to be a billion dollars company, can you help us?"When was the company 400 million? I have no recall of the time.Dan Maydan: Just to talk about it brings back memories. J. Morgan came to me one time and told me, "Have you heard about this guy Adizes?" I said, "No." Then I heard that you were consulting with a company in Israel. So, I went to Israel to ask about you, and then we hired you after I came back. And that was, I think, around 1984 or so, if I'm not mistaken.Ichak Adizes: It was a 400 million dollar company then. When you left, I left with you; it was 12 billion dollars, 12 billion, right? …Dan Maydan: No, it was between 10 to 11 billion dollars.Ichack Adizes: Right; still a pretty big growth. The company invited me to help it grow to 1 billion and we ended up with 11 billion. I think the company who interviewed you and asked for references in Israel was Elbit. I'm interviewing Emmanuel Gill who was then the president of Elbit next week.Dan Maydan: Oh yes. I had just spoken to him about you at that time.Ichak Adizes: Dan, tell us what made Applied so successful, to go from 50 million dollars all the way to 11 billion dollars and become the world leader in semiconductor equipment.Dan Maydan: Well, when we joined the company it was coming down fast. I mean, pretty fast. And that had to be reversed. So, we created a totally different environment and introduced innovation and commercialization. The company needed to continuously innovate, to come up with new products and a new methodology and organization, which could support different strategies of operation. We made sure that every two years or so we would introduce a new product. Every four years we would come up with a new market segment. So, we kept growing continuously for over 20 years on an average of somewhere between 20 to 25 percent a year.Ichak Adizes: It was really innovation that was at the heart of the rise, the entrepreneurship, the (E) component, (the audience that is listening here knows about PAEI, so you're welcome to use the PAEI code in your answers) But I think that it was not just individualized (E). Tell me if you agree with me or not. You are very much an (E) person and, there is no question you provided a lot of entrepreneurial ideas and leadership to the company but you also brought with you a capability that you had, which was to imprint this entrepreneurship in the whole company. (E) was not dependent only on you.Dan Maydan: You are absolutely correct. As you say, your methodology of PAEI, and "E" always on top of each unit was central. To get that to work it is very important for a growing company to decentralize and to get people who are able to perform better than you, so you have sufficient time to talk to employees, to talk to customers, and understand the company even better. Then you concentrate on the strategy while understanding every detail that is occurring on a daily basis.So, the innovation and commercialization are very important concepts, but innovation by itself is certainly insufficient. And I experienced that at Bell Labs where I was for many years. You also need commercialization, if you want to be in high-tech, which we were.So, using the organizational structure, which you helped us establish we achieved that. It was important to understand that every organization has green units as you define it. Green, as the source of the profits, led by an (E). And to recruit people who were better than me. And if you have these kinds of people in a correct organizational structure and you rely on them, you don't micromanage them, then the company will usually do well.Ichak Adizes: I want to tell the audience something about Dan. I lecture all over the world and in all my lectures I mention your name, Dan, and give you credit for what I've learned from you. In Adizes we do not only teach but also learn from our clients. I would like to share that with our audience.When Dan retired, I was invited to come to the retirement party, and I noticed something very, very interesting. When he retired, a lot of the people that were under him were let go, or they left because a new President who came from the outside had his own ideas about who the top management should be. And all those managers who had reported to Dan left but became CEOs of their own companies.And here is how it happened: Here is Dan, president of the 11 billion dollars company, and whenever I would call Dan, and I would ask "Dan, can I see you?" he would say: "Sure, come in." Now, that's very surprising, because any other company of that size, when I call the president he would say, "Well, we can see each other next week for half an hour." And then they would have a hell of a tough time giving me the time, their all-precious time. But Dan said, "Sure, come in."Well, I thought maybe because I'm his consultant he gives me preference with time. Then I realized that any vice president, if they called him, he would say, "Come in."Where does a president of an 11 billion dollars company have time? How can it be? So, I asked him, "Can I look at your calendar?" I looked at the calendar. Most of it was empty. A meeting here and a meeting there, but most of it empty. How does he do that?And Dan, at the retirement party told me where he learned how to do it: at Bell Lab. Your first boss at Bell Lab taught you this. It was very interesting how you made a science out of it.When somebody would come to Dan, the president, with a problem, and would say, "Dan, here is my problem, what should I do?" Dan would get upset. He would say:”You are a manager. You are an executive. You should have a solution. Don't just give me the problem. What's your solution?" If the guy didn't have a solution, Dan would send him out and say, "Come back with a solution." When the guy came with a solution, if Dan did not like it, Dan would NOT tell him what to do. Rather he would ask:” Did you think about this or that? Go back and redo your solution."He constantly put all the work on his subordinates. They had to think it through until they came up with a solution he could accept. And then he would say, "Very good solution. Go ahead and do it."Now that is totally different from what executives usually do. Executives often get it wrong. A person comes with a problem, the executive gives the solution, and then the executive spends a lot of time supervising that the solution is just the way he wants it to be done. They work very hard.In the case of Dan, he makes his subordinates work very hard. They have to come up with a solution that he can accept. And he always tells them what's missing so that they can redo the solution. As a result, all his subordinates developed qualities that make for an excellent CEO. And not surprisingly, they all became CEO's of their own companies.And he himself had a lot of time available on his hands because he did not have to solve problems. They did and since he approved their decisions they felt obliged and committed to do the best they can do and needed much less supervision. Perfect time management…..So Dan, how did you learn to do this? How did you learn to make the people come up with the solutions, rather than you providing it? How did you control your ego not to aim to be smarter than anybody else?Dan Maydan: I don't know how I controlled my ego, but I think a lot it came from the culture at Bell Telephone Laboratories, which was the center of innovation and created the wealth of the, I would say, of the 20th century. Not just in the United States but worldwide.If you get bright people, you want to challenge them, and unless you challenge them, they will not be able to produce. And you don't want them to just follow your orders. You have to manage the environment that they themself are part of. They are the creators of new things so they need to be supervised in a fashion that just suggests to them whether they are going in the right or the wrong direction.So, this is methodology is all very natural, and I adopted it. Many of the people reported doing the same thing. So, we never micromanaged. We challenged employees continuously, not just vice presidents, but all levels.I didn't allow reviews that were technical (except financial). I didn't allow people to come with, written out explanations, because I wanted to know exactly their thinking. I let them talk freely and openly, and then there was a discussion.And, at the end, many times I had to make a decision one way or another. But it was the thought of the people around us that we wanted to hear. I wanted them to offer suggestions, which the individual responsible either accepted or rejected. And that really creates a totally different kind of environment.We did it within the company and we also did it with the customer. Because, after all, what you sell to a customer is the dream which you need to deliver two or three years later. Because what you develop today will only be used by the customers two to four years from now, and therefore while listening to his needs you need to understand what he'll really need two years from now, and you try to sell him that particular kind of a dream.But you always need to deliver. And that kind of message needs to penetrate every single employee in the company, from the technical to the financial, operations, and sales organization and in fact at all levels, from top managers to the lowest-level employee. We all understood the charter and what our job was in the company.Ichak Adizes: I would really like here to emphasize what Dan has just said. And that is, I call it, the terrorism of the PowerPoint. Companies are really becoming addicted to PowerPoint presentations. Meetings, lights are low, and then the Power Point presentations go one after the other. Very few people are watching. Some people are looking at their iPads or iPhones or BlackBerries. There is no discussion. One question here, one question there. Boring. No thinking. No discussion. Presentation is over. Meeting is over. Nothing happened.Dan would never allow that to happen. Let me describe to you a meeting that Dan handled. At the beginning I was really surprised, because at the meeting—executive committee—here is Dan Maydan whom we are interviewing right now, he is the president of the 11 billion dollars company. An executive committee meeting is taking place that he chairs. I was a consultant and watching. And Dan is kind of sitting very quietly. Here he is the chairman, he is the president of the company, but doesn't say a word. A discussion is taking place. Still doesn’t say a word. I started to wonder, is he tired of the job or what? Why is he so quiet? He doesn't say a word.Then I realized what he was doing: As long as the discussion is going in the right direction, he does not “push the river.” He lets everyone discuss. And he will always encourage discussion and exchange. If the group is starting to go in the wrong direction for some reason, he will jump in and say, "Hey guys, have you looked at this, have you looked at that?" And let them continue the discussion.He was creating a learning environment, an exchange of ideas and learning, rather than a presentation where people are glued to the screen and just ask a question here and a there.I really want to applaud you Dan for establishing an incredible culture at Applied Materials that enabled the company to grow from 50 million dollars and going down, and reverse its direction to 11 billion and going up.And then you retired. I want to ask you a question which was interesting to me how you managed that. When you retired the Board hired somebody who was with a production orientation which means they brought in a (P) while the company needed to hire somebody from a high-tech company. He kicked all the E's out and put all the PA's in, and the company went from 11 billion to I don't know how far down, an incredible number down.And I was watching you. You built that company. You gave your heart, and soul, and brain for 20 years, to build it from 50 million to 11 billion. And now the company was going down. Other people would have collapsed. Given up. What happened? What went through your mind after you retired and watched the company going down? What went through your mind?Dan Maydan: Of course it was saddening, because I saw very quickly that many of the top employees were leaving the company. People with capabilities were disappearing. It became more or less an empty shell. Only kept going by momentum and giving an opportunity to competitors, not just in the United States but elsewhere, to penetrate the market to which we were the leader. Of course, inertia kept the company going for some time. However, it didn't stay the top-technology company. They lost the number one position in the industry to become number two. It's still number two. It's not what it used to be which is very sad. But you know, life moves on and I'm sure that they are now in the process of recovery. And, hopefully they'll come back to a leadership position.Ichak Adizes: Doesn't it hurt you Dan … I would expect somebody else would bitch and moan and complain, and really feel very depressed that they're destroying the Taj Mahal that you built. You took it in stride and you simply say: life goes on. How could you do that? Where did you get the strength to continue and just to kind of separate, to let go of your dream, let go of whatever you built? How did you do that? Other executives, especially founders of companies do not usually act so casually when somebody new comes in and starts destroying their creation. They often wind up with a heart attack, they get cancer, and they die. You didn't fall into the trap. How come? What really made you not fall into the trap?Dan Maydan: Well, I have a good friend, a Japanese man who told me, "Don't look at it as retirement, look at it as a second harvest." I really started my second harvest, when I began involving myself with many new companies. I'm involved with about eight different companies. One was already sold. One became public. And it is a great challenge. And in addition I'm involved with some non--profits, like the Technion, which I'm a graduate of. And that keeps me very busy and challenged.On top of all that, it is a great pleasure for me to see all my associates becoming CEOs or very successful employees and executives, of other companies. I continuously meet them. At least 50 percent of my time, which is about three or four days a week, I have lunch or dinner with previous employees. And we talk, not necessarily about the past, but we talk about the present and the future, of what should be done, how can or should we do it. So I'm continuously challenged, and I feel very happy and satisfied about all that. I feel extremely satisfied that many previous employees, and it's not just executives, it goes down to the direction of managers (I knew almost everybody at the company) when they start new careers they usually call me and we meet and discuss their new role. And if they listen to me, it makes me feel very satisfied and happy. So, life … You know, we only have one life, and life must go on.Ichak Adizes: This is a help. Dan you seem to look at everything as if today is the first day of the rest of your life. So, you look at the present tense as a beginning of the future, rather than a continuation of the past. That gives you the capability to turn around and be with your face to the sun and move on, and look at the new challenges and lead a productive life, rather than lament the problems that happened in the past and mourn that what you built is being destroyed.Dan, another question to you. I was very impressed with your acumen in identifying talent. What did you look for in people when you were bringing them to top positions? You promoted a lot of people from below to the top.Dan Maydan: You know; we gave opportunities at Applied Materials to people based on their talent, not on their origins. That's why we had people from many different countries. The only thing which I didn't allow them was to speak their own language when they were at work. They all had to speak English so that everybody else could understand them. We had people from China, from Japan, from England, from Korea, from you name it, Spain, Brazil, any country that you could imagine; we had people working for us based only on their talent. That again, I learned at Bell Labs: Always take the best people you can find. And don't ever hesitate to take people who are better than you. Just give them the opportunities to excel.Ichak Adizes: How did you find good people? What does it mean when you say “good people?” How did you identify talent? When you were looking at a particular person, what were you looking for? What impressed you?Dan Maydan: Well, that's a very good question. And it's very difficult to describe. First of all, if I look for a technical person, I am trying to find someone with a technical background. When it is human resources or finance or whatever, at least give them the opportunities to have experience in this area. Looking for technical people I took about 100 or more of the top students from the top 10 universities. We kept them at the expense of the corporation for six months. They went from one department, or from one division, to another, including manufacturing. And then the various divisions bid on them, and they, these people were very successful.If a guy, for example, came and told us in an interview, after asking him the question: "What would you like to be five years from now or where would you like to be?" If the guy told us, "Oh, I want to be in your position," then he lost it. We'll never take him. But if the guy said, "I want to be able to contribute to the best of my ability, and create new things or create better things for the company," and if the background was proper, if he had a good grade and showed promise, a future, he is a guy we hired. So, we were very careful in hiring people based on their talent, not necessarily on their aspiration to become top general managers.Ichak Adizes: Dan, apropos hiring talent, what was it that made you hire Adizes, when you interviewed Emmanuel Gill, why did you decide to hire Adizes? What triggered you, or what made you interested?Dan Maydan: Well, if you recall, you came and gave a presentation, and I thought it was very, very impressive. I mean, the concept of PAEI, that you need all four of the roles and E is most important in high tech, and you covered the concept of corporate lifecycle, the concept of green that everything must lead like river into green (profit center) at the end…..Those were very unusual concepts which I felt were very important.I felt the company was growing. We were, as you say, a 400 million dollar company. We were growing very, very fast. And we didn't have any experience in how to run a company. Even though Morgan started to hire good people, who had expertise—like Jerry Taylor at that time in finance, and Jim Bagley in operation—we still needed to create a culture that will enable us to grow to be a much larger corporation. My dream was to reach 20 or even 30 billion dollars in revenues, which I believe we could have done.We needed to organize the whole thing together. After all, people make the organization, and the organization gives the opportunity to people. We needed to give these people this opportunity, and I felt that you were the right guy to create, or help us create, this kind of organization which will give us all both the opportunity and the capability to reach our dream.Ichak Adizes: Is there any specific event that you think contributed something really important to know about or it was really more of a total flow?Dan Maydan: It was really a total flow, because I felt the company was limited unless we did something, and Morgan felt the same. And we really needed help, to build a strong organization and thank you for providing it.Ichak Adizes: I would like to tell the audience what I really did with Dan and Dan's leadership. We actually restructured the company practically every two years, or something like that. As the company was growing, it needed continuous restructuring. A division that was 50 million in revenues became a billion dollars division. It's like cells. When they grow big they have to split and start all over again.Dan was never afraid to re-look at the structure, and then realign the structure, and change the structure as the company was growing … I look at organization structure like they are pants of a little baby. When a child puts the pants on the first time, they look oversize, but then after one year they become like underwear. You continuously have to restructure the company, which is growing very fast, or the structure will stymie organizational growth. And Dan always allowed restructuring, encouraged it. There was no fear in the company about restructuring, and restructuring, and restructuring so that the company could grow and not get stymied.Dan Maydan: Let me comment on that. You said one very important thing. You see, everything, if it's alive, must change. The only thing which doesn't change is in the graveyard, or everything that is dead. So we were all open to change. And the change which we created, you explained very carefully to us, and I think that was a major issue, is what kind of organization we should have? Decentralized or a centralized organization? And we all felt, due to your guidance, decentralized would give us a much better opportunity to grow. We didn't even worry about two divisions competing with each other, not on the same product, but on products aimed for the same market.So, we allowed this kind of competition, and every division was responsible for its own profit and loss. They were autonomous and I think we had about seven of these divisions. And we were entirely open to this kind of structure, and I have recommended to every growing company to do the same because this is a very effective, and in my view even essential way for growth.Ichak Adizes: I would like to emphasize something, and thank you, Dan for pointing this out to me because you remind me of one of the principles of the Adizes Methodology. Usually, companies start with centralization, and only if there is a need and pressure they will decentralize. I start with decentralization, and only if there is a need and pressure, I will centralize something. So, it is the starting point which is important. Start with decentralization, and only if and where needed, centralize.Dan Maydan: One more thing. We never hesitated taking some experienced people and some bright, even new people, to create something which was like a startup. And we gave them incentives which made them quite rich if they became successful, including a portion of the market success (which was capped of course), but gave them the opportunity to shine and demonstrate their capability to start something like a startup.Ichak Adizes: Right. All these nurseries….Dan Maydan: It was more than a nursery, because it included the business. Nursery is just the development, and we let them grow and become independent divisions.Ichak Adizes: Right. Right.Dan, did you ever fail, and if you did, what was it and why?Dan Maydan: I like to force people to look in one direction, and each individual can only work on one project at a time. Because, succeeding is like a war: Either you live or you die. So, you don't have several opportunities, you have only one opportunity and need to go in one direction.However, going in one direction, sometimes you have to change it. Sometimes, you try sequentially and you find out that you are you heading into a dead end, and at that point you must make a very, very quick correction to divert and start either from a new beginning or, based on the knowledge you had from before, continue. And then, at the end, if a good product comes out of it, you are successful, regardless of the difficulties of on the way to success.Ichak Adizes: So, what you are really saying is, there is no such thing as failure, because failure can be a learning experience for you to take corrected action and eventually succeed. So, there is no such thing as failure.Dan Maydan: And that depends on management more than anybody. If they get some budget and then they find out that you didn't perform they should take everything away from you. Of course that has to be done from time to time, but many times, if you recognize the capabilities and you recognize that there is still light at the end of this tunnel, it's up to top management to continue and instead of punishing, reward those individuals when they reach the light at the end of this tunnel and make it a success.Ichak Adizes: I would like to tell the audience about an experience that I had with another client, which I think pinpoints this principle you are talking about.I was having dinner with him, and he got a telephone call and went to the phone. When he came back his face was a little bit long, so I asked him, “Alan, what happened?" And he said, "Oh, I just learned I lost 20 million dollars." And I asked him, "How does it feel to lose 20 million dollars?" And he told me something which I always repeat in my lectures, and it really highlights what Dan is talking about.Alan said, "Ichak, I look at it this way: I'm just thinking, I'm a very lucky man." I said, "What do mean lucky man? You lost 20 million dollars?" He says, "Well, I'm lucky because I know very few people can afford to take a course in life whose tuition is 20 million dollars. I could afford the 20 million dollars tuition and that is very, very unusual, so I'm lucky. Now the question is: did I pass the exam? Did I pass the exam or did I fail the exam of this course? Did I learn anything from this course, so that I can be better in the future? I just wasted 20 million dollars tuition for a course I have taken if didn't learn anything."Look at a failure as an opportunity for learning. What can you learn from it? What did God want you to learn from it so you can do better in the future and eventually actually succeed? If you learned it was not a failure. It was a “class” you took.Dan, another question. I know that one of the things that people were struggling with at Applied Materials is—we were working together and I was your advisor— and many, many companies have this problem all over the world, and it is: Applied Materials was a multinational company that had markets in China, and in the Far East, in Japan, in Germany, and Europe, United States, and we needed to structure the organization to be globally product oriented, so it was global-thinking, but local-acting. And we always had to balance: If everything is structured around global-thinking and it's too centralized, then we defocus the local market. But if we pay attention to the local market and ignore the central thinking, then the danger is that we lose control. What is the right balance between headquarters and markets? Can you recall how we solved it?Dan Maydan: One important criterion is that for each region you have to maintain and do the business based on the culture of the local region. And that is what we did. We always put local people in as the general manager and employees of a particular region, and yet they worked for the global company. Yet, certain activities must be controlled, centralized. For example, the financial organization was common to all of them, even though it was distributed geographically. We had a controller, or financial person in Japan, or in China, or in Europe. The CFO’s job was to travel from one place to another and assure that all of these organizations conform to the laws as prescribed in the United States without violating, of course, any law in the other regions. We had meeting of all these regions on a monthly basis, where we all met together and decided on the distribution of responsibilities and the direction we wanted to go. Of course, some regions were a lot more difficult to manage, some were easier. But we always made sure that we took the best advantage of each local country because after all they have a different culture, they served different kinds of people, and there are things for sure which they know better than us at headquarters.Ichak Adizes: Dan, what would you recommend to a manager who is looking for advice? What would be the Ten Commandments you would tell him or her? What should he or she watch for? What would be the bottom line?Dan Maydan: Well, you know the business is like a reverse pyramid. The bottom is the product. Without the product there is no company. However, the product by itself is not the whole thing. It's not more than 30 percent. So, you really need to assure that there is innovation all across the board, in operations, in finance, in sales, in marketing, every place. Second thing, you need to remember that you must have satisfied employees, satisfied customers, and you need to think very carefully because there is more than one formula how to satisfy these stakeholders. And watch and give your organization the opportunities to succeed, because your job is basically just to orchestrate and assure that the strategy's the proper one, and implementation is done by people that are better than you. And never hesitate to give the responsibilities to all those individuals who have a lot of capabilities. One plus one will then be equal to four rather than two.Ichak Adizes: Dan, could you repeat this: "hire people that are better than you." Many managers are scared to hire people that are superior, because they are afraid that they are going to be pushed out, that those people are going to make them look stupid, that they are going to make them look bad, so they don't want people who are better or smarter working under them.Dan Maydan: Most managers you find are trying to build an organization based on their own image. And when you do that you narrow yourself to a very large extent. You really need to build a diverse type of organization. You need to bring in people who are very different from you. You need to bring people who, you at least believe, are better than you, and rather than be afraid of them, to understand that we all contribute to the same goal and purpose: to make the company stronger and better. If you create this kind of an environment you will find that you create satisfied people, satisfied employees, and satisfied suppliers. You need to listen to your customer, but you need to know yourself what the customer will need a few years from now. All those kind of things you can not do if you try to build the company based on your image alone. It has to be very broad-thinking type of organization.Icha