KLA-Tencor: Maintaining Focus in a Start-up and Fostering Innovation in a Mature Company

Rick Wallace, the new CEO of KLA-Tencor shares his insights about managing a large organization.  He describes his job as making trade-offs to ensure that all three constituents, investors, customers and employees, are happy with the company.  While they all have separate and sometimes contradicting motivations, a company's long term success is heavily dependant on its ability to cater to these three constituencies.

Rick Wallace describes the importance of focus for a start-up.  While venturing in multiple markets can help diversify the risk, it is often disastrous for start-ups because they are already handicapped with limited resources.  Rick talks about how focus helped put KLA-Tencor on the right track.

Rick Wallace shares the history of KLA-Tencor to show that it is important to follow one's business model.  KLA revolutionized the industry by starting to charge for service instead of just offering it up for free.  In order to enforce this, the founder had to risk losing IBM as a client.  However, his bet paid off, and IBM finally agreed to pay for service.  This has led to a large and profitable annuity stream for KLA-Tencor.

Rick Wallace shares his experience of being tasked with figuring out how to sell multiple machines per fab.  He describes how his boss took away his major constraints, time and money, and incented him to take a risk.  He has used a similar structure several times within the company to create an entrepreneurial and risk-taking environment within a large multi-billion dollar company.

Rick Wallace shares his strategy for hiring and retaining talented employees.  He claims that money is important, but the primary motivators for employees at KLA-Tencor are personal growth and fairness in rewards and recognition.

Wallace describes the various steps he takes at KLA-Tencor to ensure that their technology doesn't get outdated by a fresh start-up.  He discusses a unique organizational structure that fosters growth and innovation, an investment arm of the company which monitors start-ups, and large financial barriers to entry.