Competitive Advantage — Redefined

By Jack Harding on 01/13/2015

One of my employees recently passed me the article “When Marketing is Strategy” authored by Niraj Dawar in the December 2013 issue of the Harvard Business Review. The essence of the article is that, “The strategic question that drives business today is not ‘What else can we make?’ but ‘What else can we do for our customers?’ Customers and the market—not the factory or the product—now stand at the core of the business.”

Mr. Dawar’s piece resonated with me instantly. This philosophy has been the centerpiece of the eSilicon strategy from the beginning. Nearly 15 years ago we announced the formation of the first “fabless ASIC” company, a concept quickly dismissed by the market as unworkable and yet documented prophetically by Bryan Lewis of Gartner Research (then Dataquest) in 2001 during eSilicon’s launch event, “How Will the New Fabless ASIC Trend Affect You?”. Within just a few years virtually every ASIC supplier abandoned their burdensome internal fabs for the efficiency and quality of the eSilicon model. In short, we had, as Mr. Dawar might say, discovered that, ”… the sources and locus of competitive advantage now lie outside the firm, and advantage is accumulative—rather than eroding over time as competitors catch up. It grows with experience and knowledge.”

eSilicon finds itself in a familiar place today. True to our original thesis and Mr. Dawar’s crisp description of the phenomenon, we are now leading another strategic shift “downstream” to help shape our customers’ “criteria of purchase.” Namely, we are deploying internet-based tools to redefine the manner in which the semiconductor development world accesses technical and commercial information in a format and structure that they did not request. Just as a fabless ASIC model was not requested.

However, through our segmentation of the market into, basically, those companies that want to work in the old paradigm, and those companies that wish to work in the new, we are reaching a growing demographic of e-business savvy semiconductor developers anxious to allow us to shape their experience and provide innovative solutions. That said, some folks simply prefer to step on the grapes with their bare feet. No one asked us to build an online multi-project wafer (MPW) quoting tool. Likewise, no one asked for its GDSII Online or IP MarketPlace™ cousins. Yet, today, we have registered users in nearly 50 countries.

Why? Because the 1-2 week, error-ridden process of defining, pricing, documenting and scheduling an MPW run is being accomplished in less than one minute through our offering. And, by the way, it’s free whether we process the MPW or if the customer takes the data and goes directly to the supply chain. So, why do we provide the capability, and for free? Because, as noted above, the advantage we gain is accumulative; more users, more projects, more technologies, more learnings, better solutions, extended brand recognition, and so it goes. Said another way, the e-business tools we deploy reverse-trend our offerings from that of a commodity (anyone can do an MPW in a month) to a luxury whereby the elite and informed get to enjoy the remarkable one-minute experience. And this is just the beginning.

One of my industry friends recently joked about my semiconductor “charity” – all this free stuff. No doubt, monetization in the earliest days of an innovation is a complicated and challenging task. But we will fix this in a couple ways. First, we now have hundreds of new customers with whom we are engaging in meaningful discussion about their projects and, second, we have more billable e-business services and products to launch to a known demographic that have self-declared their interest in and appreciation for e-business semiconductor development. We’ve unleashed a market and one, to me, that is as predictable as online shopping.

Approximately two decades ago Michael Porter observed, “There are no longer any low-tech industries, only low-tech companies.” Ironically, the very semiconductor industry that has contributed enormously to Mr. Porter’s declaration now finds itself a laggard in the same ecosystem it has enabled: the e-business community. For how long will we crush the grapes barefooted? Or will we embrace the inevitable, drive our own efficiencies and tame the complexity curve that provides both our challenges and opportunities? Check out the free tools and decide.