“Let’s see, I have to put myself back in the 2007 mode. Just by way of background, in fiscal 2007, HGST lost money – $400 million. For the first five years of its existence, it lost money and only had 4 non-sequential quarters of profitability. When I arrived in 2007, costs were out of control. We didn’t have an efficient supply chain, we had limited flexibility, and we weren’t even playing as a competitor in the non-commodity space.
“In fiscal 2010, we made over $600 million. The shift from losses to profit is about a $1 billion swing in three years. So a pretty dramatic change.”
As one of his first assignments as president, Steve led a strategic planning effort to build a new understanding about the business in two parts:
- The ‘commodity’ based business that serves a specific segment of the market (and how most of the external world sees the disc drive business); and the
- ‘Non-commodity’ based part of the market where technology innovation is really more relevant and a driver in all key decisions.
“On the commodity side, we have to be cost competitive; we have to have a supply chain that can deliver at a fast pace that is predictable; and we need scalable technology.
“On the non-commodity side, product differentiation makes all the difference. You have to start with the customers and build an understanding of what they are trying to do. Then solve for that. And you have to have the flexibility to be able to see, design and execute on these new requirements quickly. Engineers can solve any challenge, as long as they have a clear understanding of the need they are solving for.”
Let’s talk about HGST’s performance chain, in terms of speed, flexibility, predictability and leverage.
“We need to optimize the core – all six key elements – of the hard drive business. We have to move fast. Commonality allows us to be flexible. Leverage is critical – each one of these has a reason they are important to every aspect of our business.
“Conceptually, my view is that we spent a lot of time at the functional level across the company dealing with the interaction of all these things – speed, predictability, flexibility and leverage.”
Do you have a performance chain process in place now that you feel is well oiled or well defined?
“Yes, we have a process. I assume it is never very well oiled. You always have to worry about what you don’t know and be willing to adjust. This business is always dynamic. The only time you get caught is when you think you’ve got it nailed.
“Always assume the unexpected will happen and be ready to act on it. Something happens – now you need speed – now you’ve got to be quick in adapting. And you’ve got to set the capability for speed before you need it.
“You can’t wait until something happens to worry about flexibility. Then it is too late. Flexibility built in is what gives you speed to recover.
“Balance across the performance chain is a dynamic process.”
Summing up your performance chain journey?
“We were not flexible. We were not predictable. We didn’t respond in a speedy way. We had to revamp all of that. We’ve now progressed to the place where we are flexible, we are predictable, we have the speed we need and we are helping customers solve bigger problems and opportunities.
“We are the quality leaders – we can take what a customer is doing and help them make it better. That is how we win.”
HGST, a Western Digital Company: HGST was formed in 2003 from the strategic merger of the storage technology businesses within IBM Corporation and Hitachi, Ltd. Since that time, the company has built on the heritage of both industry pioneers to grow profitably as a major contributor in the global storage industry. HGST drives are used by students and families; small-office/home-office workers; leading-edge, high-transaction enterprises and major computer, consumer electronics and automotive system manufacturers throughout the world. HGST was acquired by Western Digital in 2011.