Don’t stop after you set standards; VCs also look at best practices

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Dec. 19, 2003 — This summer, while discussing the push for MEMS standardization with a venture capitalist, a very interesting question was posed in regard to current business models: What about best practices?

This question is very well-timed because the MEMS industry’s focus seems to be shifting away from the technology itself, and toward sustaining a successful business. Perhaps one of the most critical issues facing a number of companies is execution — an area where best practices could be of tremendous help.

The need for MEMS standards has been an ongoing topic for many years. The Semiconductor Equipment and Materials International (SEMI) trade group has a team set up to look into equipment standards. The National Institute of Standards and Technology (NIST) now has metrology standards in place. Packaging has also been targeted and, of course, the biggest point of contention is standardization of MEMS processes, and even the devices themselves.

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Standards are tangible. They are specific guidelines and procedures to ensure consistency. They typically arise via scientific research and application experience, and are formed by the consensus of a recognized body or association.

Best practices are intangible. They are proven ways to consistently and effectively perform a business process, or achieve a particular business objective. They generally come about as a result of extensive experience, and can serve as guidelines for other companies.

If one VC is inquiring about best practices, others are most certainly considering them, too. So, where to start?

Establish a clear vision: More often than not, companies are still more focused on developing a device and finding applications for it, rather than trying to meet a need. The companies that identify a problem and devise a solution (that just happens to be micromachined) are on the right track.

Pinpoint key applications: What’s your primary target? Zero in on two or three to pursue in the near- to midterm, with the rest part of your long-term road map. Companies struggling with this are generally experiencing the pains of technology push, rather than responding to market pull. True, in some instances, MEMS devices must be pushed — particularly in areas where they create entirely new application categories. But, by and large, the real opportunities lie in responding to a bona fide market need.

Understand your markets and customers: Where are the problems and inefficiencies? What trends could help or hinder your efforts? What’s your advantage? Improved performance or functionality, as well as cost savings, should be your top selling points. Next-generation anything, in and of itself, isn’t sufficient. In some instances, you not only need to know who your customer is, but who their customers are. Who’s the ultimate end user? Consumer whims and demands, as well as seasonality, can directly affect you — no matter how far down the supply chain your company is.

Devise a reasonable road map: What percent of an entrenched market can you realistically capture? And how long will it really take? Beyond projected revenue generation, VCs take a hard look at management teams. Many MEMS startups are often founded and run by the engineers who have developed the device; VCs tell me that such startups should find a CEO and CFO as quickly as possible.

Ask questions: Talk to successful companies. While some may argue that this is easier said than done, interestingly enough, it appears that some of the larger companies within this industry (who are now past their own critical ramp-up period) may be willing to share their lessons learned. They seem to understand that to do so would be a win for all involved.

On the other (more complex) end of the spectrum is Six Sigma. Best known as a rigorous quality improvement technique, these tools are applied to as many steps within the development process as possible — with a primary focus on manufacturing efficiencies. Honeywell is a bit of a trailblazer here by being one of the first known companies within the MEMS industry to implement Six Sigma; these practices are in place at its MEMS fab — Honeywell MEMSplus!

It’s very possible that Six Sigma may be the right step down the path of process and device standards within the MEMS industry. In addition, best practices have come into play over the past few years that are allowing the Six Sigma process to be applied across the entire corporate organization. However, while Six Sigma may take up more resources than startups can comfortably accommodate, it�s certainly something to keep in mind.

Perhaps the biggest question is whether the implementation of best practices will increase the success of companies. The answer is more likely than not a resounding “yes,” although it might be extremely difficult to quantify. Either way, moving forward armed with improved processes (based on lessons learned), rather than spinning one’s wheels, or constantly reinventing them, will do much for better execution overall, improving the success of the MEMS industry as a whole.

PriceWaterhouseCoopers has a great Web site that details the mechanics of best practices, and would be an excellent starting place.


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