How Seagate recast its mold and smoothed out the bumpy road of inconsistency

Seagate is a company that has grown through acquisition and survived the ups and downs of the disc drive business. Shooting out of the gate in the late 1970s, Seagate was virtually untouchable as a PC storage provider. In 1989, we strengthened our enterprise business with the acquisition of Imprimis. We rocked the disc drive world in 1996 by merging with long-time rival Conner Peripherals, making Seagate the largest independent disc drive manufacturer in the world.

But it wasn’t all smooth sailing. Around that time, Seagate missed a product cycle that cost us nearly $1 billion in revenue and a sizable chunk of market share. We were chock full of resources, talent and technology, but by 1998 it was clear that the disparate organizations were not gelling. Inconsistencies troubled us and it was time to make a change.

At the helm of a new management team were Steve Luczo and Bill Watkins. Determined to leave no stone unturned, they assembled a team of leaders and charted the course for success. Equipped with a new set of Corporate Values to guide decision-making, the executive management team got to work. They decided on the following formula: continue to own and increase investments in key strategic technologies; improve business operations and processes from design to manufacturing; and focus on the customer. The direction was clear, but the execution would not be easy. What wasn’t understood at the time was how positively these changes would affect the culture of Seagate. Our attitudes and behaviors began to change as the business approach changed.

Own and invest in the technology

We knew we had to strengthen our commitment and boost research and development (R&D) spending to access the key technologies that drove product strategy. At the time, this approach bucked the industry’s conventional wisdom. Most drive competitors outsourced the R&D of their products. We stood our ground and believed in this strategy. This technology ownership strategy was vindicated during a tough economy. “In our business, how we invest today results in where our products are in 18 months,” said Luczo.

“Many in the industry asked, ‘Why would you want to have all this overhead?’My thinking was, ‘Why wouldn’t you want to own assets that control your entire product strategy?’Vertically integrating our technology gave us the ability to invest beyond a current market condition. We remained profitable during the last industry downturn in part because we were able to invest in required technology. It made us much more responsive.”

Operational excellence

The management team researched best practices and methods in business operations and processes and rapidly spread many of them across the Company. The challenge was replacing the old ways of doing things while still cranking out over 10 million drives a quarter. Supply Chain, Lean Manufacturing, Six Sigma, Core Teams and Factory of the Future initiatives popped up across the Company and established a common framework that got us headed in the right direction. “Many of the Company’s Key Initiatives actually triggered the cultural transformation. Our intent focus on processes has become a normal part of the way we operate,” said Bill Watkins, president and COO.

For example, Six Sigma has already saved the Company over $600 million. Manufacturing improvements have resulted in a four-fold increase in drives per employee since 1999.

This progress is just the tip of the iceberg. Impressively,we revolutionized our supply chain, to where it’s the most flexible, efficient and cutting-edge in the industry. The efficiencies run so deep that we can now capitalize on unplanned customer demand that was impossible just a few years ago.

“We are developing new ways of working with our suppliers,” said Karl Chicca, senior vice president, Worldwide Materials. “We’re investing in our suppliers in the form of skills enhancement, resource development, and process assistance. And it’s really paying off, because it’s not going to do us any good if we’re charging ahead and they’re not there with us. What we’re doing is revolutionary.”

Focus on the customer

While some companies pay lip-service to the notion of listening to their customers, we tap our customers to help drive product strategy. Through Six Sigma-enabled processes like “Voice of the Customer,” we receive candid feedback from all direct customers and even our customer’s customers to provide a better customer-service experience.

We have worked hard to establish a relationship with the end user rather than relying solely on the OEM relationship. Brian Dexheimer, executive vice president ofWorldwide Sales, Marketing, and Customer Service, was convinced the reward would be worth the effort.

“What we missed in the past was how storage was used from an application standpoint,” Dexheimer said. “We wanted to understand the challenges that customers were trying to solve on a daily basis. If we wanted to know if there was a need for storage in a certain consumer electronics device, for example, our usual customers could not tell us. We had to dig deeper.”

It translates to improved teamwork

With the positive cultural change brought by the corporate initiatives, there comes a sense of improved teamwork and pride throughout the Company. “We look at progress through different eyes at Seagate,” said Watkins. “When we identify a problem, as long as there’s a process and we’re working to figure it out, then we know our efforts will ultimately lead to long-term success for this Company.”

Overall, we’ve come a long way since 1998. But the entire Company continues to move forward to achieve even better results. “We’ve got a lot more to accomplish,” said Watkins.

“We’ve certainly made tremendous strides, but I don’t feel like we’ve reached our final goal. We’re doing something together, as a team, that we wouldn’t be able to accomplish as individuals. And that teamwork is a powerful tool for success.”