12 June 2012
Taking the long view: Interview with Alex Davern, COO of National Instruments
Despite having been in the test business for more than 35 years, National Instruments remains a 'one of a kind'; not only in terms of the technology which it offers, but also in terms of its philosophy. Alex Davern, as coo and cfo, has had much to do with the company's development.
"I've watched the company grow across the world," he said. "But a continuing challenge for me is to run an engineering company on a long term basis in a world of quarterly results."
Born in a garage, NI has developed into a $1billion company with more than 6000 employees – 1900 of whom are doing R&D – in 40 countries. And one thing of which Davern is proud is NI's continued ranking as one of the best companies to work for. How does he explain this? "Our focus is all about acquiring engineering talent," he responded, "and creating an environment in which they can prosper. People have to be excited about what they do and they will get excited if what they do matters."
Employee retention is also higher than industry norms. "Our growth creates opportunities," Davern explained. "This means our staff can grow without having to leave the company and it means we can keep their expertise. We have a simple philosophy; making engineers more productive, making customers successful."
NI's goal is to provide reusable elements that abstract problems, so engineers can focus on the application. "Our customers are domain experts who can build systems for themselves," Davern said. "We help them get their technology to market more quickly."
Davern said the company was trying to keep four main groups happy. "Customers, shareholders, partners and employees. Customers need us to grow and be profitable. Shareholders need us to provide a return on the investment. We need partners to help us deliver solutions and we need our employees to grow."
Fundamental to the corporate philosophy is a 100 year plan; something which is probably unique amongst technology companies. "It's a decision making tree and one of the biggest sources of differentiation," Davern believed, "and we don't cede control to anyone who has a different time line."
How does this work? At the 100 year level are core values, culture and the NI way. At 10 years are the core strategic vision, people, training and platforms. At five years, products and markets, as well as company, growth and quality goals. In all decisions, the 100 year goals take priority.
Even though NI has some 1900 R&D staff – 75% of whom are developing software – most of its products are based on development work done by others. Davern admitted: "It's done by mass market companies like Intel and Microsoft. They provide the building blocks, we add specific technology."
How does NI's R&D add value? "Enabling commercial technology to be applied to our markets," he responded. "We're building a framework; drivers and applications that abstract the power of technology, plus asics, timing devices – elements that are key to instrumentation and control."
He believes this approach is giving NI's customers access to the latest technology possible. "The average age of an instrument on the market is probably five years. Add to that a two year design cycle and you've got a seven year old device. Nobody would want a seven year old pc; why should you buy redundant test equipment just in order to use an a/d converter?"
The 1900 R&D staff is also the largest of any test company, said Davern. "Agilent only has about 1300 in test and measurement R&D."
Add to this NI's relationships. "We have a tight relationship with Xilinx and Altera is a good supplier," he noted. "One of the biggest challenges for Xilinx is fpga programming and LabVIEW gives it another path. Meanwhile, our relationship with Tektronix is allowing its IP to be made available in different form factors."
From its origins in a garage, NI has now matured into a mainstream player in the test market, said Davern. "It's all down to retention of our engineering staff and the compilation of expertise."
But it's the future which concentrates Davern's mind now. "We want to double our revenues by 2016," he said. "We will be a target for everyone in the industry, but we want to outstrip their investment so they can't catch up. While we have to be worried about innovators, we don't want to trap ourselves in the market. So we will have to leverage all appropriate commercial technology and continue to embrace the 'next big thing'."
How will it grow annual revenues to $2bn? "Through growth in demand for LabVIEW and the hardware that our customers need," he asserted. "Our strategy is simple: giving LabVIEW users what they want. There's no point in coming to market with products that aren't significantly differentiated. For instance, a product which is 3% better will fail; people won't switch from something which is tried and tested unless it brings them significant value.
"It's all about intent, effort and investment," he continued. "You can have all the intent in the world, but if you don't try, forget it."
One potential stumbling block – but one which affects almost every company in the electronics industry – is the lack of analogue engineering talent. "We're working at the primary school level to make engineering not seem so difficult," Davern concluded. "That's one of the greatest things we can do."
Alex Davern is chief operating officer, chief financial officer and executive vice president of National Instruments. As COO, Davern helps to ensure global corporate alignment between the company's regional teams and focused investments in key growth areas. He also manages the supply chain from manufacturing to deployment.
He joined NI in 1994 as the company's international controller and was promoted to CFO in 1997. He became senior vp of manufacturing and IT operations in 2002. Prior to his career at NI, Davern worked for PricewaterhouseCoopers in Europe and the US.
Davern has a degree in business studies and a postgraduate diploma in professional accounting from University College Dublin.