Isola CEO Jeff Waters Shares Insights and Reflections

Estimated reading time: 18 minutes

Waters: I think they're okay, but not great. This is always that anxious period of time when you're just coming out of summer and you're kind of waiting to see what September looks like, because you always get a bit of a slowdown in July and August. How quickly are we going to emerge? How much additional volume and upsurge will a new server platform from Intel drive? How much will you see in a pickup in business in Europe and North America as designers come back to work and purchasing managers get back into play?

The uptake in September has been good so far but overall, and I would say it's true across all the geographies, nobody is really optimistic, but I would say nobody is really doomsday about what's going on either. It feels kind of steady. Our goal though, and I think we talked about this the last time we met, has been that we're not going to depend on the market for our growth. We're squarely centered on how we can grow from the roughly 4–5% market share that we have today worldwide to 10%. There's a lot that we can do.

Matties: It's not an easy task.

Waters: It's not and fortunately we don't need to do all that by next year. Some things will take a few years, but others are already happening and showing good returns. A great example is our customer approach: showing more humility, listening more to our customers, and making the necessary changes internally to regain their trust. With this, we’re already seeing enhanced satisfaction from old customers, and new streams of business from ones that wouldn’t give us the time of day historically.  But this is just one example of where we’re seeing results.

Matties: If you're looking at the right sequence on the critical 20%, you're going to be just fine, right? That’s the goal, to work on the right things in the right order. Have you seen any percentage in market share since you've taken over?

Waters: Yes, we grew the last couple of quarters.

Matties: To the level that you thought you would be at now in market share?

Waters: No. It's lower.

Matties: What do you attribute that to?

Waters: Probably a couple of things. We made a number of changes organizationally. One was we went to a global sales organization, and actually now all of our functions are global. We used to be regionally organized.

A lot of the opportunity for us is in enhancing that communication between North America and Europe with Asia. There just were not communication channels for that when we were structured regionally. So when business would move from the West to the East, we’d lose it either by not communicating or by not having the right prioritized support in each region to win it. On the cost side, we recognized probably within the last three months that we had a cost challenge in Asia. There are things that we need to do to get more cost competitive. The good news is that they're all fixable.

Matties: As long as you can identify them, you can fix them.

Waters: Yes, and that is now creating more runway for us to get more aggressive and more customer-friendly when it comes to our sales force with Asia. That is a huge opportunity for us. Many PCB shops in Asia, including most of the top ten ones, have not worked with us, either in several years or ever. What you typically hear, though is, "Yeah, we'd love to work with you guys. You just have not historically been remotely cost competitive."

Well, we're changing that dialogue now and we are able to be cost competitive, even in the high-volume business over in Asia. That's different and it takes a little bit of time to convince your sales people of that. Then it takes a little bit of time for them and guys like me to go out and convince the customer base of that. But every week we see progress in that with new PCB shops that are opening up business to us and allowing us to get in on designs and allowing us to participate in a market that before wouldn't have thought about us.

Matties: Is there anything that we haven't discussed that you think you'd like to talk about?

Waters: I guess one of the things I would just reiterate is that when we talked the first time, I said one of my initial observations was that Isola had a very unique set of assets with our R&D, our manufacturing and our technical support that we had in Europe, North America, and Asia, and my suspicion was that this was going to be a source of opportunity for us. I would say if I've learned anything over the last seven or eight months, it's been that that is absolutely true.

Matties: It seems to me that Isola was so well-positioned to dominate the market space, and somewhere leadership got off track, because you're right. All the assets are there: the team, the infrastructure, the manufacturing locations, and the distribution. I look back and I say, “Well, the only thing missing must have been the leadership.” But it sounds like your culture and your approach is a lot different than the way that it's been done in the past.

Waters: Absolutely. One thing, though, is throughout my career I've been running groups where I've taken them to a certain level and then things started to stagnate. Then somebody new came in to take over for me and it kind of gave it a new, fresh look at things. I think after you've been at something for a period of time, it can be helpful to bring in some different thinking.

Matties: You just have to do it soon enough. You have to know when to say done is done, right?

Waters: Absolutely.

Matties: This is just armchair quarterbacking, but it seems like it may have taken too long for that to happen. All that being said, it sounds like the turnaround's happening and things are moving in the right direction.

Waters: They are. We really do have the ability to leverage what's already special about Isola, but to expand on it also. It is really about us, across every dimension of what we do as a company, thinking about the customer and thinking about what we can do ourselves to make it more attractive to the customer. That sounds trite but it's absolutely true in what we do.

Matties: Customer perceptions drive everything. The decisions are made in the emotional mind. If they feel good about you, it's a lot easier to do business.

Waters: Yeah, so we're getting there. We're running as fast as we can.

Matties: Well, thanks for taking time out to do this today. I appreciate it again.

Waters: My pleasure.

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