Underdog Innovation: David and Goliath in Electronics

The story of “David and Goliath” from the book of Samuel, has taken on a secular meaning of describing any underdog situation, a contest where a smaller, weaker opponent faces a much bigger, stronger adversary.  Not just in EDA, but all companies in different technology industries deal with this struggle.

Organizations have moved from “build once, last forever” to “build fast and improve faster” approach to meet the dynamic requirements of their customers. In order to scale, evolve and respond, companies are choosing between two business philosophies. One which focuses on building larger, process driven yet efficient organizations and the other on smaller more efficient teams.

The panel discussion “The paradox of leadership: Incremental approach to Big Ideas ” at the recent Confluence 2015 conference addressed this question.  It explored the pros and cons of each of these philosophies and tried to gauge if there is a preferred way to creating success as part of the conference theme: “Building the Technology Organizations of Tomorrow.”  In my previous blog, Billion Dollar Unicorns, I discussed which companies were leading innovators, but the question remains: how do companies get there?

Confluence 2015 Panelists from Facebook, Pactera Technology, Saama Capital, SAP, and Zinnov.

Confluence 2015 Panelists from Facebook, Pactera Technology, Saama Capital, SAP, and Zinnov.

On the panel were:

Whereas industry startups (the Davids) have inherent advantage of being nimble and focused, the necessary ingredients for the significant innovation, the large companies (Goliaths) suffer from bureaucratic processes that can dampen or kill innovation.

Broadly, you can classify the innovation in two categories (according to Peter Thiel’s book Zero to One):

  • ‘0-1’ denotes a major innovation, and may be a disruptive solution, a new product or technology
  • ‘1-n’ denotes an evolutionary or incremental innovation

Large companies are good at 1-n innovation. The panelists emphatically asserted that the only way to achieve 0-1 innovation in the large companies is to form a separate group with the right skills to focus on the specific innovation. This team can be guided by a corporate sponsor (adult supervision) or could be an independent subsidiary.

On the other hand, the startups are formed on the very basis of a major idea that leads them to 0-1 innovation. In many cases, a 0-1 idea that couldn’t see the light-of-day in a large company is the very reason why a startup is formed. In the EDA context, think Silicon Perspective, Sierra Design Automation, Berkeley Design Automation, and numerous others.

This brings an interesting question, what about the startups established for a decade or more, who already have differentiated products? Let us call them “established Davids” (eDavids). Atoptech, Atrenta, Berekely DA (recently acquired), Calypto, Forte (recently acquired), Jasper (recently acquired),  and Real Intent come to mind. Whereas eDavids are still working on the new products (0-1 innovation), the 1-n innovations form bulk of such company focus, as the majority of its work is on improving their products that already have a large customer base for good number of years.

For example, Real Intent has the leading Clock Domain Crossing (CDC) product in the market for several years. It competes with big and small players alike. They continue to deliver several 1-n innovations in CDC.

Does it mean eDavids are not differentiating against Goliaths?

Absolutely not!

First of all, what we consider a 1-n innovation by eDavids, are sometimes a 0-1 innovation for a large company. For example, one of the large EDA companies is still working on a viable CDC product.  Another large company has ceased to innovate and their current product is on life-support. A third large company has a CDC product for years in market but with a low rate of innovation their customers tell us.

Then there is question of how you distinguish between 0-1 and 1-n innovations in an established product. For example, Real Intent introduced a completely unique next generation configurable CDC debug environment with command line interface. Real Intent improved its data model that enables its CDC tool to run full-chip CDC analysis on a 1 billion gate chip. Should we call these a 0-1 innovation or 1-n?

The debate on how-to-do innovation, among Davids (established or not) and Goliaths will not cease, not even in EDA! But one thing is clear, eDavids are having field day with the success of their innovations thanks to the immense value their customers realize!

This entry was posted in ramesh-dewangan by Ramesh Dewangan, VP of Application Engineering at Real Intent. Bookmark the permalink.

About Ramesh Dewangan, VP of Application Engineering at Real Intent

Ramesh is VP of Application Engineering at Real Intent. He brings 25+ years of experience in engineering, customer management, product management and marketing to Real Intent. Prior to joining Real Intent, he led the product marketing of the core product suite related to RTL design at Atrenta. Previously, his career spanned Cadence, Tera Systems, Synopsys and Texas Instruments. Ramesh holds an MBA degree from the Walter A. Haas School of Business, University of California; and a bachelor of technology degree in electronics from the National Institute of Technology Karnataka, India.