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Success factors for value creation in the era of technology convergence. Serge Leef Vice President, New Ventures General Manager, System Level Engineering Division Mentor Graphics Corporation May 2012. Progression in System Design. Integrated System Design. Multiprocessing

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success factors for value creation in the era of technology convergence

Success factors for value creation in the era of technology convergence

Serge Leef

Vice President, New Ventures

General Manager, System Level Engineering Division

Mentor Graphics Corporation

May 2012

progression in system design
Progression in System Design

Integrated System Design

Multiprocessing

Gigabit,Non-volatile

Memory

Digital SignalProcessing

Microprocessor

Packaged IC

Consumer

Communications

Energy

Medical

Industrial

Automotive

Aerospace

DesktopComputer

Military & Aerospace

1970

1980

1990

2000

2010

2020

Serge Leef, Information and Communication Technology Research Forum, May 2012

attributes of embedded systems
Attributes of Embedded Systems

Domain-specific

Highly heterogeneous

Distributed over networks

Highly interactive with physical world

Require multiple disciplines to implement

Validated mainly through physical prototyping

System integration and test organizations are pivotal

Subject to rigorous quality, certification, qualification rules

Serge Leef, Information and Communication Technology Research Forum, May 2012

typical system architecture
Typical System Architecture

Portable Energy Source

(Battery +

Alternator)

PSU / Power Management

Inputs signal

conditioning

Outputs signal

conditioning

Solenoids,

Valves,

Stepper Motors,

Sensor Excitation signals,

Comms

Cockpit

commands,

Sensors

(e.g. speeds,

pressures,

temperature,

valve position)

Comms

Inputs Processing

FPGA or ASIC

CPU

Control

Algorithms

Outputs Processing

FPGA or ASIC

Bypass controls

Serge Leef, Information and Communication Technology Research Forum, May 2012

system example car
System Example: Car

NETWORK

ECU

PLANT

  • Hundreds of PLANTs
  • 40-80 ECUs (4-32 bit CPUs)
  • Up to 10 NETWORKS of 4+ distinct types

Modern vehicle is a complex, distributed compute and control system

Serge Leef, Information and Communication Technology Research Forum, May 2012

system example airplane
System Example: Airplane

Terminal

Server

Display

Switch

Router

Avionics

(AFDX + ARINC 429 - CAN)

A/C Ops

Cab Ops

IFE

3rd network

Lights

………

Windows

Seats

Galley

Serge Leef, Information and Communication Technology Research Forum, May 2012

system example guided missile
System Example: Guided Missile

In-flight power management for guidance 

Post-impact detonation 

Serge Leef, Information and Communication Technology Research Forum, May 2012

medical multi physics interaction and test
Medical: Multi-physics interaction and test
  • Multi-domain, multi-physics medical system
    • Human body physiological sources
    • Electrical sensors and actuators
    • Ultra-compact low-level embedded software / digital control
    • High performance GUI and medical monitor embedded software

Pacemaker

Surface ECG

Data Link

Temperature

Hospital-based

remote heart monitor

Blood Pressure

Serge Leef, Information and Communication Technology Research Forum, May 2012

system design challenges
System Design Challenges
  • Design requirements are becoming more complex
    • Lower cost, lower power, lower weight
    • Increased performance, reliability, or safety
  • Convergence of multiple disciplines
    • Everything has to work together: Digital, Analog, Software, Mechanical, etc.
    • Multi-company, distributed supply chains
    • Complicated communication via a number of domain-specific file formats, tools, and protocols
  • Design optimization
    • More than just getting a design to ship, a successful project relies on predictable schedules, and optimization of Reliability, Performance, Manufacturing Cost, and Life-cycle Cost

Serge Leef, Information and Communication Technology Research Forum, May 2012

how do you design the whole system
How do you design the whole system?

Specifications

Network

Silicon

Platform

Embedded Software

Multi-Physics

Protocols

Data

Traffic

Platform Software

Plant / Mechanical

Application Software

Sensors & Actuators

Analog

Digital

Mixed - Signal

Serge Leef, Information and Communication Technology Research Forum, May 2012

need to remove walls between disciplines
Need to Remove Walls between Disciplines

Mechanical

Electrical

Digital Control

Software

Controls

Micro-controllers

DSP Processing

+

w

ieqs

ies

Cmd

Angle

k

s

+

  • Thermal
  • Mechanical
  • Fluidic
  • Mass Transfer

Electro-Mechanical

Analog, Digital, & Mixed-Signal circuits

Sensors & Actuators &

Space

Control

Circuits

  • Advanced Algorithms
  • Signal Processing
  • Embedded Control
  • Supervisory
  • GUI & Presentation

Transfer functions

Serge Leef, Information and Communication Technology Research Forum, May 2012

how to pursue innovation in system design
How to Pursue Innovation in System Design?
  • Big companies rarely succeed in innovating
    • Stagnant organizations resistant to change (IBM PC example)
    • Risk/reward ration is all wrong ($10M exit event)
  • Cycle: dissatisfied employees to entrepreneurs
    • Purchase model: front and buyout
  • Solution
    • Accept a combination of organic and external
    • Looking at 100 opportunities per year
    • Closely examined 20
    • Bought 7 - ranging from $2m to $70m
    • Each GM seeks related or augmenting startups
    • I looked at 10 last year: Sweden, Germany, Hungary, US, France

Serge Leef, Information and Communication Technology Research Forum, May 2012

what makes a good environment for technology ideas and start ups
What makes a good environment for technology ideas and start-ups?

Location, public policy and culture play key roles

Creativity is only one factor leading to possible success

Elements essential for successful innovation ecosystems:

Education infrastructure

Business-friendly climate

Risk capital ecosystem

Culture of failure

Serge Leef, Information and Communication Technology Research Forum, May 2012

education infrastructure
Education Infrastructure
  • University research
    • Mechanisms for funding relevant programs
    • Relationships with professors who recommend best students
    • Entrepreneurial professors drive commercialization of inventions
  • Technology transfer
    • Rights should be transferrable or licensable at predictable cost
    • If not predictable, established companies do not get involved
  • Government links
    • Governments are NOT good venture capitalists
      • Typical goals are prestige and employment
      • GREED must be the key driver for capitalist enterprises
    • Governments can play a role by focusing research
      • Select areas of national interest
      • Facilitate through funding University/Industry partnerships

Serge Leef, Information and Communication Technology Research Forum, May 2012

educational collaboration examples
Educational collaboration examples
  • France: IRT  Large scale initiative
    • Government objective:
      • Keep the French research competitive
      • Strengthen the link between research and industry
    • Allocated millions of € to improve GDP growth via tech sector
    • 5 centers of excellence: biotech, nuclear, semi, aero, systems…
    • Establishes locations for each; facilities free to participants
    • Each center is driven by 3-way partnership among
      • Universities, Government Research Labs and the Industry
      • 50% to 90% of personnel costs are subsidized
  • USA: CHREC  Small scale initiative
    • NSF (National Science Foundation) driven consortium
    • Focus on “Domain-specific Computing” via reconfigurable hardware
    • 4 University research teams: UF, VT, BYU, GWU
    • 10-20 industrial sponsors providing funding and direction
    • Technology transfer options available to the sponsors and can be licensed to other companies within NSF-inspired framework
    • Great source of future hires for the industrial sponsors

Serge Leef, Information and Communication Technology Research Forum, May 2012

business friendly climate
Business Friendly Climate

Source: Who in the world is entrepreneurial? CNN-Money, Geoff Lewis, June 1, 2007

  • Corporate registration
    • 2-5 days in US, Canada, Australia, New Zealand
    • 152 days & 50 steps in Brazil
  • Legal system
    • Strong protection of intellectual property
    • Means to enforce contracts
    • Rapid adjudication of disputes
    • Bankruptcy laws mitigate downside risks to investors
  • Tax policies
    • There should not be any business taxes while the startup is in the investment mode and has revenue below certain threshold
  • Employment regulations
    • Need to be able to rapidly adjust to funding and business conditions
    • Labor costs must scales smoothly and predictably

Serge Leef, Information and Communication Technology Research Forum, May 2012

risk capital ecosystem
Risk Capital Ecosystem
  • Refine prototype(s) into product
  • Engage with teaching customers
  • Pricing, packaging, marketing strategies
  • Market development
  • Achieve product differentiation
  • Win business against competition
  • Build repeatable success methodology

B

  • Sales organization & execution
  • Productization and wide deployment
  • Outbound marketing programs
  • Public launch
  • Develop working prototype(s)
  • Understand the ecosystem
  • Business model development
  • Market definition

C

A

Red zone

*Based on observations of a typical fabless semiconductor startup company, 2006-2009

Serge Leef, Information and Communication Technology Research Forum, May 2012

  • Phases and Milestones*
    • Series A funding - $1M to $3M
    • Series B funding - $5M to $8M
    • Series C funding - $8M to $15M
  • Red zone – latest exit point for outside investors
risk capital ecosystem1
Risk Capital Ecosystem

Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors,

and Policy Makers Live By, Scott Shane, Yale University Press (January 28, 2008)

  • Venture Capitalists
    • VCs have specialization; some specialize in A or B rounds; $23.2 billion invested in 2010; $28.4 in 2011*
    • There are companies that specialize in mezzanine financing including investment banks and pension funds
  • After Series B…
    • Private equity players can participate instead of VCs, focus on on-going revenue producing companies
    • IPOs – most desirable successful exit for the investors, but should not be done until absolutely necessary
    • Sub IPOs - create public shell company and merge startups into it.. If the venture is too small for a real IPO, then use penny stock market to raise capital (many shady players in this space)
    • Selling the venture can also be viewed as a success
    • Most startups fail

Source: Interviews with ex-head of Investment Banking of a major Wall Street Company, March, 2012

  • Before Series A
    • Friends and family
    • Angels
      • Former entrepreneurs - series A or earlier if familiar with space
      • Less demanding than real VCs
      • More proactive in looking for investments
    • State governments invest in early rounds of subjects of interest- motivation to develop new business segments
    • Universities – in California: Stanford, UCB, UCLA, USC, CalTech provide facilities and access to professors
    • Normally nurturing behavior

Serge Leef, Information and Communication Technology Research Forum, May 2012

culture of failure
Culture of Failure

*Source: Confessions of Serial Entrepreneurs, J. Wang, eterpreneur.com, January 8, 2009

“Failure, something we all fear, provides the greatest moment for us to learn. How we manage or better put how we are honed to manage the process of failure provides not only the basis for but is the best indicator of future success” - Entrepreneurship: Cultural Views on Failure A Good Indicator Of Chances Of Success, Ainsley Brown, Commercial Law International, Dec 2011

  • Failure carries a huge stigma in some cultures
    • Can be cross-generational
    • Need to find ways to cushion social damage
    • Develop structures that support “serial entrepreneurs”
  • Motivation factors driving serial entrepreneurs*
    • Need to prove self
    • Have a lot of energy
    • Heed a lot of stimulation
    • Starting businesses that will make a difference
    • Typically interested in “big ideas”

Serge Leef, Information and Communication Technology Research Forum, May 2012

comparing success factors
Comparing Success Factors
  • Educated work force alone is not sufficient for success

Serge Leef, Information and Communication Technology Research Forum, May 2012

summary
Summary
  • Convergence of innovations in computing, sensors, mobility, and networking are driving exciting prospects for advances in automotive, aerospace, medical and consumer markets
  • Capitalizing on these opportunities is a challenge for inventors, entrepreneurs, academics, businesses and governments
  • Each has a role to play in driving value creation
  • Proactive public policy should focus on ALL success factors:
    • Education infrastructure
    • Business-friendly climate
    • Risk capital ecosystem
    • Culture of failure

Serge Leef, Information and Communication Technology Research Forum, May 2012