Cypress Semiconductor: A Federation of Entrepreneurs

Cypress Semiconductor: A Federation of Entrepreneurs

By
Charles O'Reilly III, David Caldwell
2012|Case No.OB84

In 2011, Cypress Semiconductor was doing well. Their 2010 revenues had grown 32 percent to $884 million, and coupled with diligent cost reduction efforts, their profits before taxes were up nearly 23 percent. In the preceding two years Cypress had eliminated its debt and built up a large cash position. But the semiconductor business was a brutal one demanding both continual cost reductions and innovation. Cypress was a comparatively small player, competing with firms like Samsung that was more than 40 times its size. Cypress founder and CEO, T.J. Rodgers reflected on the challenge of fighting large competitors in a tough environment by saying, “It’s all about execution because if you haven’t done what you said you were going to do it doesn’t matter if you have a good plan or not.” In Rodgers’ view this meant that to be successful Cypress had to continue to be relentless in driving out costs and be able to generate a stream of new innovations. His solution was to manage Cypress as “a federation of entrepreneurs.” This case details the history of the firm and its philosophy and practices that it uses to encourage innovation within its organization. The case gives a comprehensive account of Cypress’s approach, people management including hiring and compensation procedures, and information systems. The focus is on Cypress’s strategy and practices to stimulate innovation and launch successful new ventures.

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