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4 secrets to business longevity from Analog Devices’ Ray Stata

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In a climate where startups come and go like popcorn at a movie, founding and running a company for the long term can seem like a lost art.

Case in point: Of these electronics companies founded around MIT in the 1960s — Sprague Electric, Philco, Clevite Transistor, Transitron, Sylvania Electric Products, Analog Devices, Unitrode, George A. Philbrick Researches, and Nexus Research Laboratory — only one still exists today.  

MIT alumnus Ray Stata has led Analog Devices Inc. for 54 years.

Founded in 1965, Analog Devices Inc. had revenue of more than $6 billion in fiscal year 2018. It still makes its original product — operational amplifiers. It’s still headquartered in Norwood, Massachusetts, and, as one of the few semiconductor companies on the East Coast, it still manufactures chips in a fabrication plant in Wilmington, Massachusetts.

And as of February 2019, its co-founder, Ray Stata, still chairs the Analog Devices board.

To what does Stata, who earned both a master's and a bachelor's degrees in electrical engineering at MIT, attribute his company’s longevity, and his own? He offers four pieces of advice:

Always be iterating

From the beginning, Stata studied and tried to practice organizational learning, an attribute that enabled Analog Devices to adapt to tectonic shifts in technologies and markets.

At first, Analog Devices built operational amplifier modules by hand for the defense and instrumentation markets. But Stata was watching a new technology emerge — the integrated circuit. He foresaw how the integrated circuit business would overtake modules.

“Each year ICs got better, and they were an order of magnitude cheaper,” he said in a recently published history of the company. “I concluded that we had to take bold steps to learn how to design and manufacture ICs, or our success would be short-lived.”

When the PC business boomed in the 1980s, Analog Devices had to change from selling low volumes of high-performance, high-profit-margin parts to military and instrumentations markets to selling inexpensive, easily manufactured products in high volumes to the computer market. “Many of our most sacred beliefs had to change,” Stata said.

Today, on the cusp of the “internet of things,” Analog Devices has expanded into sensors, processors, software, and wireless connectivity, and is selling to even more varied markets.

Take calculated risks

Although Stata saw the writing on the wall with integrated circuits, by 1969 the company had gone public, and he couldn’t convince its board of directors that Analog Devices needed to embrace the new technology.

So Stata devised a workaround: He borrowed against his Analog Devices stock and funded his own startup, called Nova Devices, to design and manufacture integrated circuits. Within two years, Analog Devices’ board bought the startup, and within eight years, integrated circuits made up more than half of the firm’s revenue.  

Another instance of risk and reward: In the mid-1970s the company made the unlikely choice of Limerick, Ireland, as the site of a second fabrication plant.

Although the Irish government was courting tech companies, offering attractive subsidies and training programs, industry colleagues thought it was a crazy decision, Stata said, because there was no semiconductor business there. The area had neither the industrial infrastructure nor the technical