Established at Helsinki University of Technology in 1993, Heptagon pioneered an innovation of micro optics used in millions of smartphones. Heptagon was sold to Austrian company ams in 2017 for EUR 850 million. The transaction became one of the biggest exits in Europe that year. The company’s road to success was by no means a straight one – quite the opposite. The financial crisis in 2008 drove it to the brink of bankruptcy.
How did the company manage to turn a downward spiral into a success story?
Rene Kromhof from the Netherlands joined the company in 2007. For 11 years, he was part of the Heptagon leadership team. He is now an executive, professional board member and investor. Here, Kromhof shares some of the lessons he learned during his years at Heptagon.
1. Don’t stare at the clock or think about the organizational chart – execute fast
A startup needs to be fast, flexible and agile, Kromhof says. Things don’t happen only during office hours. If a customer needs something tomorrow – or today – a company that’s not staring at the clock or working hours but gets on with it wins.
“We were acting so fast that our competitors would still be trying to fit in a suitable time when we’d already scheduled a follow-up meeting with our customer.”
The technology sector is so volatile that speed is a huge asset.
“Forget about 8-hour working days and pre-arranged blocks for work. If your phone rings at 8 pm, you answer it. Otherwise someone else gets that deal. Execute fast. Never lose the startup mentality.”
2. Focus on lean processes and low hierarchy
Kromhof says that for a long time the operations at Heptagon were a bit chaotic. “We had limited HR or other support functions. Recruitment is not that hard, we presumed.”
In a sense, they refused to grow into a large, traditional company. “We had lean processes and low hierarchy. It was a major advantage for us; a working culture based on speed and a clear focus.”
The rise of smartphone cameras propelled Heptagon into the world’s leading optical technology company. By 2013, it had supplied a billion components to consumer electronic giants, and the figure had risen to 2 billion by 2016. At that stage, Heptagon had 2,000 employees and a new 300,000-square-foot manufacturing site in Singapore. The company was delivering close to a million modules each day.
“Even then, we were still largely a startup. In Singapore factory, some processes like SAP were needed, but outside of that in our Swiss and USA office we remained the way we were with some 100 people. I myself managed all this business with perhaps four people in sales globally and 8-10 or so in other functions. We never allowed to fall into the trap of ‘inertia of mass’ that big companies have.”
3. Cope with disappointments – there are no highs without the lows
”I have vivid memories of my stomach turning and palms sweating when I received an email that had a huge impact on our company. Companies like Heptagon often only have a few clients, meaning a single “no” can have a huge impact.”
Kromhof knew where that email message would lead: they had to cut costs, let people go and brace themselves for really tough years ahead. The road of a startup tends to be an emotional rollercoaster. Startup stories paint a romanticized picture of the uphills and downhills – in reality, the downhills can be horrendous. For example, the financial crisis in 2008 drove Heptagon to the brink of bankruptcy.
Kromhof is often asked for advice and tips for running a successful business. This is something he’d like to emphasize – and also something he didn’t know before the Heptagon experience: Staying sane when faced with major risks means coping personally with disappointments, and accepting there are no highs without the lows. A difficult but vital skill is to see past the bad times without freezing and losing the ability to function.
"Panicking leads nowhere, you have to keep a cool and act.”
4. Find your own way to recover – take micro breaks
Fast growth and the global market demand 24/7 readiness. People also need to recover, but how?
“I encouraged my team to take micro breaks and find their own way of resting. It could be a long lunch, watching Netflix, hitting the gym, staying home and spending time with family and friends whenever possible – but being ready regardless of the time and place when work demands. Managing a global company means having to be flexible. It’s a global mess, with no waiting around for someone’s shift to start.”
5. You might have to redefine the whole company
When things got hard at the market, Heptagon pivoted from a camera lens company to a complete sensing solutions provider. “We found that optical sensors could become much smaller and higher performing with our technology. Before us, most smartphone optical sensors did not have optics or integrated packaging.” That allowed customers to shrink the size of sensors, and with that increase the screen sizes of smartphones and enhance the industrial design of end devices.
“We were able to re-define our product strategy at the right time, with the right customers. It takes luck to succeed, but I do not think that’s luck alone - rather a clear drive and vision to move into other territory.”
“I remember that pivot moment really well, it originated with me when we received a project that was completely outside our capabilities, but could change the company as it was adding lots of customer value. With very few people in leadership, we agreed we wanted to do this. And we succeeded at the end, making us a sensing company away from optics for camera’s alone.”
6. Don’t get stressed over things you cannot control
”Many in the business world would feel better, myself included, if they stopped getting stressed over things they cannot control. This is perhaps the biggest lesson my own boss has taught me.”
7. Recruit according to the right personality, not resume
Recruit the right personality, not the current expertise, Rene Kromhof says. “I hardly read through the resume.”
“You can ask all kinds of questions in an interview, but it all boils down to the energy and personality. I’ve made some recruitment mistakes, which were tough. I wish I’d realized the importance of focusing on the type of people we needed at Heptagon earlier on.”
8. You can never talk too much with a customer – try to solve their problems
There’s a huge difference between “oh, that is really an interesting product or technology” and “we’ll buy it”. Ensuring the latter response is the key question in business. If you are able to solve the customer’s problem, you get the response you want: we’ll buy it. ”But the thing is: you can only achieve this if you have strong and differentiating tech…”, Kromhof says.
The message is clear: You can never talk too much with a customer. Small companies may think they won’t be received or listened to at big companies. But with the right people and interesting products they will. “Look for access, talk to people, network, ask around for contacts from colleagues at fairs, ask to get intros, find your way to the right people. They change all the time, so you have to begin the search again. Do it anyway.”
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