Table of ContentsA Solid FoundationCulture for InnovationOrganizational StructureCEOsEfficiency versus InnovationBlurred BoundariesBusiness Unit ManagementASML is a Dutch company founded in 1984 as a joint venture between Advanced Semiconductor Materials International (ASM International) and Philips. From a wooden shed behind Philips in Eindhoven, the new company launched its first lithography system: the PAS 2000 stepper. The following year, the new company had already outgrown the modest hangar and moved into a futuristic building in Veldhoven, where the head office is still located. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayASML creates systems for photolithography (also known as optical lithography or UV lithography). This is a process necessary for creating semiconductor chips. It uses light to transfer geometric patterns from a photomask (an opaque plate with holes or transparencies allowing light to shine through) to a photoresist. Lithography systems allow these patterns to be printed at a tiny scale so that they can form integrated circuits on a small area rather than assembling discrete components. As a result, these circuits can be produced more quickly and more cost-effectively than before. Chips, or integrated circuits, have become essential and are today used in most of our electronic devices. Since their creation in 1958, integrated circuits (ICs) have advanced significantly, allowing devices such as mobile phones and laptops to operate faster by reducing the size of patterns printed by lithographic systems to fit more transistors onto the same surface. Due to its growing importance in everyday life, ASML envisions “a world in which semiconductor technology is ubiquitous and helps solve society’s toughest challenges.” Their goal is to continue to reduce the size of integrated circuits to add value, reduce costs and encourage the use of chips in sectors such as healthcare, energy, mobility and entertainment. Today, ASML is the world's leading provider of photolithography systems for the semiconductor industry. reaching 85% market share in 2015. While they had only 100 employees in 1985, they now employ more than 14,000 people, of whom more than 5,000 are specifically employed in R&D. Their R&D and manufacturing facilities are now spread across the Netherlands, Asia and the United States. In 2018, ASML ranked 75th on Forbes' list of "The World's Most Innovative Companies," and the firm believes its multidisciplinary and culturally diverse teams are key to innovation and creativity within the firm. the right ingredients to become a successful innovator. Philips is a Dutch company founded in 1891 with the aim of providing affordable and reliable lighting to everyone who needs it. Since their founding over a century ago, they have continually championed innovation to improve people's daily lives. Over the years, Philips has diversified its product line so radically that it operates several separate entities without compromising or diluting the spirit of innovation that is at the heart of the company. Philips has become one of the world's largest conglomerates. The company owes its success to its ability to connect innovation to the consumer and its continued investment in research anddevelopment. Investment in R&D remained an important part of both companies' innovation strategies, ASML spent €1. 2 billion in R&D in 2017 alone while Philips spent €1. 76 billion the same year. Culture for InnovationASML started as a close-knit family of 31 employees. When brick phones and rigid business structures ruled, this team wasn't afraid to break the mold. During their early years, the team followed unorthodox creative practices that led to what they call the "wild years." One early employee proudly remembers his colleague pressing his ear against a screw to get the right frequency; colleagues admired each other's creativity and interacted much like family. Everyone knew each other and everyone was there for each other. Even though the ASML team is much larger today, it is still the passion for technology that binds the employees. Being the world's largest supplier of lithography systems gives employees the motivation and pride to continue innovating to improve our everyday devices. The industry's underlying motivation outside of just the company is a paradigm introduced by Intel co-founder Gordon Moore. He first observed that the number of components on integrated circuits doubled every year, then he adapted this figure to a doubling every 2 years. This phenomenon, now recognized by the industry as Moore's Law, helps guide strategy and set common goals to advance technology and society as a whole. Diversity is also an integral part of ASML’s culture of innovation. In 5 years, the company has expanded abroad, in the United States and Asia. Not only did this bring them closer to customers, but they also started attracting international talent to enrich their knowledge and creativity. Today, ASML describes itself as a melting pot of multidisciplinary and culturally diverse staff who work together to develop creative and relevant solutions. Even small teams of up to six people include a wide range of nationalities to challenge employees and encourage continuous learning across cultures and functions. The consensus among employees is that it is an inspiring and challenging work environment, as you see some of the smartest people in the industry working on life-changing solutions. Although most employees agree that the people make the company a rich, diverse and friendly environment, there is a common feeling among foreign employees that management is still very Eurocentric. Organizational structure ASML has three main business sectors: ; Deep ultraviolet (DUV) scanners, extreme ultraviolet (EUV) scanners and applications. The three business segments are supported by research and development, sales, operations and procurement. As with many start-ups, the company's early years were chaotic and unstructured, with undefined roles and open communication. This disorder and family structure was similar to that of WL Gore, with no hierarchy, intermediaries or fixed roles, which led to greater creativity in problem solving. However, unlike Gore, ASML clearly had a core business in lithography systems and outsourced everything outside that core business to meet deadlines. The flat hierarchy and short lines of communication were essential in ASML's race to launch a competitive product, but then-CEO GjaltSmit, stressed that it was time to somewhat control the chaos. When the company moved to a larger building, it was easier to manage administration and divide staff into teams. Despite this increase in authority, the organization remained relatively stable with Smit at the top followed by managers leading flexible teams. Former project manager, Richard George, was surprised by the level of freedom and discretion granted by senior management. Even today, managers are given large tasks with a deadline and can then decide for themselves how to complete them. The role of top management is to enable managers to accomplish the task, thus providing the necessary funds and human capital to the project leaders. Like other innovative companies like Google, giving freedom and confidence to employees requires a lengthy recruitment process. ASML has several elements in its application process, starting with a resume that demonstrates high skill and experience in technical fields such as engineering. Once your resume is scanned, the candidate may be asked to complete an assessment to further test their technical skills. If this test is passed, the candidate is invited to an interview. Since ASML encourages multidisciplinary teams, it is likely that the candidate will be asked to interview with multiple stakeholders to ensure that only well-rounded candidates with the right personality are hired. The benefit of this time-consuming application is that senior management can trust employees to be motivated and work effectively as a team without the need for continuous monitoring. This allows the company to maintain a flat, broad structure because the CEO doesn't have to micromanage teams. Simultaneously, employees feel more empowered and are more intrinsically motivated to complete tasks because they work in teams of highly skilled professionals and have the confidence to share creative ideas without being questioned by upper management. The CEOsThe first CEO appointed by ASML was Gjalt Smit, a visionary with great enthusiasm but a lack of technical knowledge. Because of this gap and the many obstacles the new business had to overcome, Smit realized his best option was to adopt the role of coach, allowing his team of experts to determine the success of the business while coming together to encourage crazy ideas. The aim was to create a business environment unprecedented in Europe at the time; inspired by Silicon Valley, Smit wanted to encourage risk-taking at all times by fostering an environment of trust, independence and inclusiveness. To instill this culture, he introduced daily “morning prayers,” or progress reviews, and twice-weekly “tea concerts” where all employees meet and developments in their field are presented. He also introduced mandatory two-week training for new employees to ensure they fit into the culture as the company experiences very rapid growth. Some even call Smit the Steve Jobs of ASML for his ability to foster creativity and lead the company with a clear strategy. However, like Steve Jobs, he was also known for his rather unsympathetic character. Since Smit, the business has grown significantly, which brings with it the difficulty of balancing creativity and control. Despite this, the role of ASML CEOs has remained largely the same over the years. Current CEO Peter Wennink continues to facilitate communication rather than assigning specific tasks and strivesto change the inherently negative perception of risk in the European business landscape. With over a third of ASML's staff comprised of engineers, they are undeniably central to the company's success. However, Wennink admits that they cannot enjoy complete autonomy like before, because they can be myopic and naive in terms of business strategy. Thus, he ensures that the company remains focused on the larger goal of keeping Moore's Law in force by relentlessly innovating to reduce chip sizes. Efficiency versus innovation In many companies, the trade-off between efficiency and innovation leads to difficult decisions by senior management and ultimately requires a compromise. But at ASML, it is precisely efficiency that drives innovation. Every year, ASML sets aside a budget of one billion euros to invest in R&D with the aim of developing the smallest, most efficient and most cost-effective chip manufacturing machine. Although the chip industry is highly volatile and subject to cyclical downturns, ASML systematically stores excess cash to ensure maximum efficiency and avoid obsolescence, regardless of financial performance. This is part of Wennink's strategy to maintain Moore's Law even when Intel itself begins to doubt its future viability. Although efficiency drives innovation at ASML, companies like 3M have proven that striving for maximum efficiency is not always the best solution. They reminded businesses that invention is inherently messy and cannot simply be programmed into the course of an employee's job. For this reason, ASML separates its R&D from other functions to enable both efficient processes and a creative environment that tolerates failure. Despite Wennink's clear strategy and significant investment in keeping Moore's Law alive, its persistent focus could lead to the company's ultimate downfall. Many big players in the chip industry are starting to abandon this paradigm; Companies like IBM have already started investing in alternatives that could make the silicon microchip obsolete. ASML's relentless pursuit of Moore's Law could leave them blindsided if such alternatives take over. Blurred boundaries One of the ways ASML mitigates this risk is through its open innovation model. This involves creating an ecosystem in which the company can collaborate with suppliers, customers and partners to share knowledge, build trust and manage self-interest. Through this model, ASML can share risks and rewards throughout the supply chain. By innovating alongside its customers, the company is able to make relevant improvements at the same pace as its customers so that innovations can be implemented immediately and seamlessly. To formalize this program and foster collaboration, ASML's main clients are also major investors. Intel, TSMC and Samsung together own more than 20% of ASML's shares and therefore have a great interest in the company's success. In a way, the ecosystem resulting from the blurred boundaries between participants can be defined as the organization rather than ASML alone. All parties involved collaborate and share knowledge across borders to pursue the common goal of improving everyday devices across all industries. Co-innovating with key customers by definition leads to demand-driven innovation. The companies in which ASML chooses to invest are therefore likely to be closely linked to the.