Looking for reproducible results

James Truchard By Ted Smalley Bowen
June 26, 2012

James Truchard and his partners at National Instruments (NI) saw a business opportunity in one of the most routine tasks in science and engineering — the design of test and measurement systems. With a little tweaking, a common set of building blocks could meet a wide range of requirements, sparing labs the effort and expense of inventing their own systems. Four decades after the company’s founding, NI’s products help control everything from kindergartners’ Lego robots to the CERN Large Hadron particle accelerator.

Truchard, NI’s co-founder, president and CEO, met with fellows of MIT’s System Design and Management Program on June 12, 2012 to discuss his experience guiding the University of Texas spinoff from startup in 1976 to the 6,300-person publicly traded company whose 2011 revenue topped one billion dollars. In the second SDM Speaker Series event of the year, the engineer-turned-executive described some of the factors that helped him and his partners successfully harness their technical ideas. [Note: Truchard was contacted after the event for this article.]

Truchard’s formula involves a strong dose of prudence. A PhD in electrical engineering, he co-founded NI while working fulltime as a managing director at Applied Research Laboratories at the University of Texas at Austin. The company was self-financed and he moonlighted for three years, putting in some 100-plus hour weeks and sacrificing time with family, but it helped keep the company autonomous.

Bootstrapping can be difficult, but "people get venture capital and end up owning four percent of the company. And you need an exit plan, which is a challenge if you’re trying to plan long-term," he said.

He emphasized the need for startups to generate revenue quickly. "He first established contacts with institutions and academia and understood their needs before starting to develop products," said SDM Fellow Marwan Walid Hussein. "This meant that his first products were relevant and on trend."

Truchard focused on the balancing act required to maintain a technological edge while managing a large organization. NI offers employees, many of whom are hired right out of school, technology and management tracks, allowing them some flexibility in shaping their careers.

"He sees it as a challenge finding a balance between being a technically driven company and one that’s top-heavy with management. There’s really no single good answer for this," said SDM Fellow Rajesh Nair, whose resume includes several startups. "I was also interested in his discussion on how you get creative types, who are by definition non-conformists, to focus and work together."

The company allows employees to pursue their own projects within regular work hours, and has hired and bolstering R&D during economic slowdowns. "In 2001 and 2009 we used the opportunity to pick up some talent and scale up R&D, where we had been under-investing. We told Wall Street what we wanted to do and warned them profit would be down," he said.

This reflects Truchard’s preference for long term planning. In his summary, yearly plans address budgets, projects, and personnel assignments; five-year plans identify market opportunities and promising technologies (which for NI include electric cars and mobile devices); the 10-year horizon deals with the company’s evolving vision; and a 100-year span is useful for airing the company’s philosophy, which stresses innovation, integrity, and respect. "If you do that, each 90 days should add up and you just publish the results," he says. "There’s some scrambling, but long-term should trump short-term."

James Truchard