In the year that his company touched $1 billion in sales, Ray Stata stepped down as the CEO. Five years on, Stata continues to be the chairman of the board of Analog Devices, Inc. (ADI), the Massachusetts-based semiconductor company he founded in 1965 with partner Matt Lorber. Now 67 years old, Stata-born into a family of farmers-has lost none of his zeal for new technology or venture funding. Although Stata's association with India is almost 20 years old, it was only recently that he committed serious money to the region by setting up a new design company, acquiring Hyderabad-based Chip Logic, and investing $10 million from his own pocket in Ventureast TeNet Fund, set up by Ashok Jhunjhunwala, professor of telecommunications at IIT-Madras. In Chennai recently, Stata spent more than an hour with BT's Nitya Varadarajan to talk about his management philosophy, and where he sees India's strength in it could be. Excerpts:

Q. It's been five years since you gave up active involvement in ADI. Now you are sought after as a venture capitalist. How do you like this change in role?

A. I was always a venture capitalist. When Analog Devices was started, the concept of VC funding was unknown. Borrowings were from banks, and there was a compulsion for generating returns both for growth and repayment. Analog Devices had to make profits from the first year, and it did. In that sense of internal funding, I was a VC. Now, of course, I do more hands-on investments. One investment I made, which was purely personally motivated and not with a financial end in view, was with the TeNet companies of Ashok Jhunjhunwala. But other investments are not socially motivated like this one; they have been made with the material end in mind.

Your links with India go far back...

Yes, Analog Devices has had a relationship with India for the last 20 years, selling components in a modest scale. My first trip to India was in the mid-1990s (when I met Jhunjhunwala) and our associations with Indian companies for digital signal processing applications (at least 15 of them) intensified. Then, last year we bought out Chip Logic, which is our only acquisition in India. That apart, I have personally invested in Ventureast TeNet Fund.

This is a question that every foreign investor is asked: do you have significant investments in other key markets?

We do have investments, but in a more modest scale, in China, Australia, and some in Europe. But our focus by far is in India.

What would you essentially look for in a company that you fund?

I am not a numbers' guy, so I don't foresee future profits immediately. But I would look at the technology the company is offering, how innovative and relevant IT is. If the company does not have an entirely new product then how does IT plan to value-add to bring out competitive alternatives. I would also look at the quality of people... the technical talent. Then I would assess the people: are they assertive or are they participative. I dislike authoritarian minds.

Where do you think India stands globally in IT?

I foresee that India will be the design house of the world. Not in manufacturing, but definitely in design. However, a few important measures have to be taken. Indian engineers would have to stay on in the country, work from here, bring in success stories, and highlight sustainable models.

Remember that the US has engineers who have the experience of several years behind them. Indian engineers would also have to 'accumulate' their experience. But the TeNet model of Prof. Jhunjhunwala is doing precisely this, and there are other companies too-although not as many as one would wish. It may take a decade, but since the country has world-class engineers, it is achievable.

Is it that faith which prompted you to set up Integrated SoftTech Solutions here?

Yes. iSoftech will be an R&D outsourcing company, which will develop, implement, maintain products at the behest of companies.

It has already started working on several important projects related to networking (intelligent core optical network equipment) and embedded products, e-mail client software, and telecom provisioning software, which enables users select services they want on the web. Currently, the company has a team of 15, and will grow to 100 in a year-and-a-half. The break-even should come in the second or the third year. There are many small American enterprises wanting to source design from India, but don't know where to go. The iSoftech experiment will help break barriers between both countries, and link smaller enterprises together.

Talking of engineers staying back, Prof. Jhunjhunwala is trying to do precisely that, and also create technology relevant to the Indian market.

Prof. Jhunjhunwala is an absolutely remarkable man. He has a singular vision of developing affordable products that can be used by the masses, for popularising IT at the ground level, and for linking industry and university together. Jhunjhunwala is the greatest of leaders, a great salesman, strategist and a technologist.

Is there any model that Indian IT companies could follow to become more relevant globally?

The IIT model (as practiced by Jhunjhunwala's TeNet group) would be invaluable for showcasing purposes. The brightest people have to stay here, have to learn total quality management (TQM) through 'mutual learning'-that is, learn collectively through groups of affiliates. Even competitors should come together and learn to do well in management.

Analog Devices has inspired a lot of management practices, including the balanced scorecard. How did a technology company get to be so good at management?

In the early 80s, Jay Forrester (founder of Digital Computer Lab at MIT) put together a group for the new management staff project, which focussed on management culture, the making of successful employers, and management from a systemic point of view. I was part of this group of six to eight CEOs that met three to four times a year. We discussed many common elements that made for success. Peter Senge was a research assistant for this project, and I can say that our discussions formed the genesis of his book (The Fifth Discipline).

And the balanced scorecard?

It was (Art) Schneiderman (a consultant) and I who worked together in finding a tool that would elevate the matrix of quality. The Crosby School advocated the 'do it yourself mode' and 'read books', but this did not work. Then I hired Schneiderman who already came with a 'learning curve' concept, which helped to reduce waste exponentially in a given period of time. Quality measures were added to this, and we had what is known today as the balanced scorecard. Later presentations were given to universities, and it caught on in a big way.

Although Analog Devices had a much slower growth than, say, Intel, it was always considered a great company to work for. How did you manage to create that reputation?

Analog Devices has more than 10,000 people today. The reason why it has grown so much is the underlying principle of having respect for people and providing them a framework and suitable environment to work in. A lot of people working in hi-tech areas while not being entrepreneurs in their own right nevertheless like freedom from authoritarian type of management. They need the space to be creative and we offer that.

You went to a small school in a rural community. What gave rise to your interest in technology?

In school, there were small courses in science, but I read much more on science and mathematics. This, in turn, fuelled me to expand the knowledge frontier further. My first turning point in that direction came after I slammed my head into a wall while playing basketball and ended up in hospital. There another patient, an old gentleman, after listening to me talk, advised me to head for MIT. ''Set you sights to MIT, don't go anywhere else,'' he said and that became my singular ambition.

From the village school you went to the Massachusetts Institute of Technology (MIT). What did you gain from the MIT experience?

Many things. Even getting into IT was an experience. I had a four-year completely pre-paid naval scholarship that any university would accept-except MIT. Funds were a constraint, but get in I did, and worked my way upwards. Apart from learning to be persistent, I learnt a lot about relationship building and managing. I was clever, but there were people a lot smarter than me. The workload was very high and challenging. It was so strenuous that nothing could have been worse-and this really prepared me for anything that could happen in the future.

Given your years of experience right at the top, what do you think is essential for an organisation to grow and succeed?

A willingness to change, adapt and integrate. Analog itself started with a single product line, shifted to functional circuits, then we shifted from simple parts to integrated circuits, subsequently from signal processing to digital processing. Now we also offer complete design solutions, solutions to handsets, and GSM solutions. As Ross Ackoff, a management guru said, ''Performance depends on how parts work together than separately.'' Most work only in perfecting parts. Of course, leadership style is also important.

How is the tech slowdown impacting the semi-conductor industry?

The answer lies between hope and speculation. I think the worst is over. Historically, it has taken about a year for the industry to recover from previous bad spells, but this time I think IT will take 18 months to two years to get into its previous footing.

Looking back, what do you have to say about the life that you have led?

I have satisfied all my material needs. Now I am in the value curve of innovation and creativity, which motivates and which is, in turn, the path to self-actualisation. It is important to remember that the learning of the individual and the corporation is linked. 

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