IndexA solid foundationCulture for innovationOrganisational structureThe CEOsEfficiency vs. 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 located behind Philips in Eindhoven, the new company launched its first lithography system: the PAS 2000 stepper. By the following year the new venture had already outgrown the humble shed and moved into a futuristic building in Veldhoven, where the headquarters still remains. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay ASML creates systems for photolithography (also known as optical lithography or UV lithography). This is a necessary process to create semiconductor chips. It uses light to transfer geometric patterns from a photomask (an opaque plate with holes or transparencies that allows light to pass through) to a light-sensitive photoresist. Lithography systems allow these patterns to be printed at a tiny scale so that they can form integrated circuits on a small surface rather than piecing together discrete components. As a result, these circuits can be produced faster and more cheaply than before. Chips, or integrated circuits, have become indispensable and are used in most of our electronic devices today. Since their inception in 1958, integrated circuits (ICs) have made great advances, making devices like cell phones and laptops work faster by decreasing the size of patterns printed by lithographic systems to fit more transistors on the same surface. Given its growing importance in everyday life, ASML envisions “a world where semiconductor technology is everywhere and helps address society's toughest challenges.” The goal is to continue reducing 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 supplier of photolithography systems for the semiconductor industry. reaching an 85% market share in 2015. Having just 100 employees in 1985, they now employ over 14,000 people, with over 5,000 employed specifically in research and development. Their R&D and manufacturing facilities are now spread across the Netherlands, Asia and the United States. In 2018, ASML was ranked 75th on Forbes' "World's Most Innovative Companies" list. The company believes that its multidisciplinary and culturally diverse teams are key to innovation and creativity within the company. A solid foundation Starting as a joint venture with Philips, ASML had all the right ingredients to become a successful innovator. Philips is a Dutch company founded in 1891 with the aim of offering reliable and affordable lighting to anyone who needed it. Since their inception over a century ago, they have consistently championed innovation to improve people's daily lives. Over the years, Philips has diversified its product range so radically that it manages several separate entities without compromising or diluting the innovative spirit that drives the company. Philips has grown to become one of the largest conglomerates in the world. The company owes its success to its ability to connect innovation to the consumer and to continuous investment in research and development. Investment in research and development has remained an important part of both companies' innovation strategiesthe companies: ASML spent 1 euro. 2 billion in research and development in 2017 alone while Philips spent 1.76 billion in the same year. Culture for innovation ASML was born as a close-knit family of 31 employees. When traditional phones and rigid corporate structures dominated, this team wasn't afraid to break the mold. In the early years of existence, the team followed creative and unorthodox practices that led to what they refer to as the “wild years.” One of the original employees proudly remembers his colleague holding his ear to a screw to get the right frequency; colleagues admired each other's creativity and interacted much like a family. Everyone knew each other and everyone was there for each other. Even though the ASML team is much larger nowadays, it is still the passion for technology that binds the employees. Being the largest lithography system supplier in the world gives employees the drive and pride to continue to innovate to improve our everyday devices. The underlying reason for industry outside 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, and then adjusted this figure to double 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. Another integral part of ASML's culture of innovation is diversity. Within 5 years, the company expanded overseas to the United States and Asia. This not only brought them closer to customers but also started attracting global talent to enrich knowledge and creativity. Today, ASML describes itself as a melting pot of multidisciplinary and culturally diverse staff working together to create creative and relevant solutions. Even the smallest teams of up to six people have a wide range of nationalities to challenge employees and encourage continuous learning across cultures and functions. The consensus among employees is that it is a challenging and inspiring work environment as you observe 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 lines; Deep ultraviolet (DUV) scanner, extreme ultraviolet (EUV) scanner and applications. All three lines 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 W.L. Gore's without hierarchy, intermediaries, or fixed roles leading to greater creativity in problem solving. Unlike Gore, however, ASML had a clear core business in lithography systems and outsourced everything that was not part of this core business to meet deadlines. Flat hierarchy and short lines of communication were vital in ASML's rush to launch a competitive product, but then-CEO, Gjalt Smit, stressed that it was time to somehow control the chaos. When the company moved to a larger building, it was easier to manage administration and divide the workforce into teams. Despite this increase in authority, the organization remained relatively flat, with Smit at the top followed by managers leading teamsflexible. Former project manager, Richard George, was surprised by the level of freedom and discretion afforded by top management. Even today, managers are assigned general tasks with a deadline and can then decide independently how to accomplish them. The role of top management is to enable managers to complete the task thus providing all the funds and human capital required by the project leaders. Similar to other innovative companies like Google, giving employees freedom and trust requires a long recruiting process. ASML has several components in the application process, starting with a CV that demonstrates high competence and experience in technical fields such as engineering. Once your CV has been scanned, the candidate may be invited to take an assessment to further test their technical competence. If this test is passed, the applicant is invited for an interview. Given that ASML encourages multidisciplinary teams, the candidate is likely to be asked to be interviewed by several stakeholders to ensure that only well-rounded candidates with the right personality are hired. The advantage of this boring application is that top management can trust that employees are motivated and work effectively in teams without the need for continuous supervision. This allows the company to maintain a flat and broad structure as the CEO doesn't have to micromanage teams. At the same time, employees feel more empowered and are more intrinsically motivated to perform tasks as they work in teams of highly trained professionals and have the confidence to share creative ideas without being questioned by top management. The first CEO appointed by ASML was Gjalt Smit, a visionary with a lot of enthusiasm but a lack of technical knowledge. Because of this gap and the numerous obstacles the new venture had to overcome, Smit realized that the best solution was to take on the role of coach, allowing his team of experts to determine the success of the company and bringing them together to encourage wild ideas . The goal was to create a business environment unlike any other in Europe at the time; Inspired by Silicon Valley, Smit wanted to encourage risk-taking at all times by promoting an environment of trust, independence and inclusiveness. To instill this culture, he introduced daily “morning prayers,” or progress reviews, and biweekly “tea concerts” where all employees meet and one presents developments in their field. It also introduced mandatory two-week training for new employees to ensure they fit into the culture at a time when the company was growing very rapidly. Some even refer to Smit as the Steve Jobs of ASML for his ability to foster creativity and lead the company with a clear strategy. However, similar to Steve Jobs, he was also known to have a rather unpleasant temper. Since Smit, the company has grown enormously, with that comes the difficulty of balancing creativity and control. Despite this, the role of CEOs in ASML has remained essentially the same over the years. The current CEO, Peter Weennink, continues to facilitate communication rather than assign specific tasks and strives to change the inherently negative perception of risk across the European business landscape. With over a third of ASML staff made up of engineers, they are undeniably at the heart of the company's success, however, Weennink admits that they cannot be given full autonomy as before because they can be short-sighted and naive in terms of business strategy. Therefore, it ensures that the company remains focusedon the larger goal of keeping Moore's Law alive by relentlessly innovating to reduce chip size. Efficiency versus Innovation In many companies, the trade-off between efficiency and innovation leads to difficult decisions by top management and ultimately requires compromise. At ASML, however, it is precisely efficiency that drives innovation. Every year ASML sets aside a budget of one billion euros to invest in research and development with the aim of developing the smallest, most efficient and economical chip production machine. Although the chip industry is highly volatile and prone to cyclical downturns, ASML continually stores excess liquidity to ensure maximum efficiency and avoid obsolescence regardless of financial performance. This is part of Weennink's strategy to keep Moore's Law in place even when Intel itself begins to doubt its future viability. While efficiency drives innovation at ASML, companies like 3M have shown that seeking maximum efficiency is not always the best course of action. They reminded companies that the invention is messy by nature and can't simply be scheduled into an employee's work shift. For this reason, ASML separates its research and development from other functions to enable both efficient processes and a creative environment that tolerates failure. Despite Weennink's clear strategy and significant investments to keep Moore's Law alive, his persistent focus could lead to the company's ultimate collapse. Many large players in the chip industry are starting to abandon this paradigm; companies like IBM have already started investing in alternatives that could make silicon microchips obsolete. ASML's tireless pursuit of Moore's Law could leave them blind if such alternatives take over. Blurring boundaries One of the ways ASML mitigates this risk is through its open innovation model. This involves creating an ecosystem where the company can collaborate with suppliers, customers and partners to share knowledge, build trust and manage vested interests. Through this model, ASML can share risks and benefits throughout the supply chain. By innovating together with customers, the company is able to make relevant improvements at the same pace as customers, so that innovations can be implemented immediately and seamlessly. To formalize this program and foster collaboration, ASML's major customers are also major investors. Intel, TSMC and Samsung together own more than 20% of ASML shares and are therefore very interested in the company's success. In a sense the ecosystem resulting from unclear boundaries between participants can be defined as the organization rather than the ASML alone. All parties involved collaborate and share knowledge across borders to pursue the common goal of improving everyday devices across all industries. Co-innovation with key customers by definition leads to demand-driven innovation. The initiatives in which ASML chooses to invest will therefore be closely linked to the core and, in turn, will have a greater chance of success with the support and experience of the company and its main collaborators. Management of the Business Units ASML's growth strategy consists largely of defining wholly owned subsidiaries and mergers and acquisitions. Since the first ten years of existence, the company has continuously invested in establishing international subsidiaries stretching from the United States to Asia to provide faster technical support to customers, as well as several research centers and.