Aurora Motivations

However, in 1991 a shift in strategy brought back the emphasis on profitable growth.  Teradyne improved their standings considerably and recovered from their previous losses by 1993, culminating in 1995 being one Teradyne’s most profitable years.

By 1995 the ATE industry had recovered. D'Arbeloff noted, "It was clear that our industry was recovering very quickly, and at that point I was looking beyond what we were doing to see what the holes were." He found Teradyne to be lacking primarily in two areas - hardware and software. He saw that CMOS had emerged as a predominant semiconductor technology and Windows NT was rapidly becoming the operating system of choice of many engineers. The development of Teradyne's core business to encompass the emerging technologies became known as the Aurora Project.

 

Project Goals Essentially, the Aurora Project strove to produce an automatic tester for integrated circuits using the revolutionary advances in hardware and software technology.  Their primary objectives were to significantly reduce development costs and create testers that were a fraction of the size of the older mainframe testers.  On the hardware side, Teradyne engineers wanted to shift the company from ECL CMOS timing generators.  By capitalizing on the simpler design and a higher level of integration on each chip, smaller testers could be developed.   From the software side, the company needed to expand beyond the UNIX platform and respond to a growing prevalence of the Windows NT platform.  Building for the Windows platform would allow Teradyne to cater to a growing community of developers and engineers who were well versed in Windows and unfamiliar with UNIX.  Such a move would also lead to significant improvements in productivity and drastically lower development costs.  Furthermore, newer customers would no longer need to spend time learning a new platform and could immediately begin development using familiar base applications such as Excel and Visual Basic	INTEGRA J750 on Intest Manipulator [4]
Results The two initial project goals were to reduce costs and to create a smaller tester. It lowered development costs by 25% and was also a fraction of the size. In addition, the accompanying software was as easy to use as Microsoft Excel. As of March 2000, less than two years after the initial launch of the product, over 350 INTEGRA's have been sold to 38 customers with over $200M in orders received. Perhaps even more importantly, all of the other semiconductor test divisions are utilizing Aurora's revolutionary hardware and software developments in their own products.	Timeline: 1995-2000
How Aurora Solved the Innovator's Dilemma After examining the development of the Aurora Project, its implementation and its ultimate success, it is evident that Teradyne did solve the Innovator’s Dilemma.  Teradyne fit the criteria for a company facing the Innovator’s Dilemma.  It was a large, established company with a particular role in the semiconductor testing industry; it targeted the high-end ATE market and developed mainframe testers for its loyal customers.  Teradyne’s growth had depended on developing sustaining technologies and customizing them for its clients.  However, with the conception and development of the Aurora Project, Teradyne succeeded in answering all of the challenges, outlined by Christensen, that large organizations faced when trying to embrace new, disruptive technologies.  It correctly identified CMOS and NT as disruptive technologies and experimented with its development.  Despite uncertain markets and uncertain profits, d’Arbeloff recognized the importance of these new technologies.  Furthermore, in the context of a large, immobile firm and despite internal resistance, he recruited top talent to manage the project.  The Aurora team brought the project to fruition and delivered on all of the promises initially laid out.  Finally, Teradyne’s management isolated the appropriate market for the INTEGRA J750 tester and successfully introduced the product to customers to ensure financial success.  In short, Teradyne dealt with every challenge posed by Christensen effectively to come up with a viable solution for the Innovator’s Dilemma in this particular instance.  The question remains, however, of whether Teradyne managed to find a general solution to the dilemma.	Teradyne and the Innovator’s Dilemma Model
Our Conclusions Teradyne’s Aurora Project is extremely unique in that it is one of the few instances a company has been able to overcome the internal hurdles typical of large, established firms and actually solve Christensen’s Innovator’s Dilemma.  In addition to being a technical and commercial success, the Aurora Project also established a new semiconductor tester trajectory based on CMOS and Windows NT and was able to effectively share its innovations with the rest of the firm.  D’Arbeloff’s struggle to transform the Aurora Project from an idea into a reality certainly illustrate sources of internal resistance that define Christensen’s Innovator’s Dilemma: customer satisfaction, project feasibility, company culture and profitability.  All of these elements demonstrate how large companies like Teradyne are typically entrenched in a rigid value network that immobilizes them and impedes their response to disruptive technologies.  While the general consensus of Teradyne management was that the proposed Aurora technology had great potential, none of the division managers were willing to take on the project because they were constrained by the firm’s rigid value network.  It was almost entirely through Alex d’Arbleoff’s consistent perseverance that the Aurora Project came to be.  And once underway, Aurora continued to pick up momentum and eventually produced a product that was a huge success.  The methodology employed in the Aurora Project turns out not to be extensible, however.  Teradyne did not develop an unfailing formula for success that could consistently solve the Innovator’s Dilemma.  There are simply too many factors which play into the ultimate success of a product, many of which a firm has no control over.  This conclusion is derived from an examination of Teradyne’s past failures that employed methodologies nearly identical to Aurora.  It just happened that everything fell into place at the right time for the Aurora Project.  D’Arbeloff hired a great project manager to lead the initiative, the market condition was suitable, and the technology turned out to be feasible.  Christensen himself says that it is impossible to predict markets that do not yet exist; thus, companies that invest in disruptive technologies can never guarantee success. While research of the Aurora Project and other past ventures at Teradyne did not result in an extensible, general solution to Christensen’s Innovator’s Dilemma, it did illustrate the importance of discovery-driven planning.  This principle states that a company cannot expect to succeed in all of its pursuits, but it can always learn from every experience.  Most importantly, a firm needs to be willing to fail in order to succeed.  Says Christensen: “Discovering markets for emerging technologies inherently involves failure, and most individual decision makers find it very difficult to risk backing a project that might fail because the market is not there.” If d’Arbeloff had not been willing to take significant risks, even in the face of intense internal resistance, the Aurora Project and its immense successes would never had been realized.  Indeed, Teradyne was most fortunate to have at its helm a leader who understood the importance of experimentation and was willing to take on the inherent risk of failure in the hopes of creating revolutionary technology that would solve the Innovator’s Dilemma. "It's very important that we choose an ATE platform that's cost effective today and offers further productivity, improvement, potential for our current device testing needs and future technology roadmaps.  The J750 reduces our overall cost of ownership expenses with it's ability to test many devices in parallel in a high volume production environment.  We specifically like the zero footprint approach, enabling higher volumes out of existing test floor space." -Dr. Platzoeder, Senior VP Corporate Backends at Infineon Tehcnologies [6]