Owen Golden
Vicepresident, Global Energy Segment
National Instruments
View from the Top

A Product-Based Innovation Strategy

Tue, 01/22/2013 - 13:55

Q: What characterizes National Instruments’ position in the industry as a provider of products rather than integrated solutions and systems?

A: National Instruments works with many of the companies that develop solutions by integrating our products into the devices and solutions they create. Those service providers use our equipment because it allows them to innovate more quickly, and today this is necessary for their survival. There is strong competition out there with Halliburton, Schlumberger, and Baker Hughes and all the other global oilfield service providers, but we are unique in the sense that we provide an open system, and the people who can really take advantage of that are the research arms of these companies. There are also research institutes in Mexico that use our products extensively, because of our open system, measurement platform, and instrumentation background.

Therefore, it is hard to separate National Instruments from closed-box service providers, because a lot of our technology is inside those closed boxes. They have realized that they cannot dedicate time to building the technology from the ground upwards, because they would fall behind very quickly if they tried. If they develop a board from scratch, it gives them exactly what they need at the time, but two years from now, they don’t have a team that is there to keep evolving it in the same way that National Instruments does. Increasingly, these companies are looking for commercial, o†-theshelf equipment that is very configurable, and then they invest in the software as their intellectual property, which is where they add value. Also, they have a long history of being able to package products in a way that ensures survival in particularly brutal environments.

Q: Which role does the oil and gas industry play in your development strategy?

A: In Mexico, National Instruments is focused on a dual strategy: working with the global players that come to Mexico for manufacturing and sales, while also developing relationships with the country’s main players. Obviously, energy is a crucial market in this second area.

We have strong relationships with companies operating in this industry, and they can guide us to make sure we are making the right products for their needs. We are going after the energy sector and we are going to develop products that make it easier to solve the industry’s problems.

Q: What are the challenges of increasing awareness of the contribution that National Instruments’ products can make to its customers’ product development processes?

A: From a sales perspective, this is always a challenge, and our strategy is to keep moving up the organization, with the end goal of reaching the managers that matter. National Instruments has always been an engineerto-engineer company: when we meet with this type of people we do a great job, because we talk technology, and all the great things we can do from an engineering perspective, but that is not necessarily the person making the final purchase decision. In research areas, researchers often have the ability to make purchase decisions, but when you want to deploy large volumes of equipment, you have to move up the chain within the organization and make sure that management is comfortable with choosing our company. As we progress, we continue to grow our investment in R&D. With over US$1 billion in revenues, we invest US$200 million per year in research and development. Increasingly, our business is focused on the oil and gas sector, particularly on hydraulic fracturing, where I would estimate that our technology is present in 25% of fracking operations in the US. Q: In the oil and gas world, what are your strategies for getting your product to market? A: Our products provide professionals, such as petroleum and mechanical engineers, who have the ability to see what technological solutions are needed in the oil and gas industry, with the tools to innovate themselves. By cutting out the bottleneck of sending requirements to a programming team and waiting for them to come back, and also removing the possibility that the solution does not match the requirements correctly, we can be of great use to the industry.