After the tech bubble burst in the early 2000s and before becoming the ASML CEO, Peter Wennink faced a wrenching decision. He made the wrong call, and the results stung.
Then chief financial officer of ASML (ASML), a supplier of chip-making equipment, Wennink conferred with the firm’s chief executive about the company’s strategy. To weather the downturn, the CEO concluded they needed to cut staff amid a major reorganization.
Wennink had his doubts.
“I went along with the then-CEO, thinking we have to fire hundreds of people and do this big reorg,” Wennink told Investor’s Business Daily. “But my gut told me that after a downturn, there would be an upturn. I was too quiet at the time. I did something stupid” by not arguing against the layoffs.
After the job cuts, employee morale suffered. The lingering uncertainty led to missed opportunities and lost customers.
Wennink took the lesson to heart. When ASML struggled during the 2009 financial crisis, he refused to consider layoffs.
“In 2009, I said, ‘Whatever happens, we won’t fire anyone,'” he said. “We didn’t do a reorg, we didn’t fire anybody and we took a 15% market gain after the recovery” because of smart cash management and coordination with key stakeholders.
Celebrate Your Difficulties
Wennink, who turns 64 on May 30, became the ASML CEO and president on July 1, 2013. He looks back on the challenges he faced in 2009 as a pivotal moment in his career.
“We had nine months of no orders and in six months’ time, we lost 80% of our sales,” he said. “So we did something extraordinary. We said to our suppliers, ‘We need you to share part of the burden. We don’t have the cash to pay you now.’ We built bridges among our suppliers, our customers and our employees. And we sailed through those nine months relatively well.”
Drive Performance Like The ASML CEO
Since Wennink became ASML CEO in 2013, he’s commanded the company through smooth sailing. The Netherlands-based company provides chipmakers with hardware, software and services to mass-produce patterns on silicon wafers by using lithography.
His team has produced steady and strong increases in annual earnings per share.
The company’s profit is up more than 260% since Wennink took over in 2013. That’s more than 20% annualized profit growth. Meanwhile, the company’s revenue is up more than 160% during Wennink’s tenure as ASML CEO.
As a result, its stock has soared 800%, while the S&P 500 is up just 160%. And ASML is on the IBD Long-Term Leaders list, a collection of the top-performing companies over the long haul.
An accountant by training, Wennink oversees hundreds of engineers. While many leaders say they surround themselves with people smarter than they are, he says he has no choice.
“I have to be authentic,” he said. “We have over 1,000 Ph.D.s here. It’s my job to listen and understand where they’re coming from.”
ASML CEO’s Three Keys To Strong Leadership
Authenticity is one of Wennink’s three building blocks of effective leaders. The other two: creating clarity and fostering loyalty among team members. He frequently cites what he calls “the three cornerstones of leadership” with ASML’s roughly 28,000 employees.
For Wennink, creating clarity means defining roles and responsibilities so that everyone’s in sync when implementing processes to achieve best results. And loyalty among cross-functional groups highlights the need for team members to stick together and support each other’s success.
“You’ll have conflicts in any hierarchy,” he said. “There can be friction. My role is to address that and make sure (team members) are loyal to each other. A leader has to create an environment where people are respected, feel safe and can speak their mind.”
Gut Instinct Drives High-Stakes Decisions
Wennink places much value on gut instinct. It has guided some of his biggest decisions.
His longtime colleague, Martin van den Brink, serves as ASML’s co-president and chief technology officer. Soon after Wennink became ASML CEO in 2013, he weighed whether to double down on a big bet the company was making to transition to a new type of lithography technology called extreme ultraviolet (EUV).
“At the time, many people said EUV would never work,” Wennink recalled. “So I sat down with Martin, who’s technically a brilliant guy, and asked him, ‘On a one-to-10 scale, what’s your gut feel that this will work?'”
“Seven and a half to eight,” van den Brink replied.
Wennink instantly agreed to plow ahead.
“It was a 30-second discussion,” he said. “I could trust Martin. We didn’t need PowerPoints or spreadsheets. It took us 15 years and cost us $13 billion to $15 billion,” but it has proven a key to ASML’s torrid growth.
Replace Hype With Humility
Because Wennink manages a brainy workforce, he’s eager to support their intellectual curiosity. This sometimes requires empathy and patience.
“When we start a new product line, our field engineers and our service people are under pressure,” he said. “I’ve been here 22 years, and I know what they’re going through. We’ll have a learning curve. So I’ll say, ‘The customer will complain at first. We’re delivering an immature tool. We’ll make it better, and we’ll go through hell to get it right. I’ll be there with you the whole way.’ “
As a result, employees are more apt to level with Wennink about their frustrations. And he’s more likely to understand and address their concerns.
Let Employees Tinker Like The ASML CEO
Wennink gives employees the freedom to take risks and innovate. To spur them on, he often says, “Unless it’s unequivocally proven that it cannot be done, it can be done.”
“We do things that are scraping the edges of physics,” he said. “People come in here and say, ‘This is like a university with a factory.'”
Like the best university professors, Wennink can take complex ideas and present them in a captivating way to a broad audience.
For example, Wennink explains EUV technology by comparing it to taking a thick paint brush and shrinking it so that it produces increasingly thin, precise lines, says Skip Miller, ASML’s vice president of investor relations.
“It’s easy to get deep in the weeds, so he uses that analogy,” Miller said. “He brings technical complexity to a level that investors can understand” more easily.
Miller has worked closely with Wennink for the past seven years. In 2014, he admired how Wennink communicated the company’s investment in EUV technology without hype or overpromising.
“In a very humble way, he said, ‘Here’s what we see as our key challenges and growth opportunities,’ ” Miller recalls. “He laid out various scenarios. That built a lot of confidence in our investors.”
ASML CEO Peter Wennink’s Keys:
- CEO of ASML, a Netherlands-based supplier of chip-making equipment.
- Lesson: To lead effectively, radiate authenticity, create clarity and foster loyalty among team members.
- “A leader has to create an environment where people are respected, feel safe and can speak their mind.”
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