October 1 1998 by Charles Darwent
“The first time we came to Boston, it was T really amazing,” says Charles Edelstenne, hands waving in Gallic semaphore. “Investors saw us as a kind of curiosity——like they were thinking ‘What are these French people? They’re coming here, to the U.S.? They must be crazy.” Edelstenne pauses, then adds, with a wry moue, “The second time we came, I don’t think they saw us as so crazy any more.”
Indeed they did not. It would be difficult to ascribe lunacy to a company that could manage-as Edelstenne’s Dassault Systemes did-to hike its worldwide revenues by 23 percent in 1996 and then by a further 28 percent last year, to $337 million. Mad is also probably not the word to describe a computer-aided design and manufacturing corporation whose major product-a 3D CAD/CAM software package called CATIA (for Computer-Assisted Three Dimensional Interactive Analysis)-has cornered 75 percent of the global aviation design market and 40 percent of the automotive one.
It’s also Boeing’s design software of choice; the 777 became the first commercial airliner to go straight from computer screen to finished product thanks largely to Catia’s wiles. CAD/CAM systems like CATIA allow designers to develop and display parts on a computer screen and even rotate them 360 degrees for a hologram-like viewing capability. The process enables high-end manufacturers such as aircraft and automobile companies to cut costs by fine-tuning designs prior to creating an actual prototype.
Once an internal division of Dassault Aviation and still one-third owned by them, Dassault is a recognized frontrunner in the CAD/CAM field, counting Lockheed Martin, Chrysler, Mercedes, BMW, Fiat, and the entire Korean automotive industry among its clients. If this is madness, then there’s method in it.
Building a tangible presence in America was a part of that method. Asked to suggest differences between U.S. and European strategic philosophies, Dassault Systemes’ CEO hits on one: a willingness on the part of Europeans to treat clients as partners rather than as customers. “If you just produce software products, then you will have a lot of competitors who also produce software products,” observes Edelstenne. “To make your own market, you have to be in your customers’ business. Today, we have teams that are completely immersed in our customers’ offices, who know what they produce, how an airplane is made, who can anticipate needs our customers don’t even know they have yet.”
One requirement of such a relationship, of course, is mutual confidence: easy enough to instill if you are a U.S. firm called Boeing, less so if you are a French one called Dassault Systemes. “The entire nervous system of a company like Boeing is invested in our business,” says Edelstenne. “Twelve thousand licenses, 30,000 people working on our system. Of course they wanted reassurance that the long-term future of our company was secure, and the best way we could give them that was to put it on the U.S. market.” A tranche of Dassault stock was accordingly floated on Nasdaq in early 1996.
But Edelstenne’s blurry-edged thinking on corporate partnership extend beyond staff outplacement and equity cross-holdings. His novel view is that embracing American Goliaths is a less perilous business than slinging rocks at them.
After all, if a mere Nasdaq listing can calm the jitters of U.S. customers, then having the letters “IBM” on your carte de visite is the next best thing to prescribing Prozac. Having peddled his products worldwide through IBM since the early ’80s, Edelstenne took the alliance a step further last April when he bought the U.S. giant’s Charlotte-based ProductManager data management division for $45 million, re-christening it Enovia. “The partnership is profitable for us both,” he says. “It gives us a global position and it gives IBM an entree into technical areas of companies like Boeing that they haven’t had before. Now, we’re looking at growing our presence in markets like shipping and consumer products.”
Enovia also provides a neat enough metaphor for a strategic vision Edelstenne is likewise keen to sell. The new company’s products will allow clients like Boeing to cascade the vast amount of information already contained in their Catia databases company-wide and beyond, to a first line of subcontractors-maintenance folk and the like in the process producing a soft-edged structure Edelstenne dubs the “enlarged company.”
In the same process, Dassault Systemes can expect to see the odd bit of enlargement itself, especially in American markets. “The U.S. represents about 30 percent of our business, and that’s too low,” says a steely Edelstenne. “By creating this new market segment, we intend to take share from other companies, and that means from our American competitors.” On vous a bien averti, as they say back home in Paris.
Chairman and Chief Executive
Birthplace: Paris, France
Education: CPA [CFA], Paris
Career Portfolio: “A complete Dassault man, always.”
Defining moment: The aviation design chief -working on a kooky new in-house project called CAD/CAM-asked Edelstenne at one point if “out of kindness” he could share the system with a customer. “I had never heard of CAD/CAM, but I saw in a minute that it was real genius,” says Edelstenne. “So I said, ‘We are never kind in business.’ “
Favorite lapel wear: French Order of Merit