The Eyes Have It

None of us would have been surprised if Dr. Robert Shillman  showed up for our interview in the brilliantly colored outfit of a court jester or the crisp white uniform of a Good Humor man. They’re both roles he’s assumed recently, the former for a magazine cover photo shoot and the latter to hand out bonuses-cold cash straight from the freezer compartment of a restored 1950s ice cream truck-at a company picnic for Cognex.

Not the typical CEO of a company that does $120 million in annual sales, employs 575 people (affectionately known as “Cognoids”) at more than a dozen locations around the globe, and positions itself as the world leader in the sober field of machine vision, but perfectly in line with Shillman’s staunch refusal to take himself too seriously. “Most CEOs are so self-important,”          he Cognex Goo says. “They think their time is so valuable, but there really aren’t that many vital decisions to be made in any one day.”

As it happens, Shillman-or Dr. Bob, as he prefers-arrives in a business suit, necessitated by an early-morning TV appearance on CNN, his over-the-edge flair for levity simmering (barely) below the surface. But as he repeatedly leaps from his chair to punctuate key points, Shillman’s love for, and effective use of, high drama becomes apparent. This enthusiasm helps to convey the workings of Cognex-the company he started in 1981 with $86,000 in personal savings after leaving academia and M.I.T to

rapt listeners as well as a Wall Street audience that has little patience for the operational details of factory-floor quality inspection systems.

Cognex participates at several levels of the machine vision market, supplying both original equipment manufacturers (OEM) and factory-floor applications with modular vision devices and surface inspection systems that enable high-speed, automated production.

Over the 18 years of its existence, Cognex has weathered a staggering shakeout of competitors, from an estimated 100 in the early ’80s to less than a half-dozen today. Some of that contraction is the result of overpromise, the technology becoming irresistibly cost efficient only in recent times with the rising speed and falling prices of microprocessors, and somewhat due to acquisitions, in which Cognex itself has been a player.

The touchstone of consistency throughout has been Shillman’s relationship with the Cognoids. Devotion to the company goals just a hair short of requiring a “take-a-bullet” pledge of loyalty-is expected, but also acknowledged generously by motivators such as the “Do What’s Right Awards.” Then there’s fun injected by the zany side of Dr. Bob, the would-be standup comedian, with officially sanctioned Halloween observances, all-company nights at the local movie theater, and command tap-dancing performances by the management team. “Fun is a powerful motivator and tool for communication, and it can narrow the gap to people,” Shillman says. “And it’s fun to act like a kid.”

Does it work? Well, the two M.I.T. grad students he convinced to come aboard in the startup are still there and total work-force turnover bucks the job-hopping ethos of high tech (some 70 percent of the company’s engineering resources are devoted to software development) by hovering around 15 percent, according to Shillman. Compensation as an incentive is not ignored either: “We’ve made 26 millionaires here at this company.” Shillman’s upbeat persona and knack for employee motivation have been tested mightily of late, as the downturn in Asia (with nearly half Cognex’s business with Japanese companies) and a rationalization of the overcapacity in the semiconductor industry combined to slow orders for Cognex and threaten an unbroken 12-year run of profitable quarters. The company did some belt-tightening through ’98, remaining in the black by virtue of a hiring freeze, elimination of bonuses, and reductions in capital spending, all predictable measures in an economic squeeze but did not cut R&D or reduce head count.

There’s light at the end of the tunnel, though: revenue for the second quarter of ’99 is up 10 percent compared to the same year-ago period. While first-half revenue for ’99 still lags, due to lower volume in the OE sector, recently arrived products are capitalizing on the increased need for microprocessor and LCD displays in both industrial and consumer products.

Still, it might be that the real fun for Cognex lies ahead, as negotiations with toymakers to develop higher levels of interactivity advance. Will the next generation of robot pets be able to recognize family members and address each by name? Shillman’s not saying, but the twinkle in his eye betrays a determination to make Cognex the lead IT provider for such a lighthearted application.

DR. ROBERT SHILLMAN

Founder, President, and CEO

Cognex Corp.

Fun is a powerful motivator and communication tool. And it’s fun to act like a kid.

Age: 52

Family: Wife, Mao, an ex-ballerina (Shillman’s second marriage, he says, the first being to Cognex), and two sons, Max and Barney

Education: B.S.E.E., Northeastern University; M.S.E.E. and Ph.D., Massachusetts Institute of Technology Vehicles: Lexus GS 400, Jeep Cherokee, Acura NSX, Yamaha Radian motorcycle Leisure Interests: Club-level auto racing with the NSX sports car

Favorite holiday: Halloween, by official Cognex policy

Words to live by: “Don’t be in the grey zone-binarize it.”