CMO Close-Up: What were your top marketing challenges when you joined Cadence Design Systems?
Bruggeman: The challenge was pretty straightforward. The EDA industry is a very mature marketplace. “Mature” is marketing code for low, slow growth—single-digit growth. And the buyer in our industry has moved over the years from chief technology officer to the VP-engineering to director of engineering to where it is today, which is typically the purchasing department.
I wish the challenge was to promote Cadence, and increase revenue and the traditional things marketers have to do. But the challenge for us is to grow the industry. When I joined Cadence, it was clear that you can't come in with a company agenda. You have to come in with an industry agenda. We needed to change the market characteristics and grow this thing.
CMO Close-Up: How did you do that?
Bruggeman: We wanted to get customers excited about EDA today. Customers have fallen into a malaise—they've seen it, tested it and probably own it. There is nothing new. So the first thing was to change the mindset of the end customers.
Second, we needed to get the entire ecosystem engaged, not just the traditional supply chain and demand chain, but also our competitors. If we couldn't bring our competitors along with us, it would look like a marketing campaign for Cadence. [Ours] is a very cynical buyer and, if they perceive it is a marketing campaign, it would fall on its face. You have to be very collaborative with people. This is an industry where the founders of these companies—Cadence, Synopsis and Mentor Graphics—are still major players in the industry, 20-plus years later. There is a long history of built-up animosity and distrust.
CMO Close-Up: What was your strategy in launching an industry initiative?
Bruggeman: You start with the customers. We went to them with a very compelling message: You need to have just a basic understanding of EDA—we enable semiconductor companies to design chips. Without EDA, there would be no chips. It is a pretty compelling value proposition. The chip market is approximately a $250 billion market, yet through its 20-plus years, the EDA industry is roughly about a $4.5 billion market. So where else do you have the primary suppliers making less than 2% of an entire industry? Clearly, there had to be an opportunity for EDA to reinvent itself, to bring a new and different value to customers and break the logjam of a nonstrategic, nongrowing marketplace.
The semiconductor of today and of five years from now will be fundamentally different. The key differentiator will be based on software. There is no primary software supplier for semiconductor companies, so there is an opportunity for EDA to expand its scope from hardware development tools to software enablement. We need to shift the industry from one that is tools-based to one that is software- and content-based.
CMO Close-up: How did you communicate this vision to other industry players and to customers?
Bruggeman: In April, we launched an industry manifesto called EDA360, which proposes a new way for EDA companies to provide value around the software concept and paradigm. We found the industry's largest event—the Embedded Systems Conference (in San Jose, Calif.)—which is right across the street from the Tech Museum (of Innovation). We rented out the Tech Museum,, hosted a huge gala, used the IMAX Theater for size and scale, and invited all the key industry influencers at semiconductor companies, as well as analysts and the press, and we left it open for our competitors to come. Publishing a manifesto that lays out your strategic plans is unheard of in this industry. You are supposed to be as secretive and deceptive as possible, and we said, “We are going to share our plans and post them in the most public place possible.” We also launched a microsite and new Twitter handle, and used the whole social media community to start the buzz on this. Cadence has been perceived in the past as being very old-school. But we are changing. We win if there is dialogue and debate.
CMO Close-up: What kind of response have you gotten so far?
Bruggeman: Deepchip.com (an independent blogging community of engineers) posted it in June, and they collected responses for two months. I'm shocked at how positive the response was from competitors. Some competitors are threatened, some are leery; but others are saying, ‘This is the way forward, and how can we get involved?' I love what is going on out in the public domain.
The bigger challenge from a marketing sense is not the execution in the public domain but the execution inside Cadence. The average employment time has got to be 15-plus years. People here have seen it all and heard it all. They are very skeptical of stuff that will not stick. So the hardest challenge was not convincing our customers but convincing our own employees. Our internal campaign was as ambitious as our public campaign was. We had a whole series of meetings, followed by brown-bag lunches, focused on the engineering committee inside Cadence. One month ago, we completely reorganized the company around the tenets of the manifesto. When we did that, it became clear the company had fully embraced the EDA360 principles, and we had succeeded in how we had achieved buy-in.
CMO Close-up: Do you have any metrics on the external campaign?
Bruggeman: One year ago, the company had experienced losses in five of the previous six quarters and showed an overall revenue decline beginning in 2008. In the four quarters in which we've been engaged, Cadence has consistently grown its revenue while garnering positive net income in every quarter. We measure brand annually, so we don't have those numbers; but qualitatively, we believe we have made a major impact on the brand awareness of Cadence. I'm proud of what the team has done.