Feb 17, 2021 | 4 min read

Conversation with K.C. Liu

Podcast #127: Co-Creating an Intelligent Planet

 

The success of a Niche AIoT Business Model!

In this week’s podcast, Ken Forster interviews K.C Liu, Chairman and co-founder of Advantech, a nearly $2 billion global industrial intelligence leader.

After working for Hewlett Packard as an R&D Engineer and later a sales engineer, K.C. joined two HP colleagues to found Advantech in 1983, as a leader in innovative, embedded and automation products and solutions. He has led the company as Chairman ever since, driving the company to be recognized as a Top 10 Global Brand from Taiwan by Interbrand every year since 2013.

Some of the discussion points during this interview were:

  • What inspired you and your co-founders to co-create Advantech?
  • To what do you owe the success of Advantech?
  • When did you first recognize the potential of the ‘Internet of Things’?
  • Advantech’s mission is ‘Enabling an Intelligent Planet’. What does this mean to you?
  • Can you describe what co-creation means to you and how the AIoT Ecosystem fund plays a part in delivering that?
  • What are you most proud of and anything you would have done differently?

K.C recommends the following books:

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View Transcript
Good day, and welcome to edition 127 of our Digital Industry Leadership Series. I’m very honored today to host what I consider to be a quiet giant of the Industrial IoT, K.C. Liu, chairman and co-founder of Advantech a nearly $2-billion global industrial intelligence leader headquartered in Taiwan. After working for Hewlett-Packard as an R&D Engineer, and later a sales engineer, K.C. joined two HP colleagues to found Advantech in 1983. As a leader in innovative embedded and automation products and solutions, he has led the company as chairman ever since, driving the company to be recognized as a Top 10 global brand from Taiwan by Interbrand every year since 2013. K.C. welcome to our digital industry leadership podcast.

1:24    
Yes, thank you.

1:29    
So, I’ve been a personal fan of Advantech and your innovative leadership for years, and I’m pleased you’ve taken the time to talk with us today. So, if we roll back the clock 38 years to your founding, what inspired you and your co-founders to co-create Advantech?

1:49    
Yes, it was 1983, two colleagues and I walked in Hewlett Packard, Taiwan, Instrument Group. At that time, our daily job was automatic testing with HP computers and instruments, connected to get through a center interface code GPIB, or HPIB. We saw the need for eight years automatic tests system at that time, especially the need from HP customers. So, we decided to create Advantech to fulfill the needs, this is a really simple reason why we created Advantech, yes.

2:42    
You know, it always makes me feel old because I do remember GPIB and HPIB!

2:48    
Not many people remember that. At least you are owning up to me!

2:55    
So, what were some of your first products, and how have they evolved since?

3:02    
We were an ATS system integrator at the beginning, then a few years later we created the first standard product, a GPIB interface card for IBM PC. This product was sold very-very well, so it turned Advantech gradually into a product company, that’s what happened.

3:38    
So, in 1983 Taiwan was still largely known for offshore manufacturing, I’d say with few recognizable brands at least among our western listeners. Today your Advantech brand is recognized along with such giants as Asus, Trend Micro, Acer, and GIANT. To what do you owe this success?

4:01    
As far as I remember we never really promoted the brand. We just kept doing the service and the products and improving our communication which targeted customers day by day: starting from Taiwan, the global distribution, then set-up regional offices in important countries, state-by-state, up to today, and we will keep doing that in the future. So, this is the way we built up the brand.

4:52    
Very good, and you have a lot to be proud of in terms of the recognition of that brand. I know you’ve been personally a follower of strategic management books, particularly ‘Built to Last’, ‘Good to Great,’ and ‘Blue Ocean Strategy’. How do you apply some of the principles taught in these books to scaling Advantech?

5:15    
‘Good to Great’, this book is the key book. We have a book study many times in the company. If you come to an event to our offices you will see the big ‘Good to Great’ three circles, picture in our lobby. This has become our corporate symbol for many years. I talk about the ‘Good to Great’ three circles and did the flywheel effect. I reference the Flywheel principle, and each step in many employee orientation speeches and every company introduction meeting. I treat ‘Good to Great’ as a guideline of a daily job and trying to let all employees and even partners understand the principle because these are how Advantech works. I’m a really loyal implementer of this ‘Good to Great’ principle. I believe that I’ve been really serious about doing that for about 20-years.

6:38    
I’m pleased to say that I was actually at Phillip Morris at the time Jim Collins was writing that book, and you may remember it was one of the company’s e-chronicled in there around 2001 when he wrote it, and I do remember several members of our leadership team being interviewed at the time, and I agree with you it is a seminal book really on strategy and truly on focus.

7:06    
So, you’ve been an early leader in remote telemetry, I think you released your first remote data acquisition product called ‘Atom’ in 1992. When did you first recognize the potential of what we actually now call the Internet of Things?

7:25    
Okay, in the early days our industry was data acquisition and PC-based automation, this is our old industry. At that time, the easiest way of doing PC-based automation is to implement the easy-to-install modules at the field site and connect them to the PC through usually RS485. But in the year 2010, the term “IoT” came to us and we just agreed that this is our future. We didn’t create it, but we felt it was the future because of its word, and word trend, yes this is what happened.

8:27    
The Advantech’s mission as you describe it is enabling an intelligent planet; what does this mean to you?

8:38    
This is a slogan we actually learned from IBM, through a consulting project. It implies that Advantech’s mission is being a preferred solution provider to over easy to go, cost-effective, building blocks to solution integrators (SI); enabling them to complete their intelligent solution projects everywhere. So, this is how the slogan came to us, and we really followed the guide of the slogan for many years.

9:33    
It certainly describes your guy's global reach across not only your core region of APEC but also in Europe and in the US, and probably goes along well with your global brand as well. So, along the way you’ve also laid out a vision for what we call the AIoT, a combination of the terms AI and IoT, although I suspect you mean it to be Advantech IoT equally as well but identifying along with this the critical role of the ecosystem. So, what does ecosystem mean to you and how are you building your company around this concept?

10:15  
AIoT business is a big future trend and a big business, no doubt. However, it is still several years away from the mature stage, due to the immaturity of the ecosystem. The key job today for us is the ecosystem build-up from Advantech’s point of being a preferred provider our major ecosystems are Domain Focused SI’s. We believe several years later we can help many Domain-Focused SIs to grow big, become successful in joining and enabling AIoT business to boom. However, we must invest in ecosystem growth today. It is a big and tough job, but it is Advantech’s core business today. We cannot do it alone, therefore we are really happy to invite Momenta to be our partner, to do it together.

11:42  
And Momenta is very proud to be partnered with you as well, and especially on the AIoT Ecosystem fund which of course we co-announced with you last week, a target $50-million venture capital fund focused on early growth stage AIoT business innovators in North America and Europe. This is part of your co-creation strategy; can you describe what co-creation means to you and how this fund is playing a part in delivering that?

12:15  
Yes. As I’ve mentioned we wish to empower our key ecosystem partners of AIoT, including Domain Focused SI in many domains. Also, hardware and software component providers. We believe Momenta is a focused and professional company to work together with. We believe Momenta can help us to extend the ecosystem co-creation of AIoT, especially in Europe and the USA region. Co-creation means we wish to upgrade the ecosystem relation to one step further, more than just doing business. Okay, that means with some financial stack holding, also called “joint venture relationship”, so the ecosystem investment fund together with Momenta will be a good path to implement this ecosystem build-up.

13:37  
And we very much agree, we see a lot of the innovation, disruptors many may call them, emerging in early-stage companies focused on energy, manufacturing, smart spaces, supply chain, and other key sectors, and we don’t see enough focus among traditional investors because these are infrastructure companies many times, and they operate in the industry, the two bad ‘I’s’ in the case of a lot of traditional venture capitalists.

Conversely, I think in our early conversations with you we shared a very aligned interest in seeing these innovators come to market, and I‘d say given our own experience investing and accelerating these, and Advantech’s experience providing key technology components, both hardware, and software, I believe we can accelerate these companies, and especially in these key sectors. So, I’m very happy to be part of that with you.

14:44  
By all measures, you’ve been a personal and professional success, so what are you most proud of, and is there anything you might have done differently along your journey?

14:57  
Advantech chose a niche market since the beginning, I remember dreaming to make Advantech a very big company, today’s result is actually a surprise to me. So, actually, we just repeat the same good grade methodology to spread more niches. Now, after many years those niches can be connected together to become a big-big AIoT business model. This is what I feel proud of, I feel lucky to follow this niche. Niche trend, niche business starts, and then many niches are connected to AIoT business, I feel I don’t have any real regret, I feel lucky that we followed this kind of path.

16:08  
You’ve remained true to your original principles in founding the company and have taken good steady steps along the way, all of which are great things. And it’s funny to refer to something that McKinsey will call a trillion-dollar value at stake business opportunity as a niche business! It’s a good sample.

16:34  
Yeah, the book of ‘Good to Great’ also says that this is the way to do real long-term business, to create long-term success.

16:44  
Yes, yeah, and I think that truly describes Advantech well in terms of being a long-term focus, right? From your original real focus on what was lab instrumentation at the time, to what became the Industrial Internet of Things, and we’ve had a similar love and respect for this space as well, so I can completely align with you on the value of this.

I know you are an avid reader and as you’ve said, you share books with your management team and hold book club meetings in many of your branch offices. Beyond the three seminal books, you mentioned earlier, what people, books, and/or other resources inspire you?

17:30  
Recently I am inspired by another book, ‘The Infinite Game’, written by Simon Sinek in 2019. I don’t know whether you’ve heard of this or not, but in this book, he compares finite and infinite games. We are now doing a serious book study in the workshop among our top executives and also board members. I wish that Advantech can be an infinite game player in the future. That means we are not working to win the game against our competitor, but just to continue the game by extending the boundary of the game. And I also believe AIoT business ecosystem investments fund projects with Momenta will be a good step of moving forward.

So, I’d like to thank you Mr. Ken Foster for bringing all of this to Advantech. Yes, thanks.

18:58  
Thank you very much for the very kind comments, and certainly for this wonderful interview today. I know you don’t spend nearly enough time in the public face as I think you should, given your wisdom and your vision in this space, but hopefully, this will be the start to more of that.

So, this has been K.C. Liu, chairman and co-founder of Advantech, and co-creator of In Intelligent Planet. Thank you for listening and please join us next week for the next episode of our Digital Industry Leadership Series. Thank you and have a great day.

19:37  
Thank you.
 
[End]