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Business lessons from an MIT professor


Friday, August 28, 2009

Posted by John McHale

Last week during a visit to SynQor in Boxborough, Mass., I received a lesson on cost-of-ownership by the company founder, who is also a former Massachusetts Institute of Technology (MIT) professor. SynQor makes high-reliability power electronics for demanding environments such as military avionics.

Martin Schlecht, SynQor's founder, president, and chief executive officer (CEO), was briefing me on their DC to DC converter product line and the defense market outlook when he asked if he could go slightly off topic and explain the concept of how long-term cost-of-ownership for a product can be more cost effective than buying the lowest price device.

He jumped up and immediately started drawing charts on the whiteboard in the conference room. I quipped "why don't you have a chalk board, you're a professor right?"

He said he has one in his office and that he prefers chalk boards -- the only draw back being that the "chalk dust always ends up in the cuffs of his pants."

Anyway, Schlect made the argument as he says he has made on many sales calls that products with outstanding mean-time-between-failure (MTBF) statistics result in a lower cost of ownership for the end user over the life of a product.

Schlect made a very persuasive argument with his makeshift graph and had me sold that a component with an MTBF of millions of hours can cost only about $3 to maintain even if it initially cost $3,000.

However, he says no matter how well cost of ownership is explained or understood, many of those in the defense community are under orders to procure electronics based on the product price rather than a cost-of-ownership equation.

Too bad, maybe a greater focus on cost of ownership would help with managing component obsolescence, the dark side of commercial-off-the shelf (COTS) procurement.

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Welcome to the lighter side of Military & Aerospace Electronics. This is where our staff recount tales of the strange, the weird, and the otherwise offbeat. We could put news here, but we have the rest of our Website for that. Enjoy our scribblings, and feel free to add your own opinions. You might also get to know us in the process. Proceed at your own risk.

John Keller for MAE
John Keller is editor-in-chief of Military & Aerospace Electronics magazine, which provides extensive coverage and analysis of enabling electronic and optoelectronic technologies in military, space, and commercial aviation applications. A member of the Military & Aerospace Electronics staff since the magazine's founding in 1989, Mr. Keller took over as chief editor in 1995.


Courtney Howard for MAE Courtney E. Howard is senior editor of Military & Aerospace Electronics magazine. She is responsible for writing news stories and feature articles for the print publication, as well as composing daily news for the magazine's Website and assembling the weekly electronic newsletter. Her features have appeared in such high-tech trade publications as Military & Aerospace Electronics, Computer Graphics World, Electronic Publishing, Small Times, and The Audio Amateur.


John McHale for MAE John McHale is executive editor of Military & Aerospace Electronics magazine, where he has been covering the defense Industry for more than dozen years. During that time he also led PennWell's launches of magazines and shows on homeland security and a defense publication and website in Europe. Mr. McHale has served as chairman of the Military & Aerospace Electronics Forum and its Advisory Council since 2004. He lives in Boston with his golf clubs.

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