Interview: Donald Macleod
1 Feb 10
From humble beginnings, Donald Macleod has risen through the ranks to become president and CEO of US giant National Semiconductors – but still has a place in his heart for Scotland
by Richard Goslan
Donald Macleod has a lot to thank his CA training for. It was as a junior member of the audit team of what was then Peat Marwick Mitchell that he was sent to Greenock, to work with National Semiconductors, the California-based analogue chip manufacturer.
In the late 1970s, the Scottish economy was heavily dependent on branch factories of US corporations such as Nat Semi, Motorola, Timex and Polaroid.
For a young auditor, the experience of working with that kind of client base provided an insight into a different kind of corporate culture.
“I owe the fact I got my job with National Semiconductor to the fact that in my CA training, one of the clients that we had was the company I’m now with,” says Macleod.
“You know the people, you know the company and you know the culture, and it’s a lot easier to find yourself in a position where you can accept a job like that, versus the traditional role or if you apply for a job in a newspaper.”
Macleod was sufficiently impressed by National Semiconductor to join them on a full-time basis in Greenock, where his first objective was an unusual one. He explains: “When I joined the company, the factory had just burned down completely. The insurance was for full replacement costs, so my first experience in finance was to spend as much money as possible, so that it could be recovered against insurance.”
It was the start of a lifelong relationship with National Semiconductor, which has seen Macleod rise through the ranks of the company to the point where he was crowned president and chief executive officer at the end of November last year, based in Santa Clara, California.
He succeeded outgoing CEO Brian Halla, who in his handover described Nat Semi as “the house that Donny built”.
“What he meant was that the business model which the company has had through the period from 2003 onwards, that was my business model,” says Macleod. “We resolved that one of the main reasons we are here is to provide returns to our shareholders, so we adopted a mantra of striving to achieve a 20 per cent return on investment capital. For five years, from 2003 to 2008, we achieved that.”
Last year, however, was a different matter, for National Semiconductor as for pretty much everyone else. The company cut 1,700 jobs globally, about a quarter of its workforce, as the global economic downturn saw demand for its products plummet.
Macleod reaches for a suitably technological analogy to describe the company’s response.
“This is not a recession, it’s a re-set,” he says. “We all have to re-set the way our businesses are going to address future opportunities, and the word re-set is important because it means you’re not just going to do the same in the future as you were in the past.
“The emphasis on shareholder return is there all the time – it’s why you exist. The question is how are you going to re-set and press the right buttons, to evolve that shareholder return in the future compared with where you were in the past.
“Technology, the new products which will drive the next cycle, are not the same products which were prevalent in the industry before we went into this dip, so you have to go and find those products.”
For the new boss of National Semiconductor, that means focusing on the opportunities presented by the shift in demand to renewable energy.
“How can we enable renewable power electronics to be more useful in recovering energy, whether it’s in improving efficiency in solar panel installations, or in improving efficiency in the large batteries for electric vehicles, or whether it’s with a smart grid, linking electronic devices?” he asks.
“There’s a lot of opportunity for companies like ours in the electronic marketplace. What we focus on is efficiency in power management, which is playing into some big global themes, so we’re optimistic about the future.”
Macleod was back home in Scotland recently to take part in the GlobalScot conference. He is a passionate supporter of the government-led initiative which sees prominent international Scottish business leaders offer advice, contacts, assistance and support to companies here which are looking to expand their horizons.
“Scottish companies traditionally tend to look for support and help from institutions such as Scottish Enterprise, but there’s no reason why they can’t go directly to exercise the network of GlobalScots, especially people like myself in Silicon Valley where there are so many opportunities,” says Macleod.
“This is going to be a pretty tough calendar year for the Scottish economy, but the growth opportunities are international, not at home. More emphasis should be placed on growing internationally, and as members of the GlobalScot network we are all out there willing to help.”
Macleod admits that given the journey he’s been on, his relationship with ICAS is fairly distant nowadays, but he pays his annual subscription because he owes the Institute for helping him get to where he is today – although he has a hard time filling in the details of his continuing professional development.
He says his network of friends in the US is still heavily Scottish, with many of them colleagues who have also relocated from Nat Semi’s plant in Greenock to the company’s headquarters in Santa Clara, California.
“Our finance organisation is full of Scottish accountants who have come over to the US, and we actually have a recruitment programme where every year we bring a CA over to the States,” says Macleod.
“It would be great to say it’s me that’s driven that, but if the first person who came after me wasn’t any good, it would have fallen apart at that time.”
Given that his first son was only six weeks old when he moved to the US, Macleod says his three children are more American than Scottish, although they return each year to see relations.
Outside of work, the family retreats to Lake Tahoe in the Sierra Nevada mountains of California, where they enjoy skiing, sailing and fishing.
“Coming from the Isle of Lewis, you don’t need any introduction to the water,” says Macleod calmly, as he prepares to navigate National Semiconductor through some potentially choppy seas.