In the midst of his technological advances, Ovshinsky ran headlong into an obstacle not described by the laws of physics: corporate governance regulation in the post-Enron age. He had always packed ECD’s board with Nobel Prize winners and world-renowned thinkers in diverse fields whose attendance was clearly more related to mutual intellectual stimulation than legal and regulatory compliance. After the passage of the Sarbanes-Oxley Act in 2002, he had to take on additional outside directors with government-mandated skill sets, who then pressured him to emphasize quarterly earnings at the expense of experimentation. He was also forced to impose a reporting hierarchy on the company, which had never known titles or more than two levels of separation between the lowest-paid employee and the CEO. The culture of the company, which had always been collegial, became more conventionally corporate. Longtime colleagues began to leave, and Ovshinsky found himself dreading days filled with meetings and administrative duties. When Iris died suddenly in 2006 at 79, after an apparent heart attack, he abruptly retired.
It was not necessarily the board’s fault. ECD’s technological lead had never translated into sales leadership, and companies not distracted by forays into hydrogen research or other intriguing technologies claimed a greater share of the photovoltaic market. Although ECD’s sales continued to grow at a steady pace, its 2009 revenues of $302.8 million pale in comparison to the $2.1 billion of market leader First Solar.
Ovshinsky says ECD would not have fallen behind had the board listened to him, and notes that the company’s share price has fallen only since his departure. In the later years, he says, he not only had to fight to preserve his research budget, but also had to battle his own executives to develop the 30-megawatt production lines that are now ECD’s greatest asset.
“The ECD machine I developed is larger than a football field, runs 24/7, and makes miles and miles of photovoltaics,” Ovshinsky says. “When I said I was going to do that, we had only 5-megawatt machines. I lost Iris and I lost the company at about the same time. The company I could have absorbed, but Iris was a deep, deep part of me.”
A Cultural Innovator
Stan Ovshinsky always made a point of giving Iris equal credit for his insights and inventions, and longtime colleagues say she was also at least as responsible as he for the remarkably collegial corporate culture at ECD.
Before Sarbanes-Oxley, formal titles, reporting hierarchies, and standardized appraisals were nonexistent. A promotion simply meant taking on more responsibilities, and new hires were constantly encouraged to work outside their specialties or to take on tasks that challenged their skill sets. Many a chemist discovered a flair for physics, and a clerical worker could rise to senior management. Although the Ovshinskys did not use the rhetoric of participative management or nonhierarchical organizations, ECD embodied both concepts.
“My mom joined as a secretary when she was 35, after being a housewife forever,” recalls Joichi Ito, CEO of the Creative Commons, whose parents both worked for ECD for many years. (See “The Ambassador from the Next Economy,” by Lawrence M. Fisher, s+b, Autumn 2006.) Ito himself, now a globe-trotting venture capitalist and digital activist, began working at ECD as a teenager, and says that Stan Ovshinsky became a combination mentor and surrogate father to him after his parents’ divorce. His mother “quickly became head of personnel, then vice president of international sales and licensing, and then was sent to Japan to be president of the Japanese division, and became the chief negotiator with the Japanese clients who were the biggest slice of the royalty fees for the technology.”