How To...Be Creative (But Not Too Creative)
By Bridget Finn; Paul Jacobs

(Business 2.0) – A wireless chip is like a new car: As soon as it hits the street, it loses value. So for Qualcomm, which makes cell-phone chips and licenses its technology to handset makers, staying ahead of the commodity curve is crucial. Its solution? A delicate balance of innovation and operational control that lets the company craft market-leading chips and set industry standards without ever missing a shipment date. In 2003, Qualcomm sold chips that run in about 117 million cell phones, around 20 percent of the market. During the same period, revenue reached $4 billion, with profit up 103 percent to $938 million, landing the company at No. 30 on our list of the fastest-growing tech companies (page 115). Paul Jacobs, president of Qualcomm's wireless and Internet group, shares his secrets. --INTERVIEW BY BRIDGET FINN

There are things we need to do right, and there are things we need to do right away. In the chip business, it's important to know the difference. We can't afford to do the kind of R&D we do if we aren't driving change in the industry. And if we aren't driving change, we'll get commoditized.

Somebody said the best way to predict the future is to invent it. I like that concept. We have a lot of engineers who want to be creative and find out what's possible. In fact, the very first engineers at Qualcomm were the "what's possible" types; that's how we developed our businesses.

But as our volumes grew, we learned that small errors could cause big problems. So we had to find engineers with a laser focus for hitting specific goals and doing precision work. We still have the creative types, but now we need both kinds of engineers--because there can only be a certain amount of out-of-the-box thinking if we want to hit our shipment dates.

For instance, we have really smart people in our Israel office, but when we'd assign them a project, they'd come back and say, "Well, you asked for this, but here are five other ideas that are really great." They didn't understand that what they were doing was part of a larger project. We had to train them very carefully and say, "We want the feedback, but don't innovate so much that what you bring back isn't suited for the original system."

At one point, we considered shutting down the Israel office. There wasn't enough communication because they didn't know who to talk to in the larger organization. So we started to rotate people. Some of the Israeli engineers came to our offices in San Diego and built relationships. That helped them earn bigger projects, more trust, and more ownership. In fact, I was just in Israel to celebrate the 10-year anniversary of that office.

Our assets are our people and the ideas they come up with, but it's our pace of innovation that keeps us ahead. When we see an opportunity in the market, we have to move quickly. At the end of the day, our customers trust us because we don't miss our deadlines.