Posts Tagged ‘loose cannon’

“Dear Mr. Watson, My employment with IBM has been terminated” (More Loose Cannons)

November 3, 2009

Dilbert.com

There was a birthday celebration of sorts last week.  From the October 29th edition of  ABC News Science & Technology:

While the actual date of the Internet’s birthday is somewhat debated, many say that the Internet was born 40 years ago today at the University of California, Los Angeles, when a computer to computer message was sent for the first time from the UCLA campus to Stanford.

At the time, Leonard Kleinrock and his colleagues were charged with developing the Advanced Research Projects Agency Network (or ARPANET), a government-funded research project in global computer communications that eventually grew into the Internet.

I thought it would be a good occasion to  reflect on how easy it is for Loose Cannons to get smashed by colliding worlds.

In the days before ARPANET, computer-to-computer communications were homogeneous, and computer manufacturers liked it that way. The very idea of not owning every aspect of a technology stack seemed to be ridiculous.  Where’s the value if you can get critical components from anywhere?  What if competitors start using the same suppliers?  Heads of business units hated the idea, but Loose Cannons kept proposing technical architectures that looked, well, open.  The idea was playing out in many ways in many companies.

At IBM, two architectural revolutions were simultaneously  underway. We now know that they were related. In the summer of  1980, IBM executive Bill Lowe prepared to brief  the company’s Management Committee on development plans  for a personal computer:

It was a dangerous place to be.  The Management Committee — or, given IBMers’ fondness for acronyms, the MC — ruled on issues that couldn’t be resolved at lower corporate levels, so going before the committee was, to IBMers, like going before the Supreme Court.  It was actually rougher because the top IBM executives who sat in judgment were known to be brutal, especially if they thought someone was wasting their time.[1]

Bill Lowe had been beaten up by the MC before, but this time Lowes’ plan to use outside suppliers drew polite questions from MC members who expressed some concern about turning over even partial control of any of their businesses to “outsiders.” What Lowe and the vast majority of IBM engineers didn’t know was that earlier in the year the MC had received a  forecast for global PC sales that showed a peak market of 80,000 units in that began to rapidly decline in 1984 as the specialized customer  need for computers was satiated:

IBM had already been embarrassed by early missteps in the PC market but the corporate culture was focused on mainframes and services.  Problems might be created by opening up the hardware and software architecture of personal computers, but

The general attitude…was that you don’t have big problems in small markets, and we thought the personal computer was a very small market.[1]

The MC might have been more inclined to turn its attention to a market that had real legs.  Like, say, networking.  Ed Hendricks was an engineer at IBM’s Federal Systems Division in San Diego.  Hendricks had helped design VNET, at that time the largest computer network in the world.  VNET was  IBM’s internal corporate network, linking IBM mainframes at scientific data centers.  By 1980, VNET was a global asset with hundreds of  hosts in North America, Europe and Asia.

Meanwhile, ARPANET was growing into the Internet, and Ed Hendricks was interested in how IBM’s technology would continue to prosper when the world started connecting IBM mainframes to large UNIVAC computers, HP mini-computers,  PC’s, and supercomputers from Cray or Control Data.  Hendricks became an industry player in this arena, collaborating with my colleague Larry Landweber at the University of Wisconsin as the expansion of the ARPANET began in earnest. Ed  Hendrick’s IBM Internet Gateway Project was aimed squarely at insuring that IBM mainframes would not be stranded in a world in which they could only talk to each other:

The objective of this project is to begin to bridge the gap between IBM computer systems and network technology predominant among government agencies, conractors and universities.  More specifically, we are working to develop according to DOD standards the technical capacity to interconect networks of IBM computers and systems to similar but different computer networks used by government agencies and their affiliates.

Hendrick’s website preserves the sometimes heated but  thoughtful and deep technical discussions — involving Hendricks,  the legendary Jim Gray, and MIT’s Jerry Saltzer, among others –  that took place througout 1980 about the relative merits of ARPANET and IBM’s networking strategy. For reasons that are still unclear, IBM decided to move the Internet Gateway Project to IBM Research in Yorktown Heights, New York, an effort that Hendricks calls “screwy.”   Hendricks along with team members Gerot “Mike” Engel and Dale Johnson planned to spend a week at Yorktown Heights, getting comfortable with IBM Research’s Systems Laboratory, their proposed  new home:

…the Systems Laboratory was created to focus more directly on perceived business needs. Consequently, Systems Laboratory projects are evaluated and prioritized on the basis “leverage” they exert on the software product line…by design, ninety-five percent of the work carried out in the Systems Laboratory is so closely related to strategic product development that it cannot be discussed outside IBM.

Shocked, the Internet Gateway team concluded:

…a project such as ours which is intended to establish internet communication compatible across differing systems…could not be carried out under such guidelines.  Our overall reaction…was that the ARPANet Internet Gateway project could not have been started within the Systems Laboratory.

They concluded that if the project was to have any chance at all of success, there would need to be a formal review of management decisions, what  IBM called the “Open Door” process.

March 14, 1981

John R. Opel, President IBM Corporation

Dear Mr. Opel,

This letter is intended to invoke the IBM Open Door Policy.  My purpose in requesting this Open Door is to seek clarification of the decisions which led to a situation where a project which is clearly critical to IBM’s future posture in the data communications industry cannot be pursued…Bureaucratic accomodation for only that which is in the strategic plan is a very dangerous posture to be in while the data processing and communication industry is rapidly evolving.

[My team and I] have been working to carry out a project to establish a capacity…to cooperate with the U.S. Government and University Computer Science departments in the evolution of techniques to interconnect dissimilar computer networks…There is essentially unanimous agreement that this activity promises important advances for IBM and for computer technology in general.

In September 0f 1980 we were notified by our management that this work could not be carried out…On each occasion when this qustion [of where the work could be carried out in IBM] was being escalated to the proper level, my management would insist that I leave the management issue to them and to concentrate my own efforts of the technical work.

Last week I was informed verbally that no sponsorship for this project could be found.  My manager asked where hie should look to find me a job. My position was…that inability to find organizational sponsorship for the project is not equivalent to a decision that IBM should not be involved in developing the capacity to interconnect IBM networks to government and university networks…to look for other professional opportunities now and give up attempts to pursue this technology…would be to let the company down….

Sincerely yours,

Gernot Engel

19 March 1981

Mr. Thomas J. Watson, Jr., Chairman Emeritus

Dear Mr. Watson,

My employment with IBM has been terminated as a consequence of recent management decision which are incompatible with my professional goals…I believe I am justified in requesting more thorough and explicit responses to the following questions:

  1. What “business needs required the termination of our ARPANET Interconnection Gatweway Project and the abandonment of the…professionals we had been dealing with?
  2. What factors prevented alternative organizational arrangements that would have allowed our group to continue its work within IBM?
  3. What is IBM’s posture regarding professional cooperation with the computer scientists working in association with DARPA…to establish mutual techniques for interconnection of dissimilar computer networks?…

Sincerely yours,

Gernot Engel

May 15, 1981

John R. Opel, President IBM Corp.

Dear Mr. Opel,

On March 4, 1981 I sent a letter to your office requesting clarification of a decision which cancelled the internet gateway project…Your office’s attempt to analyze the internet decision appears to be stalled because it was handed back to middle management….I can only conclude in this instance the Open Door Policy has failed. My recommendation to salvage the situation is that you give fifteen minutes of your time to receive a presentation on the internet project and attempt to evaluation for yourself the value of this project to IBM’s future.”

Sincerely yours,

Gernot Engel

May 19, 1981

Dear Mr. Engel,

I have reviewed the results of [the] investigation into your concerns.  Your disappointment with the decision to terminate the VNET/ARPANET project is understandable; however, I conclude the decision was properly based on the need to fund other Ad Tech projects with greater business potential…

I understand you are currently considering a return to IBM, and I hope you choose to do so.

Siuncerely,

John R. Opel

Number 1-81: September 11, 1981 MANAGEMENT BRIEFING

TO ALL IBM MANAGERS:

Organizations seem to have an irresistable tendency to codify successful practices in rules, instructions and controls which soon begin to take the place of judgement. When that happens, the result is bureaucracy.

IBM is not immune.  Earlier this year, reports from many sources indicated to me that a growing bureaucracy is affecting the performance of our business…corporate staff heads, group executives, and the division presidents are exploring ways to reduce unnecessary controls, rules and approvals in their areas of responsibility…We will succeed in that effort only if you managers, at every level of the business,k are willing to stand up and fight bureaucracy wherever you find it…If you have all the information to make a decision, make it…

[signed by John Opel, president]

John Opel stepped down as IBM president in January 1985 and chairman in May 1986.  He was succeed by John Akers, and he was succeeded by Lou Gerstner in 1993. Gerstner, the former CEO of RJR Nabisco, described his transformation of IBM in “Who Says Elephants Can’t Dance?”[2].  Most observers agree that critical to IBM’s turnaround that took it from a free fall in the early 1980′s to unquestioned market  leadership in computers, software and services was the dismantling of a remote, hierarchical management culture that squeezed innovation in political pincers.  By the time I took over the computing research directorship at the National Science Foundation in the late 1980′s, IBM had become a major player in the growth of the Internet [3]:

In the mid-1980s, NSF decided the time was right to try to link its regional university networks and its supercomputer centers together. This initial effort was called NSFNET.
By 1987, participation in the new NSFNET project grew so rapidly that NSF knew it had to expand the capacity of this new network. In November of that year, it awarded a grant to a consortium of IBM, MCI, and a center at the University of Michigan called Merit to create a network of networks—or inter-net—capable of carrying data at speeds up to 56 kilobits a second. By July, 1987, this new system was up and running. The modern Internet was born.

REFERENCES

1. Paul Carroll, Big Blues: The Unmaking of IBM, Crown Trade Paperbacks, 1994

2. Louis V. Gerstner, Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround, Collins, 2002

3. National Science Foundation, NSF and the Birth of the Internet, http://www.nsf.gov/news/special_reports/nsf-net/textonly/index.jsp

Posted in Uncategorized | Leave a Comment »
Tags: , , , , , , , , , , ,

Guess Who’s Coming to Dinner

September 22, 2009

In the irreverent, satirical movie Brain Candy the scientist who is responsible for the eponymous drug that takes the world by storm and briefly turns an ailing pharmaceutical company into a global powerhouse is invited along with his team to the CEO’s house for a celebration.  While his nerdy team members are left at a dismal affair of chicken salad and soggy potato chips, the scientist is escorted to the real party, a sophisticated Bacchanalia complete with caviar, Champagne, celebrities, super models,and swimming pools.  Few Champagne-and-caviar parties in today’s corporate climate, but there is still a sense that when dinner is served for top decision-makers, R&D does not have a seat at the table or is – at best – a distraction.  R&D is a somewhat curious, uncomfortable, and frequently unwelcome guest.

There are obvious signals when the worlds of technology innovation and business execution are on collision courses.  There are early warnings that reverberate through organizations, but they tend to go unnoticed because corporations make  it  easy to set up effective filters.  Warnings can show up in the very language that R&D management uses to talk about the rest of the company.  In “Are R&D Customers Always Wrong?” I quote former GM research chief Robert Frosch talking about the

…ocean of corporate problems

as if they were the problems of some alien world into which the GM R&D Center had been dropped.  In “Well, what kind of fraud is it?” Edward clearly lived in a different world, and the many “Loose Cannons” who I still hear from were never able to bridge the gulf.  Everyone seems to be a helpless observer to a catastrophe over which they have no control.

My experience is that senior executives, starting in the boardroom, can too easily focus on events that are rushing at them — too fast for effective reaction — ignoring the events that are still far enough away to anticipate.   There is, for example, an overwhelming feeling  that, since the time of a chief executive  is so precious, every step should be taken to avoid diluting the CEO’s time with minutiae.  To be perfectly honest, technologists tend to do that – passion for a technology project can fill a briefing with flourishes that are meant to be savored and admired by peers, not convey actionable information to decision-makers.  But that doesn’t excuse what in my view has become the regrettable practice in large companies of filling virtually all executive time with managing cash, debt, and other financial indicators of performance.

Financial performance in a technology company rests on other factors, too. Market disruptors, for example, are rarely predicted by financial analysis.  Even annual strategic planning and investment is a barren exercise without the participation of an educated team to make sense of the alternatives.  In an industry with many acquisition targets the ones that should occupy the attention of senior management are not necessarily the ones that have the strongest near-term business cases because those may not be the ones that advance long term goals.  Intel chairman Andy Grove once said that a Board’s responsibility is to

…insure that company success is longer than the CEO, market opportunity, or product cycle.

I will have more to say in later posts about the collision between decisions that really advance long term goals and those that are simply chosen from a list of predetermined alternatives.  What starts in the boardroom is inevitably replicated at other levels.  To deal with all of the important factors that determine success of a technology company  technology leaders must have a seat at the table.  Avoid collisions by inviting them to dinner.

I’ve worked with many senior executives who have set a technology place at the table with oftentimes-spectacular results, but today I want to focus on my Bellcore mentor CEO George Heilmeier, winner of the 2005 Kyoto Prize for his invention of the liquid crystal display.  George, along with Bellcore research chief Bob Lucky and head of the software business Sanjiv Ahuja led the remarkable transformation of Bellcore from an inward looking R&D consortium to the profitable stand-alone supplier of telecom software and services that was divested by the Bell Operating Companies and acquired by systems integrator SAIC in 1997.   Bellcore generated enough cash in the first quarter after being acquired to pay back the entire purchase price. George took particular delight in his mentor role.  Even during his busiest days at Bellcore, he would wander into my office, put his feet up on the coffee table, and ask what was going on in the labs, a conversation that often went on long into the evening.

One of George’s most enduring contributions to the R&D culture at Bellcore (and, as I later found out, to Texas Instruments, Compaq, and DARPA) was the Catechism.  I tried many times to get him to call it something else because I really believed that some in our multicultural environment would be offended by the term, but he always ignored my suggestion and in the end nobody seemed to mind very much.  The Catechism was George’s way of framing every strategic discussion, but he took particular care to make sure it was used to manage technology.  I later found out that others, including former Intel research head David Tennenhouse, who had also been swept into George’s wide path, had also carried the Catechism tradition forward.  According to the Catechism every strategic proposal in the company had to answer the following six questions:

  1. What are you trying to do? (No Jargon)
  2. How is it done today and what are the limitations of current practice?
  3. What is new in your approach and why do you think it will succeed?
  4. Assuming success, what does in mean to customers and the company?  This is the quantitative value proposition.
  5. What are the risks and the risk reduction plan?
  6. How long will it take?  How much will it cost? What are the mid term and final exams?

At Bellcore, George personally ran a Quarterly CEO Technology Council Review, where R&D managers from around the company would present their best ideas – always using the Catechism — for innovations to heads of the strategic business units, sales, and marketing.  Sometimes to the consternation of both the CFO and  the head of sales, George would reward skunk works projects that had terrific answers with additional resources to continue their work.  I wondered many times about the metaphor mixing in Question Six, but again it didn’t seem to both others.  There was no complicated process.  If you answered the questions well and the value proposition made sense, you got enough to get you going.  If the project was a little further along, you needed business unit heads to also buy in, and so on until it made sense to tie cost and revenue goals to the project. By that time the balance of the authority for the project was in a product group so the Technology Council could disengage. Amazing ideas came out of this process including the word’s first e-commerce products and an amazing quality transformation among the company’s more than 6,000 software engineers.

George Heilmeier’s Catechism was the inspiration for my Loose Cannon escalation process at HP.  HP was about 50 times larger than Bellcore so the idea of a quarterly CEO review was not feasible.  However my Technology Council was a direct pathway to the Executive Council so the effect was the same.

I sat down with George last spring for a wide-ranging conversation.  Much of what he had to say about both the Catechism and seats at the table has also appeared elsewhere – most notably in his five public speeches in conjunction with the Kyoto Prize.[1] The work that won him the Kytoto Prize was done in the 1960’s at RCA’s Sarnoff Laboratories in Princeton, where he had recently completed his PhD.   This included the discovery of electro-optic effects in certain kinds of liquid crystals that would be used to build  the first liquid crystal displays.   George always claims that he just “stumbled upon it” but he quotes Vladimir Zworykin, a television pioneer  with commenting:

“Stumbled, perhaps, but to stumble you must be moving.”

Heilmeier became disillusioned with the slow pace of change at RCA and left to spend a year as a White House Fellow, an assignment that turned into an appointment as Special Assistant to Secretary of Defense James Schlesinger and later to his appointment as head of DARPA.  Schlesinger and other White House mentors gave George a seat in senior policy discussions from the earliest day, and his growing comfort with proximity to important decision-making shaped his outlook on the value of a seat at the table. Two lessons stuck with him.  First was the negative power of vested interests:  in times of change those with the most to lose will fight tooth and nail to undermine it and those with the most to gain do not yet realize how much they have to gain.   Second was the negative aspect of “technology transfer”.  George was never a fan of throwing technology “over the transom”.  His commitment to providing an equal voice for innovation grew out of his experience that it was much better to form what he calls an “interdisciplinary team” with representation from R&D, product engineering and manufacturing  (he still believes that marketing is best done organically with all members of the team interacting with customers).   The leadership and balance of this team shifts as time goes on.  This is the dinner table.

In my next post, I’ll give you an example of these principles in action: a transformational event that could only have been successful with a seat at the table and that would have been killed by a distant CEO, undiluted with the minutiae of technological disruption.

[1] A Moveable Feast: Kyoto Prize Lecture (SD Version), 2005

Posted in Uncategorized | 4 Comments »
Tags: , , , , ,

Loose Cannons, Volume 1

September 7, 2009

Dilbert.com

This is my all-time favorite Dilbert cartoon. Anyone who has ever worked in a large corporation like Hewlett-Packard understands immediately what’s going on here.  I always used it in CTO coffee talks when I wanted to show our engineers that I was really one of them — that I  wasn’t from another world (although I  suspected that many of them were already convinced that I was the pointy-haired boss and some thought I was Blob).  After a few hours, like clockwork, the email would start pouring into my inbox.  The subject line was always something like: “From a Loose Cannon.”

Some of the messages were very strange and a few (like the ones talking about contacting aliens from space) were downright disturbing, but most of them were respectful notes to let me know of  legitimate ideas that hadn’t made it through internal management gates.  I knew the engineering managers well.  They were smart and careful and for the most part they were very successful.  I didn’t want to second-guess their investment decisions, but I started wondering whether another sort of investment analysis would give a different answer, because these were obviously colliding worlds.

I was not popular with some of HP’s general managers because I had invented a new sort of escalation path for engineers, inviting ideas that had already been turned down at some point in the management chain.  I created a Technology Council consisting of the CTO’s of each of the major business units, the Director and Chief Scientist from HP Labs and some  HP Fellows to help with technology strategy and road-mapping, so it made a great deal of sense to use this team to take one more look at some of the Loose Cannon Ideas.

One of the Loose Cannons proposed using HP’s Jornada Pocket PC “to control my TV and VCR or other IR devices – that way you could store stuff in there and program those things simply and easily.” Another L-C wanted to create a document management system for the “growing home genealogist market”.

The company already had a rich history of encouraging risk-taking by its technical staff, but at HP business objectives were never far from sight.  There was a 60-year history of combining risk with rational investment.  It was a strategy that worked well.  It was lightweight, and I think that’s why cool new products and sometimes whole new product categories continued to flow out of R&D activities.  I am not only talking about the research labs. At that time there were over  12,000 engineers, many of whom had advanced degrees and were rewarded for patents, publications and other creative work; there was incredible bench strength. I will have more to say in later posts about how this process of identifying and nurturing creative ideas was carried out, but today I want to concentrate on the very specific calculation that virtually all R&D managers in the company learned.  I think that the legendary Joel Birnbaum was responsible for it, but my friend Stan Williams, who for many years now has guided HP’s nanotechnology and quantum computing research nailed the analysis in a dramatic way[1]:

…Why don’t we put together a program to become the world’s best center in quantum computation?

The answer is that even in the research labs we have to be ‘cold blooded’ businessmen…The first question is this: what is going to be the total world market for the technology?…The answer is, looking 15 years ahead, $1 trillion per year…we then have to ask what fraction of the market will belong to quantum computation…Now, how much could HP capture if it went after it very aggressively…[then] the question is if we could sell that 15 years from now that is the appropriate level of investment for that income stream?

Stan then incorporated development costs, risks and barriers and the time value of money to conclude:

…even when addressing a significant share of a $100 billion market that is 15 years in the future, the amount of money we should be spending now is about a million dollars per year.  In an industrial laboratory environment that’s about three researchers with their associated overhead costs.

Every engineering manager in the company knew how to play this calculation in reverse:  if we fund one full time engineer to pursue a new, untested idea, what is the possible income stream we would see from that research 3, 5, 8, or 15 years from now?  Many – maybe most – of the technical staff understood it, too. And yet, there were these L-C ideas that just never seemed to go away. A generation earlier Dick Hackborn had been a management champion for inkjet printing, a crazy, complicated way of spraying colored water on paper, that even today accounts for most of HP’s financial success. As far as I know Dick was not in the decision chain for printing solutions, but he was a very influential guy and his sponsorship swayed many opinions at the topmost levels of management.

So what was the Technology Council’s role in all of this?  The company was much bigger, and a consequence of size is a decreased reliance on individual opinion and an increased reliance on quantitative processes.  As a result new ideas needed to be accompanied by a business case analysis that supplied both the decision model and the critical financial and market parameters. The difficulty was that business managers were making decisions mainly about their markets and their risks which affects the starting point for Stan’s calculation and may dramatically underestimate the role that organizational barriers play in estimating the total risk.  The Technology Council was in a position to combine information from a number of business units and recalculate the business case.

Here’s one example. HP was at that time organized into four large business units:  one for personal computers, one for services, one for large servers, and another for printing.  The software in HP’s most expensive servers was a version of the original Unix developed at Bell Labs in the 1970’s called HP-UX.  It was one of the most important profit drivers for HP’s high performance business systems but it was under pressure from the high volume Microsoft-based market on one side and other Unix variants such as Linux, Solaris, and AIX on the so-called “value” side of the server market. The Printing Group also was in the software business, designing drivers and user interfaces for printers and scanners that were attached to personal computers and workgroup servers.  The focus of printing software was on the large and very profitable market for Microsoft-based PC’s, workstations, and servers.  By comparison, relatively few of the much more expensive HP-UX systems were sold.  The Printing Group did the Williams calculation and concluded that investing in software for HP-UX was not warranted.  The Server Group meanwhile was being starved for printing solutions.  Customers were asking for it.  Lack of HP-UX printing support meant lost sales, but HP-UX software developers would have needed engineering support from their colleagues in the Printing Group in order to make any headway.  Printing did not see enough downstream revenue to justify such an investment.

A Loose Cannon proposed that my office should fund a cross-business initiative in HP-UX printing solutions.  When the Technology Council looked at the opportunities that were being lost, it was clear that even a modest investment would pay off in the very near term.  Although we didn’t realize it at the time, it turned out that HP’s investment in Linux would quickly  take hold in the marketplace, so the investment in HP-UX printing had a big impact on that market as well.

There were worlds smashing into each other all over the place in those days, and there were two organizational decisions that made a difference.  The first was Carly Fiorina’s decision to make the CTO a member of  the company’s Executive Council – the half-dozen executives who ran the company.  This added a technology voice to the most significant decisions made at HP. Having a seat at the table is important when worlds collide, and I will give many examples of this in later posts. The second was the decision to charter the senior technologists in the company to spend an entire day every quarter looking beyond their own business plans for new technologies and products that would have been dropped or gone unnoticed because they had not survived Stan Williams’ cold blooded calculation within a business silo.

Many other developments grew out of these Loose Cannon discussions including HP’s aggressive entry into open source software, supercomputing, and commercial printing.  Successfully bringing Loose Cannons into the fold really requires you to squarely face  two important issues.  The first concerns the role that organizational barriers play in affecting overall technology strategies, The second is why technologists don’t more often have a meaningful seat at the table in executive suites and boardrooms. More on how to deal with these issues later, but I will give you a hint right now: there are no clean solutions because worlds are in collision.

I arrived at HP long after Steve Wozniak sent his letter asking for permission to commercialize “hobbyist” computers (see my last post Proposition 13 and Innovation).  If  he and I had overlapped I wonder if he would have been one of my Loose Cannons and whether his letter would have been needed.

[1] “Nanocircuitry, Defect Tolerance and Quantum Computing: Architectural and Manufacturing Considerations” by R. Stanley Williams in Quantum Computing and Communications edited by Michael Brooks, Springer 1999.

Posted in Uncategorized | 5 Comments »
Tags: , , ,