STL and ITT in the 1960s and later, at the time of Charlie Kao’s breakthrough.
Background
At the unveiling of the plaque (in March 2012) to commemorate Charlie Kao’s work on optical fibre communications, and his Nobel Prize award, Ian Vance spoke of this remarkable achievement. Ian paid tribute to Kao’s scientific genius and determination to see it through, and also to the unknown managerial decision-makers in ITT who had the vision and courage to approve the funding for his work over a long period of time.
I had the honour of working at STL during this period (although not on optical fibre), and then in 1969 and 1970 of working in the technical directorate at ITT Europe in Brussels. Ian Vance’s presentation and the question he raised about the courage of the funding decision makers prompted me to write this piece based on my own subjective impressions. I doubt that what I have written will shed much light on the Ian’s question, but as a personal reminiscence of a period it might be of wider interest.
Introduction
First I should explain how I first came to be involved with STL. My first experience of the labs was in the mid 1950s when STL was located at Progress Way, Enfield. My elder brother Alan (almost ten years older than me) had been working at the labs for some time and I used to accompany him to STL cricket matches when I would act as scorer and sometimes to the photographic dark-room to process films and prints. In this way as a teenager I first met the likes of Joe Evans, Don Weir, Albert Langton, Arthur Brown and Al Jenkins.
I left school in 1958 bristling with A levels and went straight into full time employment at STL and I worked there for two years before studying full-time for a degree in physics. At that time, unlike today, there were ten applicants to study physics for every available place at university. My memories of the labs at Progress Way and the characters that filled it are rich and various. I will write about this later, but suffice it to say that for me it was a formative experience and I feel it was a privilege to have known the labs at end of the Progress Way era and into the first year of the move to Harlow.
Harlow
Returning to STL in 1964 was like coming home. Since graduating in 1963 I had spent almost a year at GEC’s Hirst Research Centre in Wembley and found it very uncongenial. GEC Hirst was in serious turmoil at that time, which was when Arnold Weinstock was reorganising the company, and it was amazing that they should ever have recruited me in the first place. In contrast STL was confident, relaxed and an exciting place to be. It seemed natural that I should go back into the materials and components side of STL under Joe Evans and I was delighted to do that.
Joining STL as a recent graduate meant that one came without any commitment to any specific area of work and it was agreeable to be deployed on a range of topics that were live at the time. Perhaps this was different for post-graduates who arrived at STL with areas of special research interest already defined. I think this difference marked out how I was quite happy to be assigned to research projects, whereas incoming PhDs tended to go to projects that were aligned with areas of their research experience. This might have been only partly true in the case of Charlie Kao whose PhD was awarded in 1965 after he had been at STL for some years, but I think this was probably true for other PhDs. Indeed, in Charlie’s case it made have been the other way round – with his research interest at STC North Woolwich and then perhaps STL influencing the topic for his PhD.
However, such was the feeling of community at STL that any difference in status between PhDs and others didn’t matter at all. In fact, in those days some of the most eminent and highly regarded people at the labs, such as Cyril Drake, Henley Sterling, Harry Rantzen, and even the esteemed Alec Reeves seemed to be without rank or title. The point of this is that by and large, at research engineer level, we simply immersed ourselves in our own projects and although we might have known a bit about what others were up to, we were preoccupied with our own priorities.
In my case, during 1966 and ’67 working under Bill Crossland, I was involved in a somewhat esoteric project (funded by US Defense) to determine the electron-mean-free-path in single-crystal chromium, which we did and it was published. I went on to do much more applied work in thick-film technology, which involved the transfer of methods to the production facility in Paignton. During all of this I was aware of other things going on at the labs. For example, I remember George Hockham and Charlie Kao’s work on optical fibre, Cyril Drake’s work on amorphous materials and soluble glasses, the work on III-V compound semiconductors, solid-state lasers and the excitement of seeing for the first time what could be revealed by the scanning electron microscope.
I am almost ashamed to say that although I had an elder brother who worked on computer aided design, and data error correction, I had hardly any knowledge of what went on in the other half of STL concerned with software and systems.
The point I want to make is that at that time (late 1960s) I don’t think anyone at research engineer level was making value judgements about what projects and what area of work were of any greater or lesser significance than any other. It is possible that at more senior levels in STL such assessments were being made, but if so, I wasn’t aware of them. If I push my memory back to those times then I can recall giving a paper on film technology at a conference and being made acutely aware that the whole world of electronics was at the point of change because of the innovation of silicon integrated circuits, but I have only hazy memories of STL’s work on this.
If anyone at STL in the 1960s had been asked to predict which, if any, area of research was likely to lead to a Nobel Prize, then I doubt if optical fibre would have been an obvious choice.
Brussels
In 1969 I had the good fortune to be offered a post at the ITT Europe headquarters in Brussels to be Assistant to the Technical Director of the Components Group, who was at that time John Robinson. I am grateful to John himself and to Ruth Billington, Ken Batsford and Joe Evans who must have been involved in making this possible. The job lasted two years, and this gave me the unusual opportunity of being able to see the pan-European scale of R&D in a large part of ITTE and to have some insights into STL from a more lofty perspective. Although I have to say, the view of STL was only a partial one and was limited to those projects that were of direct interest to the Components Group companies.
At that time ITT was a global player in telecommunications and through its diverse range of business interests it was a US dominated multinational of the first league, which employed about 400,000 people worldwide. As well as telecommunications and electronics, it comprised a diverse range of companies that included Avis car-hire, Continental Baking and Sheraton Hotels. IBM was possibly a bigger company, but was less diversified, more inward looking and I think less remarkable. Ten years later I was able to see the workings of some major UK companies at the highest level, and it was a revelation to realise how advanced and how effective was the ITT management structure. And later still, when working for the European Union evaluating cross-national support schemes, I was astonished to think back at the sort of European collaboration that was achieved in ITTE, which the EU found difficult to emulate.
Some of the details of the complexity of how ITT operated, and some of the individuals involved, are given in an appendix. But there are some important things to say in summary here:
- First, that the mechanism to establish a fund to finance R&D both in the central research labs at STL Harlow and at LCT Paris, and to support R&D projects within the subsidiary companies, was highly refined and effective.
- Secondly, the management structure to provide an overview and give guidance to R&D priorities was highly developed and capable of focussing resources into the most promising areas for business development.
- Also, that there were some exceptional people in senior positions in the hierarchy of ITTE who were capable of technological vision and leadership.
In 1969 and 1970 ITTE was still located in an office block on the Boulevard de l’Empereur in central Brussels, where one of the upper floors included a huge conference room. This was the stage for the monthly drama of the Harold S Geneen circus flying over from the USA to conduct its ritualistic review of all the European operations. The room was huge with a gallery for observers to look down on the players and with two large projection screens at 90 degrees to be visible from anywhere in the room. It was here where the subsidiary company managers had to make their monthly reports and be subjected to a grilling by Geneen and others.
The minutia of monthly performance figures were scrutinised and questioned. One of Geneen’s maxims had been “no surprises!” and this meant that all the underlying trends had to be revealed. Details such as trends in the value of work-in-progress compared to finished goods inventory were common areas for probing. All of this was impressive, but I was later to learn that some subsidiary divisions overcame the rigours of this scrutiny by a level of double accounting whereby they could display acceptable figures while coping with reality in a different way!
R&D must have been subjected to the same level of questioning, but I don’t recall any of the visiting US team being formidable in this respect. But, the overall ITTE technical director was William Forster, “le deux metre Bill” as he was sometimes referred to, and he was literally head and shoulders above the rest, in height and intellect. I think STL would have come under some fairly intense scrutiny, but sadly I never witnessed it. My guess is that the head of the labs at that time, would have put up a spirited case to justify STL projects and maybe it is to his credit that the optical fibre work continued through to success.
In summary – I think that at the time when George Hockham’s and Charlie Kao’s work might have been starved of funds, it is likely that the mechanisms and individuals were in place in Brussels to give it their support for all the right reasons, although I doubt if anyone then could have foreseen the long-term benefits. My guess is that first credit to management for seeing this project through should go to the then STL MDs John Clare and Jock Marsh.
ITT Europe – the system 1969 – 1971
R&D funds – the General Relations Agreement
As I understood it all subsidiary companies of ITT were expected to sign up to what was known as the General Relations Agreement. One aspect of this was the requirement for companies to pay a levy on sales revenues, which went into a central fund earmarked for redistribution to finance approved R&D projects, known as GD. The levy for Components Group companies was set, as I remember it, at 4% of sales. From my later experience with UK companies in electronics and electrical engineering this was a very high sustained rate of re-investment in R&D and in this respect, ITT was very farsighted.
R&D projects
Subsidiary companies were allowed to put in bids to carry out their own R&D projects. Usually these were for new product development or improvements in performance of existing products. Frequently these would be collaborative projects involving two or more other companies in the Group, one of which would lead the project. A typical project, say for the development of a new capacitor, might be led by the chief engineer at STC Paignton and would involve collaborative working with teams at SEL Nuremberg and perhaps FACE Milan.
The project leader was required to submit to the Group technical director an R&D case, which described in some detail what was involved including market justifications, performance targets, milestones, any collaborative aspects and the planned costs involved for each year of the project. The funding arrangements could be bids, either out of the local companies funds (LD) or out of the General fund (GD) – see above, or a mixture of both. The level of scrutiny and justification for projects with a high GD content was more demanding than local LD funded projects.
Progress on projects was reviewed as part of the Business Plan cycle (see below) by the technical directorate against the milestones and targets given in the R&D case. It was not uncommon for there to be a tension between the local company and Brussels over how some of the funds, particularly locally generated LD could or could not be spent! Working as an assistant to the Technical Director, John Robinson was not always a popular task!
Management structure and people
Considering the size of Components Group with subsidiary companies in at least nine European countries, stretching from Scandinavia to Lisbon, and from UK to Austria, the Brussels directorate was surprisingly small. During the time that I was there the CEO was Ken Corfield, a steely authoritarian figure, who was in hindsight possibly flexing his muscles before being made overall MD of STC. The Technical Director was John Robinson for whom I worked. Other CG directors were for manufacturing/ production (Dick Van Fechtman) and for marketing (Iain Laing). The financial comptroller was Ken Walton and he had one or more assistants.
I have already mentioned William ‘Bill’ Forster the overall ITTE technical director. Another larger than life character who was wholly impressive was James Goodson, the overall MD of ITTE. I don’t remember being at a review where Goodson had to defend the European scene, but he would have been formidable. Goodson was a cigar smoking ex-WWII fighter pilot with lots of swagger. (Google him to find a film clip interview.) On one occasion when all the more senior staff members were away I was summoned to advise him on a sudden acquisition opportunity to buy an electric motor company in France. Goodson was motivated to go ahead and buy the company for about $1 million out of his own pocket, and collect from ITT later. I was out of my depth and demurred, and I doubt he completed the transaction.
Impressive as these senior Brussels figures were, I felt there was something artificial about their status. It was as if the real heavy-weight managers were still the chief executives of the national subsidiary companies and the Brussels superstructure was a contrived one. The national company directors had the same comparable authority as their opposite numbers in private limited companies reporting to a board and to shareholders. It was commonly said that multinationals had no allegiance to their host countries. This may have been true in the sense that any profits may have been exported, but in other respects the determination to be successful was as strong, if not stronger in ITTE subsidiaries than it was in national PLCs. I was able to witness this in UK companies myself in my post-ITT employment.
The head of Components Group in the UK was then the irrepressible Doug Stevenson. Doug was small in stature, but huge in ability and commanded great respect – he had a photographic memory and could recall tables of figures from any recent presentation, and talk with authority about them. This remarkable man was virtually self-taught from impoverished origins in the slums of Edinburgh. I recall him telling me that he had served in the navy in submarines and had spent time in military prison for insubordination. Doug later became head of CG Europe after Ken Corfield had taken over as overall MD of STC UK.
An influential name that I recall from my Brussels days is that of Phil Crosby, who had some overall responsibility in ITT for quality – it was Crosby who pioneered the concept of ‘zero defects’ and became a guru on this subject. The free issue pencils at ITTE had the legend “Quality means conformity”, which was coded way of saying that conformity to product specification was what good quality really meant. In this respect I think ITT was way ahead of most European manufacturing companies.
Another feature of ITTE’s senior management structure was the concept of Product Line Managers. For Components Group there were three such PLMs. Each had responsibility for overlooking a selected number of product lines designated by Major Activity Classification (MAC) number. These individuals were expected to provide a cross-European view of their designated areas in all the various national companies – in effect a sideways view that cut across the national companies reporting routes. In this way the PLMs acted as ‘internal customers’ for R&D projects and their approval was needed for projects to get the go-ahead.
The Product Line Managers’ policeman-type role was not always popular at subsidiary company level – a situation not helped by the questionable level of ability of some of them, although presumably they must have been worthy figures to have been appointed in the first place. One in particular, who should be nameless, was well known for being pre-occupied with his shares portfolio and belief in long-wave Kondratieff cycles.
Context
To put this period in context is to be reminded that this was all pre-email and much business communications were done by Telex, which required the distribution locally of hard-copies of flimsy print-outs. Also that pocket calculators were expensive novelties and much of the number crunching and endless balancing of figures inherent in ITT’s documentation was done laboriously using calculating machines, only some if which had paper-roll print-outs to aid checking.
Also, thinking about that period in Brussels brings other memories. On joining the Brussels staff there had to be a vetting by the ITT security man, whose name was I think Joe Sabatini, who in most respects was like a New York cop from central casting – his final parting guidance was “watch your wallet, even when you go to the John!” In 1969 ITT was regarded with some hostility by those who wanted to be critical of US multinationals and their reputation for interfering with the politics of the countries it operated in, although the scandal of its involvement with the CIA in Chile in order to overthrow the Allende government was yet to be exposed. I was astonished to hear that ITTE had bought the services of retired and highly respected senior Belgian politician, a former socialist prime minister no less, by the name Paul-Henri Spaak. But there it was, he even had his name on the door of an office in the Boulevard de l’Empereur building.
A related memory is that in 1970 ITTE wanted to relocate from central Brussels to a new purpose built tower block on Avenue Louise, which is a swanky area a bit like Park Lane. There was local opposition to this, with posters saying such as “ITT steals my daylight”, but to no avail – planning permission was granted and the tower was built. I later heard that it was probably coincidence that Belgium’s national ballet, Ballet Bejart then got funding to keep it going and Sabena, Belgium’s national airline suddenly got landing rights to one of the major US airports. Perish the thought that there should be any connection! But two years later I travelled back to Brussels in the company of an ITT public relations man who was carrying a large flat film canister with the title clearly visible, “ITT – the Future Lies Ahead” – the irony was lost on him, but not on me.
Business Planning
A key feature of ITT’s business management was its rigorous approach to business planning. This was highly formulated and followed an annual cycle with separate phases for objective setting, planning and review. The forward plans were for a five year period with a more detailed requirement for firmness over the first three years. Each of the national companies had to produce a plan for each of its Divisions and MAC operations, and each plan had to be capable of being added with others to produce a total plan for the Division, the company or the European MAC. A huge amount of management time and effort (particularly from the financial comptroller function) was required to complete this process, including the scrutiny from Geneen’s team from ITT New York.
Underpinning the whole approach to business planning was a commitment to growing the business. Geneen’s overall mission was to double the business every five years – this required each operating unit to adopt a target of 15% increase in net-income each year. Each separate business plan was reviewed against this objective.
R&D was another element in business planning and the link here between the R&D case and the formal business plan was the requirement for a ‘product plan’. This too was a highly formalised process which applied particularly to new product development. Product plans demanded analysis of the likely market demand for the new product and an assessment of how it would fare in competition with other products.
My own contribution to this already somewhat over-complex structure was to devise a method for what became known as Summary Product Plans. This involved collating five-year forward projections of sales for each new product, or product improvement, with a summation of projections for the existing business. These aggregates could then be compared with the overall business plan target of 15% a year growth, and this usually showed a gap in expectation starting two or three years in the future. From this ‘gap analysis’ it was possible to quantify the challenge for new product development (or acquisition) over and above what was already in the business plan.
The idea of Summary Product Plans was well received by CG management in 1971 when it was first introduced, although I doubt if it was very popular with the people in the subsidiary units who had to produce them. Summary Product Plans were still in use as part of the business planning cycle when I left ITT in 1974. I would like to think that this imposition of another layer of planning was not the straw that broke the camels back and led to the eventual decline and break up ITT’s global empire!
Footnote and disclaimer
All of the above was written from memory of a time and events more than forty years ago, and is no more than my own personal view of how it was. I have no documents or other material to refer to in order to check the facts. If I have got anything wrong, I would be pleased to be corrected. And I would be pleased if others could post their memories of how it once was.
Colin Marr 5 November 2012