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Culture

“Destroying the culture!” cried the masses in my post about rose-colored glasses. It is a unique fiction in Silicon Valley that Bil Hewlett and Dave Packard were friendly to anything but an engineering culture that demanded results and held managers personally accountable for their decisions. I once got in trouble with the company’s director of  marketing and communications for suggesting otherwise in a public forum.

Even in an engineering company with “Invent” in its name, fundamentals matter.  In the Fall of 2001, I was giving a series of speeches at HP labs around the world. Part of my job was to clearly communicate progress to the technical staff of HP’s far-flung divisions, but–increasingly–it involved keeping a lid on things.

The share price free-fall of November 2000 was due in part to a significant earnings miss that had undermined the markets confidence in CEO Carly Fiorina’s ability to execute her way the kind of growth and market share she had promised.  The senior management of the company had fixed on the idea that growth meant growth in market share and profits. Market share was the ever-present  context for discussing why HP’s computer businesses were not performing. Fiorina talked incessantly about it.  It was penciled into my speeches to industry analysts.

Growth was supposed to be the result of wrenching changes, but it seemed to me like HP’s employees wanted to talk about the “wrenching” part.  It was, however, a combination of events that was the hardest to contend with.

The IT industry was in chaos, and most of HP’s employees had never experienced a bursting bubble. The number of companies that only a few months ago had seemed incapable of making a bad bet  but were now winking out of existence.was terrifying. Pessimism spread throughout the company in early 2001.

Then, in rapid succession, the announcement of the Compaq merger and the terrorist attacks of 9/11 seemed to push everybody over the edge. I remember walking into the executive suite after an especially difficult visit to the East Coast, to find much of the corporate staff huddled around Carly’s TV.  It was tuned to CNBC, and an analyst was making doom-and-gloom predictions about the merger.  He was sour on HP’s strategy and technology stocks in general. The ticker flickering  at the bottom of the screen seemed to confirm every dire forecast. Someone looked up and said, “What’s going on, Rich?” It was not really a question. It was an accusation.

The engineers were in a particularly foul mood. Carly had embraced their strategy–three technology directions that they all believed would position HP as a serious internet contender (I’ll talk about that in a later post and about why I believe that HP’s fumbling of WebOS is such a tragedy). In truth, the CNBC guy was right. The merger was a massive distraction. Aside from the printing business–which continued to motor along by figuring out new ways making a lot of money out of selling colored water–execution was anemic. That was why I was pushed over the edge when in a  Town Hall meeting that was supposed to help build a fire under the development teams, someone in the back of the room called out, “Bill and Dave would not have done this to us!”

Anna Mancini, the HP archivist whose offices were just down the corridor from mine, had been in the audience, and a few days later she walked quietly into my office and plopped a folder onto my desk. It was a transcript of a David Packard speech that had been handed to her by Dave Kirby, HP’s first director of public relations.  Anna called them “give’em hell” speeches. I had seen one of the transcripts before.  They were circulated among line managers as graphic illustration that it was ok to raise your voice to employees.  These transcripts, however, were unvarnished. They were about fundamentals, and as Anna told me, they were about “the fact that he definitely held his managers accountable for their performance.”

Kirby’s cover memo gave some bakground for the speeches which were made in early 1974 to a group of HP managers:

HP had experienced a disappointing year in 1973, at least in the eyes of Packard and Bill Hewlett. Inventories,accounts receivable and other expense items exceeded appropriate levels and there was even talk among some managers of seeking outside funding–incurring some long-term debt–to get the company over its rough spots.

After apologizing for a Bill Hewlett PA system address during which

…you know Bill got a little mad about it and I guess he got carried away over the PA.

Dave got to the heart of the problem:

…I thought it might be helpful to take a few minutes and turn around see if we can really define what some of our management objectives in this company should be…for some reason we’ve gotten a little bit off track in the last couple of years…For some reason we’ve got this talking about one of our objectives is to increase the share of the market, and I want to start right out by telling you that that is not a legitimate management objective of this company, that it leads you to the wrong kind of decisions, and that hereafter if I hear anybody talking about how big their share of the market is or what they’re trying to do to increase their share, I’m going to personally see that a black mark get s put in their personnel folder.

It must have been a stem-winder, because he catalogs all the profit shortfall, division-by-division. Accounts Receivable comes under fire,

It’s your job to see that this gets done and we just didn’t do it last year. Everybody thought it was somebody else’s business, and I even found some cases where a salesman had gone out and…told a customer that he doesn’t have to worry about when he pays his bill.

So does engineering project management

…if anything you might argue that the R&D costs ought to be allowed to grow as rapidly as our sales,

and capital equipment,

We don’t have to have every goddamn thing we’re doing gold plated.

But what really struck me was the harsh tone he directed to a strategy that valued maximizing profit growth above all else. Packard was a student of Peter Drucker:

To Drucker, businessmen who talk about profit maximization are doing more to hurt the system than anyone else…What strikes Drucker as most moronic is that the maximum profit which management hopes to achieve with their maximum profit goals is often less than the minimum profit needed to keep the business healthy and growing.

In the Fall of 2001, the entire company was transforming itself for growth.  The kind of growth that the IT industry had become accustomed to. But in the early months of 1974, David Packard told his employees,

The growth company is not a sound investment.  Such a company sooner or later, and usually sooner, runs into real difficulties. Sooner or later it runs into tremendous loses, has to write off vast sums, and becomes in fact unmanageable.

HP’s transformational strategy was based on growth envy. Carly Fiorina was in a fierce battle with Scott McNeely of Sun Microsystems over his seemingly boundless capacity to chew up huge portions of the Unix server market. On the other hand, Apple’s share of the PC market hovered around 6% (even today it it only has 10% of the total PC market).  It ranked 287th in the Fortune 500. When Oracle acquired Sun in 2009, effectively shutting down a growth-driven powerhouse, Sun’s market cap was slightly under $8 Billion.  When the market closed last Friday, Apple’s market cap was well over $300 Billion. It was more valuable than Exxon, the next largest company.

What about HP’s transformational strategy? In January of 2001, the total market cap of HP, Compaq, and Agilent (which was in the process of being spun out in an IPO) was slightly over $75 Billion when adjusted for inflation. In July 2011, after a decade of mergers, acquisitions, and divestitures- all aimed at increasing size and market share–the market cap of HP hovered around $72 Billion.

in 1974, David Packard told his managers,

Now I guess that you’ve judged by now what what I am getting back to is that one of the traditional policies of this company has been that we were going to manage it so we would finance our growth from earnings, cash flow, and as we somehow seem to have gotten away from that I see absolutely no reason why that should not still be our basic objective.

It mattered, because

The market doesn’t give a damn about your sales, they don’t give a damn about your share of the market; the only thing that counts is the rate of growth of earnings if your going to be in a growth company, and a growth company is not growing in size, it’s growing in earnings potential., and this is the thing that is so important for all of us to understand and is so important to do something about because we’re just facing a disaster if we don’t.

If culture matters on the world of innovation, then it also matters in the world of execution.  The HP-Compaq merger and subsequent events were under the watchful eye of an experienced board of directors.  Many of them had long ties with both companies, and it’s possible that some of them were in Dave Packard’s audience that February day in 1974.  I never heard any of them talk about, though.

All non-director officers were tossed out of the boardroom when “strategic” matters were discussed, so I guess it’s possible that someone showed up to “giv’em hell” and I never knew about it. Culture trumped strategy in 2001, but not in the way that most people think. Strategy was in the hands of an executive culture that placed their bets on company size, market share, and earnings potential that never materialized.

NEWMAN: Wait a minute. You mean you get five cents here, and ten cents there. You could round up bottles here and run ’em out to Michigan for the difference.

KRAMER: No, it doesn’t work.

NEWMAN: What d’you mean it doesn’t work? You get enough bottles together…

KRAMER: Yeah, you overload your inventory and you blow your margins on gasoline. Trust me, it doesn’t work.

JERRY: (re-entering) Hey, you’re not talking that Michigan deposit bottle scam again, are you?

KRAMER: No, no, I’m off that.

NEWMAN: You tried it?

KRAMER: Oh yeah. Every which way. Couldn’t crunch the numbers. It drove me crazy.

Even Kramer got it. Fundamentals matter, but there is a persistent legend in many engineering organizations that culture trumps the bottom line. It’s a legend that propagates because, as change management consultant Curt Coffman has provocatively noted, “culture eats strategy for lunch” when it comes to execution. What Coffman and others who talk about “soft stuff” don’t tell you is that in the end culture doesn’t matter.

The reality is is this: culture only trumps the bottom line in organizations that are heading in the wrong direction. It’s easy to see why: bad execution can be excused when it is in the service of a higher calling.  Sometimes — the legend goes — cultural purity even demands failure. Briefings that begin with a retrospective tour of a company’s glory days or the exploits of its leaders are not going to end well.  It’s a malady that afflicts start-ups, Fortune 100 companies, universities, and political office holders.

It was a rare meeting at Bellcore or Bell Labs that did not begin with a bow to a century of innovation and accolades. Theirs was a tradition so rich that it was bound to color all projects in perpetuity. I knew a  business development managers who intoned “WE ARE BELLCORE!” at the start of engagements. It always sounded to me like a high school football chant designed to cow the opposition.

The remnants of the Army Signal Corp  research lab at Fort Monmouth New Jersey had long dispersed by the time I interned there in the early 1970’s, but stories of the famous scientists who once stalked the cavernous halls of the enormous hexagonal building near Tinton Falls were retold to each new class of PhDs as if  the great men would be dropping in any moment to don lab coats and resume their experiments.

Start-ups are not immune, either. A few weeks ago, I was nearly ejected from a meeting with a CEO who was raising early stage money for suggesting that the distinguished professors who had founded the company might have had less than complete insight into market realities.

The “We are great because…”  meme  is propagated by leadership at all levels. Even in this age of the decline of the celebrity CEO, countless university and corporate websites are travelogues for executive jaunts to far-flung campuses. Supporters of one prominent Silicon Valley CEO would muse to anyone who cared to listen: “I wonder what it feels like to always be the smartest person in the room?”  The phrase found its way into an industry analysts’ briefing at the very moment that the company’s stock was falling off the edge of a cliff. I watched the faces of the analysts, and it was clear that they were pondering entirely different questions.

I’ve had my share of run-ins with employees who were not at all shy about using vaguely remembered words of long-departed leaders to pit culture against execution. In one instance, a series of patents led to an ingeniously conceived system for streaming audio and video from conference rooms and lecture halls. Unfortunately every cost projection showed that the effort required to install and maintain the equipment swamped any conceivable revenue stream. When I confronted the inventors with the inevitable conclusion, I was excoriated in the most graphic possible terms because I had not taken sufficient account of  the intellectual beauty of the system.  The crowning blow: “Dr. [insert the name of any of my predecessors] would have understood my work!”

On another occasion, I was called upon to invest heavily in a newly conceived and revolutionary mathematical method that would transform not only our  business but scores of related industries.  The inventors’ local managers had been completely sold on the idea and were willing to put a substantial portion of their margins at risk to develop it.

Key to the idea was the notion that every textbook in the field had been written by authors who willfully ignored the power of the new theories. The invention involved an area in which I had done research in the past, but  I couldn’t make much sense of the claims.  I dutifully sent drafts of patent disclosures to experts, but the feedback was discouraging.  The claims in the patent disclosures were either false or so muddled that further analysis was useless.

I pulled the plug. Reaction was swift and heated.  Here’s what it boiled down to: the founders would have had faith in the employees, and I did not. They were right about me, but not about the founders.

It is in the nature of engineering organizations to reconstruct the past to suit the present.  Hewlett-Packard was famous for such rose-colored glasses.  When then-CEO Carly Fiorina combined ninety or so business units — each of them concentrating on a slice of a business that overlapped with a half-dozen others, driving down operating efficiencies and, with them, margins — into a total of six, howls could be hear from every HP lab on the planet.  “Bill and Dave would not have done that to us.” A casualty of Mark Hurd’s rapid moves to salvage the strategic advantages of the two year old Compaq merger by slicing investments that did not have a clear path to revenue was the revered software laboratory at HP Labs.  “Destroying the culture!” cried the masses.

Now I happen to think that both moves were unwise, but not because of any cultural imperative that had been handed down from Bill and Dave. The numbers were seldom that hard to “crunch”.  It always boiled down to fundamentals. Risks were taken, but only when the fundamentals made sense.

It is a unique fiction in Silicon Valley that Bil Hewlett and Dave Packard were friendly to anything but an engineering culture that demanded results and held managers personally accountable for their decisions. I once got in trouble with the company’s director of  marketing and communications for suggesting otherwise in a public forum.

“Culture” often reared its head during my tenure at HP — usually as an excuse for ignoring business fundamentals. It was a problem that plagued Joel Birnbaum, my precedessor, Dick Lampman, head of HP labs and others over the years. On those occasions, I was happy to have the words of Bill Hewlett and Dave Packard to fall back on.

I’ll talk about that in my next post.

I know a young woman who attends a very pricey public university that has plans to raise her tuition by another 25% next year.  It’s in one of those western states where the number of applicants far exceeds the number of available freshman openings.  You have to wonder what was going on in the alumni office when they were putting their quarterly newsletter together. It  proudly announced the latest institutional initiative, a million dollar branding campaign.

It would be one thing if it were a campaign to spread awareness of the university’s many great programs among prospective students.  It would even be all right to mount a a campaign to position the university as a driver of economic growth and social well-being for a balky state legislature.  But no, this was a branding campaign along the lines of  management book/landfill fodder classics like Why Johnny can’t Brand.  “It’s even worse,” said the father of the soon-to-be gold-plated sophomore.  His face was red and his hands were shaking as he shoved the alumni newsletter under my nose.

They are going to spend a million dollars — my dollars — on standard logos and common fonts.” No more nightmarish inconsistencies between physics and modern languages when it comes to business cards and PowerPoint presentations. And those press releases from the Athletic Director will now just have to rise or fall on their own merits. They won’t have serifs to hang onto.  Prospective employers will heave a sigh of relief knowing there has been no graphical hanky-panky in the registrar’s office when it comes to the forms on which student transcripts are printed.  Teams of litigators will have new weapons at their disposal as they fan out across the world to chase down the diploma mills that churn out thousands of knock-off degrees. As they cross the commencement stage, new graduates and their parents will be greatly comforted to know that every time their daughter is introduced from that day forward, the university’s branded,  descriptive tag line will have to be tacked onto the end, as in, “Meet Sally Smith who recently graduated from Western State University, the Mighty Blue Raiders, leading the force of change and innovation for the Rocky Mountains and beyond.”

OK, sorry.  I got caught up in the moment, but it struck me that a million dollar project to apply consumer product marketing tools  to a university that is raising tuition by 25%, closing academic departments, shutting down programs, and firing scores of staff was probably going to have some unintended repercussions. Marketing professionals would say it was not the best choice optics-wise. I remember thinking to myself: “This is maybe the dumbest use of university funds that I have ever seen.”

If you’ve seen my other posts (here and here for example) about college costs, you know that, optics-wise,  I am suspicious of any expenditure that does not add value to students. So I started to wonder about other really dumb ways that universities spend money.  I have a top five list.

  • An expensive “branding” campaign to standardize logos is at the top of the list.
  • Letting service units do research: Dormitories, IT facilities, bookstores, technology licensing, and public relations offices, are all service units. The problem is that mission creep results in an ever-expanding number of ever-expanding service units. No doubt inspired by institutional aspirations, they try to hire the best people.  Some of them have PhDs and academic career goals of their own, so they push very hard for a piece of the campus research pie. But, as we all know, university research seldom pays for itself. It is mission creep upon mission creep as service units with no academic mission whatsoever funnel resources into research programs.
  • Overhead forgiveness: Faculty members and research sponsors are equally suspicious of indirect costs on research contracts.  Professors see it as an unnecessary tax on their salaries, and sponsors confuse it with profit.  Both sides push to have it reduced or eliminated.  There are even federal agencies that make it a point to try to have it forgiven as they strong arm investigators into promising more and more for less and less.  Even full cost recovery does not pay the actual cost of research. Reducing or eliminating research overhead is an expense that robs the rest of the university, and is not a smart way to spend money.
  • Centralization: I once had a colleague — a fellow general manager — who effectively blocked any attempt to increase the size of his staff with “Where the f— do you think we are, General Motors?” It translated better back when General Motors was ranked number one in the Fortune 500, but it is nevertheless a good message today that administrative bloat is a dumb way to spend money.  The Spring 2008 issue of the UCLA faculty newsletter shows how bad it has become:

Over the past decade, the numbers of Administrators in the UC almost doubled, while the number of faculty increased by 25%. The sharpest growth took place among Executives and Senior Managers: 114%. Because Administrators command high salaries and benefits, any increase in their number higher than the expected growth rate for the University results in high costs: rough estimates of the costs of carrying extra administrators at UC range around $800M.

  • Entertain yourselves: We call it many things.  Networking. Teas. Receptions. Faculty meetings.  For most of the world, lunch means a five dollar sandwich from the cafeteria. At too many university gatherings, a catered buffet is the lure that induces professors to attend. Whatever we call it, the world sees it as a free lunch, and professors spend university funds to feed themselves at the drop of a hat. Long-time viewers of the NBC comedy series The Office know the drill.  If there’s a reason to entertain ourselves let’s do it:

Jan: You already had a party on May 5th for no reason.
Michael: No reason?! It was the 05 05 05 party…
Jan: And you had a luau….
Michael: …it happens once every billion years.
Jan: And a tsunami relief fundraiser which somehow lost a lot of money.
Michael: Okay, no, that was a FUN raiser. I think I made that very clear in the fliers, fun, F-U-N.
Jan: Okay, well, I don’t understand why anyone would have a tsunami FUN raiser, Michael. I mean, that doesn’t even make sense.

Paring the list down to five was not easy, and I am sure many of you have lists of your own.  What was number six? Well, Rutgers’ decision to pay Nicole “Snooki” Polizzi  (star of MTV reality show Jersey Shore), $10,000 more than the annual cost of attending the university was a real contender. It was $2,000 more than Nobel Prizewinning author Terri Morrison received.  It was a problem.  Optics-wise.


I’ve been spending more time with alumni.  Zvi Galil, the new dean of computing at Georgia Tech — my successor — has been on a national tour to get acquainted with recent graduates. I accompany him whenever I can to make introductions and to generally help smooth his transition.  Not that he needs it.  Zvi was dean of engineering at Columbia for many years and knows how to get alumni to talk honestly about their undergraduate experiences. We were having lunch with a group of recent graduates when I heard Zvi ask someone at the end of the table, “What’s the one thing you wish we had taught you?”

The answer came back immediately: “I wish I had learned how to make an effective PowerPoint™ presentation!”  If the answer had been “more math” or “better writing skills” I would have filed it away in my mental catalog of ways to tweak our degree programs. It’s a constant struggle in a requirement-laden technical curriculum — even one as flexible as our Threads program — to get enough liberal arts, basic science, and business credits into a four year program, so I was prepared to hear that these young engineers wanted to know more about American history, geology, or accounting. After all, I am a former dean.  I had heard it all before.

But PowerPoint? Everything came to a stop.  Zvi said, “PowerPoint!” It was an exclamation, not a question.  Here’s how the rest  of the conversation unfolded” “Look, the first thing I had to do was start making budget presentations. I had no idea how to make a winning argument.”  From the across the table: ” Yeah, we learned how to make technical presentations, but nobody warned us that we’d have to make our point to a boss who didn’t care about the technology.”  “It’s even worse where I work,” said a young woman. “Everybody in the room has a great technology to push.  I needed to know how to say why mine should be the winner.”  And so it went.  This was not a PowerPoint discussion.  We were talking about Big Animal Pictures. If you understand Big Animal Pictures, you understand  how to survive when worlds collide.

David Stockman directed Ronald Reagan’s Office of Management and Budget (OMB) from 1981 to 1985.  He was a technician.  A financial engineer. He had a Harvard MBA, and spent the early part of his career on Wall Street with Solomon Brothers and Blackstone. It was a checkered career, and if you take seriously the accounts in his memoir of the Reagan years, he never really understood that he was caught between colliding worlds. Which brings me to Big Animal Pictures.

Stockman was a conservative deficit hawk who thought his job was to restore fiscal sanity.  Reagan had beaten Jimmy Carter in part by painting the Democrats as financially irresponsible.  David Stockman’s job was to fix that, and that meant budget-cutting.  Defense Secretary Caspar Weinberger thought that Reagan had been elected to restore America’s military might. Weinberger’s job was to pump more money into defense budgets.  Stockman and Weinberger were on a collision course, and for a year they traded line-item edits to the federal budget. This was a technical duel. Stockman and Weinberger both had considerable quantitative skills. It was a bureaucratic game that Weinberger had learned to play when he worked for Reagan in California, but there was a deepening recession. In the end, it appeared that DoD would have to make do with the 5% increase that the White House was proposing. It was a spending increase that Stockman believed was unwise and unaffordable.

Weinberger’s proposal was 10%.  Stockman could barely contain himself. It set up a famous duel in the form of a budget briefing with Reagan playing the role of mediator. It was going to be a titanic debate.

Stockman showed up with charts, graphs and projections.  The stuff that the OMB Director is supposed to have at his fingertips. Weinberger came armed with a cartoon, and walked away with his budget request more or less intact.

Weinberger’s presentation was a drawing of three soldiers. On the left was a small, unarmed, cowering soldier — a victim of years of Democratic starvation. The  bespectacled soldier in the middle — who bore a striking resemblance to Stockman — was a little bigger, but carried only a tiny rifle. This was the army that David Stockman wanted to send to battle. The third solder was a  menacing fighting machine, complete with flak jacket and an M-90 machine gun. It was the soldier that Weinberger wanted to fund with his defense budget.  Weinberger won the budget debate with Big Animal Pictures.

Stockman was appalled:

It was so intellectually disreputable, so demeaning, that I could hardly bring myself to believe that a Harvard educated cabinet officer could have brought this to the President of the United States. Did he think the White House was on Sesame Street?

Stockman and many analysts concluded that the episode revealed something deep about Reagan’s intellectual capacity. Maybe so, but I think it revealed more about Weinberger’s insight into what it takes to carry an argument when the opposing sides can each make a strong technical case for the correctness of their position: argue for the importance of the end result, not for the correctness of how you will achieve it. It is a classical colliding worlds strategy.

Michael Dell’s 1987 private placement memorandum for Dell Computer Corporation was a Big Animal Picture. Buying computers was a hassle when Dell started his dormitory-based business in 1984.  By 1987, PC’s Limited had sold $160M worth of computers based on a simple strategy: eliminate the middle man, get rid of inventories, and give customers a hassle-free way to buy inexpensive, powerful IBM-compatible computers.  In the midst of a stock market crash, Michael Dell managed to raise $21M based on a short document that ignored the conventional view that private placement business plans had to be highly technical:

Dell has sold over $160 million of computers and related equipment on an initial investment of $1,000. The Company has been profitable in each quarter of its existence, and sales have increased in each quarter since the Company’s inception.

Tacked onto the memorandum, almost as an afterthought were letters from customers — inquiries from people who were interested in buying computers from Michael Dell and testimonial from owners of his made-to-order PCs who wanted to buy more of them.  It was short (45 pages with the letters attached) and, aside from a few pro-forma financials to explain what would be done with the new money, it was almost entirely devoted to painting a picture of what success looked like to Michael Dell.

A copy of the original Dell memorandum wound up on my desk in late 1998.  At the time, my Bellcore department heads were struggling to define businesses that could either be spun out of the company or funded as internal startups. I was drowning in  highly technical market forecasts and details of patent disclosures. Each new spreadsheet screamed: “Idiot! Just look at this equation.  It’s obvious why our approach is better than everyone else’s.”  One afternoon, in exasperation,  I threw Michael Dell’s private placement memorandum on my conference table and said “Make me a presentation that looks like this.” The room got very quiet as they realized what was going on.  I was asking for Big Animal Pictures.

We started four businesses within 18 months.  Three were spun out  and made a modest amount of money for the company and the founders.  We ran one as an internal start-up. It did not do nearly so well. One of the key factors was that we could not duplicate Michael Dell’s Big Animal Picture.

This is not a lesson that engineers and scientists learn easily. In fact, when presented with overwhelming evidence that business decisions are seldom made on the basis of technical elegance and correctness, engineers retreat to the safer ground staked out by David Stockman: “Do you think we are on Sesame Street?” The answer is “Yes!”  Successful engineers and scientists know all about Big Animal Pictures.

Paul R.  Halmos was one of the great mathematicians of the 20th century. He studied the most abstract topics imaginable. One of his crowning achievements, for example, was to create an entire algebraic theory to describe mathematical logic, which was itself an abstract mathematical theory to explain symbolic logic. Symbolic logic was, in turn, an abstract explanation of the kind logic used by Aristotle, and Aristotle’s logic was the formalization of correct patterns of human  inference. Halmos did not deal in uncomplicated matters.

How did Paul Halmos counsel young mathematicians to present their work in public?

A public lecture should be simple and elementary; it should not be complicated and technical. If you believe you can act on this injunction (“Be Simple”) you can stop reading here, the rest of what I have to say is, in comparison, just a matter of minor detail.

The mistake, Paul Halmos noted in his essay How to talk Mathematics is thinking that a simple lecture talks down to the audience. It does not. Halmos (or PRH as he sometimes called himself) seems to have understood worlds in collision.   Of course, a simple lecture in PRH world might open with the phrase “…as far at Betti numbers go, it is just like what happens when you multiply polynomials,” so it’s a sliding scale.

No matter what you’re doing in the technical world, learning how Big Animal Pictures work is a valuable thing.  I sometimes sit on review panels to decide on research funding.  I recently advised a young scientist to use Big Animal Pictures.  She had five minutes to present her work and I knew that the competition would be strong.  Her first instinct was to jump into the technical meat of her research to give the reviewers a feeling for why her approach was better than other approaches. My advice was to not do that.  I wanted her to literally give a BAP presentation that would inform the panel about the importance of her research and why they should care about it.  I later found out that other colleagues had given her identical advice, which she apparently followed with great success.

And it doesn’t matter which of the colliding worlds you are on.  BAPs are always a good idea. My colleague Wenke Lee was recently called upon to give a presentation on the state of computer security research to a  group of mathematicians.  It was all about how powerful mathematics can be used to exploit security flaws and vulnerabilities. Wenke resisted the temptation to dive into the technical details of botnet attacks.  It is, after all, a subject he knows well and he probably would have had fun demonstrating his prowess. But here is how Wenke began his lecture.

He went on for another twenty minutes, but he really didn’t need to. Everyone got the point in the first thirty seconds.

The technical presentations were over and a distinguished panel of inventors had given the audience some take-away messages, when Bob Lucky began his trademarked summary of the 2010 Marconi Prize ceremony. There were already empty seats as some of  the locals started heading for the SRI visitors lot when I was roused from a cookie-induced, end-of-conference stupor.  I had heard someone up front call my name.

Bob announced to everyone who was left in the room, “Rich DeMillo is writing a book on the subject.  Rich, how do you know when innovation has occurred?” There’s a mental “passive-to-active” switch that needs to be tripped in situations like this, so it took me a second or so to respond.  In the meanwhile, I said something witty to fill in the time.  “Thanks a lot, Bob,” as I recall. But it was obvious what the answer should be.

Every speaker had said it, and most of them were Marconi Prize recipients themselves.  I have said it many times here: invention without  impact doesn’t count as innovation. And this was a conference devoted to impact on telecommunications.
  • John Cioffi had described the insight that  inserting modems on both ends of a normal telephone lines allowed you to bypass switches and get direct access to the Internet. It was the key innovation in the development of  DSL .
  • In addition to telling the story of how he and  Whit Diffie invented public key cryptography, Marty Hellman talked about the “Who am I to do this?” moments of self-doubt that all inventors experience.
  • Federico Faggin made it pretty clear that the real invention in creating the first integrated circuit (the Fairchild 3708) with self-aligning silicon gates was not having the idea, but actually making it work.
  • Adobe Systems co-founder John Warnock–who shared the Marconi prize with Charles Geschke, the other Adobe founder–said that it often boils down to one person: “Apple without Jobs cannot innovate,” he said.

It had also been a day of sharing stories about Guglielmo Marconi. According to Warnock, Marconi could not stand John Ambrose Fleming, the inventor of the vacuum tube diode, whom Marconi had hired to design Marconi Company’s power plant.  In fact, Marconi was trying to  figure out a way to fire Fleming.  Marconi’s grandson, journalist Michael Braga, was there as well,  so there were also intimate and sometimes surprising family stories.

But everyone had said that you can tell when innovation has happened by its effect on people. In the world of industrial innovation, the impact that matters is economic, so I shot back to Lucky, “Wealth creation!” It was something I believed in deeply and I knew Bob felt the same way. I had worked directly for him at Bellcore.  In Bellcore’s research labs just publishing another journal paper didn’t count for much: everyone was held accountable for translating their ideas into inventions that would matter to the company, its customers, or their customers.

Lucky has a way of nodding when he is processing information, but it’s not necessarily because he is agreeing with you.  Sometimes it takes a little while to find out what his verdict really is. After few seconds of nodding he repeated: “wealth creation.”  I had given the right answer. I really had not intended that to be the closing line of the meeting, but it was. It was true, but it wasn’t the most creative insight of the day. Almost immediately, I thought of a much better answer to Bob’s question, but it was too late.  The SRI auditorium was emptying out.  The moment had passed.

Here’s what I really should have said:

You’ll  know that you have innovated when there are LIARS!

It was a term that John Cioffi had thrown into the discussion at the start of the day.  A L.I.A.R. is a Large Institutional Autocratic Resister.  John had said that you knew when an innovation was real when LIARs said it was their idea. Faggin had said that bringing something important into the world generates resistance.  You have to plan for it in advance. Hellman had talked about the wisdom of foolishness.

Fiber optics pioneer and winner of the 2008 prize, David Payne, said two things that were especially insightful.

  • If you innovate, someone will make a lot of money and someone will lose a lot of money
  • Innovation thrives on being different.  A manager wants efficiency and conformity

In fact, everyone had talked about the biggest impediment to innovation: large established organizations.  John Warnock and his colleagues at Xerox PARC had been charged with creating the office of the future.  They succeeded beyond anyone’s wildest dreams.  PARC created color displays, mice, networks, word processors and email. But Xerox was obsessed with the quality of the printed page, so LIARs dug in their heels. They would not adopt PostScript until all Xerox printers could use it, for example.  In other words, it was never going to be adopted.

LIARs are everywhere.  It’s even worse in academia. A couple of years ago, I was an ed-tech panelist at a large trade show when a vendor of software for higher education told me that in his industry university faculty members are called CAVEmen: “Colleagues Against Virtually Everything.” I wasn’t quite sure how to take that.

Pat Crecine died a few years ago. He was the innovative Georgia Tech president who was instrumental in bringing the 1996 Olympic Games to Atlanta. Crecine recognized the future impact of computing on science, engineering, and technology and created the College of Computing where I was employed as dean from 2002 to 2009. When it was created in 1990 it was only the second such school in the world.

Crecine reshaped Georgia Tech and the LIARS had to lay low while he did it.  He was just too effective at changing large institutions. But it caught up with him. He was unceremoniously booted out a few years later.  It was a devastating personal blow to Crecine, and I don’t think he ever really recovered. At his memorial, former Atlanta Mayor and U.N. Ambassador Andrew Young said of Pat: “He was always right, and he always got everyone mad.”

A few weeks ago, I reminded Andrew Young of this remark, and he said that it was a role that Martin Luther King had given him.  He was supposed to be the irritant that kept them focused on a change agenda.

He said also that it was Jimmy Carter’s concept that political innovation is the result of three ten-day cycles.  First, everyone who is going to have to give something up, gets their forces aligned to kill a new idea, predicting that it would mean the end of civilization as we know it.  That lasts about ten days.

For the next ten days they grudgingly disect the plan, acknowledging that parts of it  actually make things better but that overall it will be a disaster.

The final ten days is spent taking as much credit as posssible for the plan, with a special effort to make it clear that the original idea was something completely different and remains truly awful.

I had drinks in Menlo Park  with Chuck House a few days before Thanksgiving, and we eventually got around to trading stories about Hewlett-Packard innovators we had known and worked with. Chuck is working on a case study of an intense, disruptive,  strategic refocusing of the company that occurred when it was about one tenth its current size.  I said I didn’t think it would be possible today, that there is very likely a law that limits innovation of that kind.

I brought up the idea of  LIARs and he started laughing immediately. Stamping out LIARs was one of the reason Dave Packard and Bill Hewlett tried to keep business units small: the biggest impediment to innovation is large established organizations.

I recently heard from Chuck House, co-author with Ray Price of The HP Phenomenon (THPP) about my post The dy Logo.  I had used Chuck’s book as a jumping-off point for a discussion of how difficult it can be to integrate “outsider” cultures, even when the outside ideas have obvious value —  like correctly orienting the logo on a consumer product. It was a riff on WWC that I enjoyed writing.

Chuck’s note was a wonderful read in itself.  He took good-natured issue with some of my characterizations, reinforced other points that we agreed on, and reminded me of a few things that I should have remembered (and were in his book).  I don’t have Chuck’s permission to publish his email in its entirety, so I won’t.  Nevertheless I wanted to share with you a couple of his observations.

First of all, Chuck pointed out that the “dy” logo was actually used at HP in the 1950’s.  From page 64 of THPP:

A spin-out corporation…Dynac allowed a number of HP employees a higher equity stake in their success while giving HP a chance to invest in areas adjacent to its main activities. Dynac’s logo was the HP logo inverted. Later, when it was found that the Dynac name was trademarked, it was renamed Dymec, keeping the same logo.

There are many wonderful things about this story, but I was most fascinated that — even in the 1950’s — corporate leadership would have invented such a thoroughly modern approach to identifying and seeding market adjacencies. Some things were lost over the next couple of decades.  At least, there is no indication that Steve Wozniak’s management was inclined to create a spin-out to  give “HP a chance to invest in areas adjacent to its main activities.”  In any event, most of the HP engineers who argued for keeping the “dy” logo were not even born when Dynac used it, so it is unlikely that their resistance to flipping the shield was a nostalgic bow to a prior golden age.

Chuck went out of his way to reaffirm the comments in his book about Carly Fiorina’s positive  impact on HP.  Despite the obvious oustider-insider clashes, he says that, ” I don’t buy that Carly introduced WWC to HP, or even that she was all that good at it herself…,” but he does think that “…she was the best CEO we’d ever had in a WWC regard by quite a long ways (except Hewlett when he would actually do it…).

To temper my comments about the narrowness of  THPP’s sources, House described for me the considerable pain and expense that he and Price endured in preparing the research.  Ninety percent of the people interviewed about events in the last fifteen years were what Chuck calls “current participants.” It’s hard to characterize that as the reminiscences of old colleagues. Point taken.

It was interesting to me that Carly opened the HP archives to House and Price.  That access was eventually revoked.  In fact, by 2001, access to the archives had become a sensitive issue with Carly, and she asked me to undertake a review of both the libraries and the archive.  I was not very excited about doing it, and other events quickly had a higher priority.

For Chuck’s unvarnished “side-by-side” view of recent HP CEOs — along with a pretty striking analysis of value given versus value received — I will simply point you to his recent blog on the topic.

San Jose Mercury News (CA)

December 23, 2001
Section: Business
Edition: Morning Final
Page: 1F

VC LEGEND LEADS CHARGE FOR HP-COMPAQ
WITH TIES TO BOTH COMPANIES, PERKINS HAS UNIQUE PERSPECTIVE
MATT MARSHALL, Mercury News

Thirty-six stories above the placid blue waters framing Alcatraz Island and the Golden Gate Bridge, Thomas Perkins fidgets in his chair. If conversation lulls, his thumbs twiddle impatiently. He is a man driven by ambition. Perkins, 69, has turned his Silicon Valley venture capital firm, Kleiner Perkins Caufield & Byers, into the most successful VC firm in the world. Kleiner Perkins has returned around $20 billion to investors over its 30-year history. But Perkins‘ impatience comes from his latest, unexpected challenge: the bitter battle over the proposed merger of Compaq Computer with Hewlett-Packard. As a board member of Compaq — and former executive at HP, the Palo Alto computer firm where he cut his teeth more than four decades ago — he has become one of the most outspoken backers of the merger. But some HP heirs — sons and daughters of founders William Hewlett and David Packard — have signaled their intent to vote down the deal, saying a merger doesn’t make economic sense. They also say the layoffs likely in a merger threaten to ruin HP‘s vaunted tradition, the so-called HP Way, which they say emphasizes company loyalty…

…A merger will create a mammoth company that can take on giant IBM — and beat it. HP and Compaq, he explains, have better ties with Microsoft and Intel — two other key protagonists in the computer industry drama. Together, he says, the foursome create an industry standard that can easily outdo IBM. ”Microsoft will be the software department, Intel will be the hardware department, and HPCompaq will be the marketing-customer delivery department,” he says. ”Wouldn’t you go for it?” In part, Perkins is fighting for Compaq. But he also is fighting for his right to interpret the legacy that Packard and Hewlett left for Silicon Valley..

I remember opening the paper a couple of days before Christmas, 2001 and feeling like I had just been kicked in the stomach.  It was not the best time to be an officer of HP. Bill Hewlett’s son and HP board member, Walter, had come out swinging against the HP-Compaq merger, and Carly Fiorina, my boss, was under incredible pressure to sell the deal despite howls from the local press, the Hewlett and Packard families, an active message board for HP employees, and now a fractious board of directors. And there it was in black and white in the morning paper:   Tom Perkins, a Compaq board member and a driving force behind the merger had a plan to turn HP — the company whose logo said “invent” — into the marketing department for Intel and Microsoft.  I had to think hard about how I was going to face my own Technology Council and reassure HP’s 12,000 engineers that — despite what Perkins said in the  interview —  the company was not backing away from its commitment to innovation.

Earlier in the month, Carly had invited us to her house for a very low-key holiday celebration — much more subdued and informal than the elegant holidays parties that were the custom when the company was doing better.  Carly had paid for much of it out of her own pocket.  It  turned out to be a  tense and not not very festive evening.  Carly was running on a few hours of sleep, and the rest of us were trying to tie down the ship’s rigging in the middle of a storm. There was an air of uncertainty. We sat around smaller tables with our spouses as dinner was served.  Carly and her husband Frank were at an adjacent table.   As much to break the tension as anything, the discussion at our table turned into a silly  guessing game over which actors would be cast to play which of us when the HP-Compaq Merger Movie was made (West Wing star Allison Janney was the consensus choice to play Carly).   We must have been loud, because I could see Carly stiffen.  Carly didn’t know who on her own staff she could trust, and it must have sounded like we were tossing off the seriously difficult times that would be coming for HP and its employees.  We weren’t.

I spent virtually all of my time that winter keeping our major technology initiatives on track, promoting strategic product directions with customers, and talking to our engineering teams around the world.  The outcome of the proxy fight was uncertain and there would have been antitrust repercussions if HP and Compaq had gotten too cozy, so Webb McKinney, who was in charge of HP’s side of the integration team and the clean room that allowed the companies to begin planning merger details without violating antitrust laws, kept most of us with day-to-day management  responsibilities in the dark about post-merger plans for technology and products.

Once shareholders approved — by a hair’s breadth — the merger, Perkins was named to the board of the new HP.  Compaq’s  Shane Robison was named to a new position that combined my old CTO role and a Chief Strategy Officer position that had not existed before. I was still concerned about the Perkins comments from his December interview.  My first encounters with the Compaq technologists were not encouraging. I got into a shouting match with one of Robison’s staff members about how much HP should be investing in security for its products.  This was less than a year after the 9/11 attacks, and I had been working closely with CTO’s of other Silicon Valley companies and federal agencies to forge a comprehensive strategy for information and communications security.  The official Compaq position was that this was a problem for Microsoft, not HP, and I was told to keep quiet about it.

Imagine my surprise when Perkins and Robison led an effort to form a Technology Committee for the HP board to oversee and track R&D the same way that Audit, Governance, and Compensation Committees oversee financial  and operational matters.  I didn’t always agree with the direction it took, but it seemed to breathe new life into a technology governance process that had been stalled for many months.  Prior to that, HP — like most companies — did not place much visible  faith in its board to integrate technology into corporate governance.   There were a few public boards that had technology committees. They had been prominently featured in the  magazines for directors that wrote about best board practices, but those articles were disappointing:  most existing technology committees were for  informal oversight of technology spending by CIO’s.  What Perkins was  proposing was something different — and so at odds with his public statements about the value of a merged HP and Compaq that it took me a little while to catch on.   The HP Technology Committee would not only monitor  technology developments, it would help educate the board about new trends and directions that would impact board-level decisions and provide informed advice on the technology implications of financial and personnel decisions, including how to maintain a workforce advantage.

A committee like this would have been helpful years before, because HP had a history of plunging into technology investments and acquisitions that, to most technology observers, made little sense.  HP’s  decision in 2000  to purchase a middleware/software company called Bluestone was one such decision.  A distant fourth in a crowded and fragmented marketplace, the idea behind the Bluestone acquisition was based on a faulty reading of HP’s current capabilities in the space, the ability of any small entrant to alter the dynamics of the marketplace and the needs of HP-UX customers who felt themselves always last to the trough when third-party software developers released new products.  After two years of chaos and the dismantling of HP’s web services organizations, Bluestone was dumped at a $400 million  loss.

HP’s decision to sell its considerable VLSI design assets to Intel was also  made for financial reasons, although it was widely known in HP’s technology community  that the success of its 32 and  64 bit  processors, including  Itanium,  depended on custom chipsets that HP had invested  in for many years.  The original architects of Itanium were on my staff,  and it was hard to peel them off the ceiling when the announcement was made, especially since they had virtually no voice in the decision-making process.

Officers were invited to sit in on the  entire HP  board meeting, except for the closing executive sessions.  Even so,  it took me awhile to realize how rare technology discussions actually were. After a particularly fiery Industry Analysts’ Meeting, during which I made a slash-and-burn  presentation on our competitive advantages over Sun Microsystems —  that made the analysts smile but our marketing folks queasy — Carly asked me to reprise the talk for the board.  Patty Dunn (who would later take over as Chairman  in a controversial  tenure after Carly’s dismissal in 2005) and others approached me to say how much they appreciated the competitive information and the willingness to be combative in defense of HP product strategy.  They claimed, incredibly, that it was the first time they had heard this kind of presentation.

The Perkins proposal would have given the board a lens to look at issues like these — necessary in  a company where financial forecasts are only as good as the underlying technology.  HP was not only one  moving in this direction.  Motorola and other technology companies  had — at about the same time — formed Perkins-style Technology Committees.  Ram Charan’s book  Boards That Deliver helps explain why technology companies need to take the Technology Committee seriously, more importantly, how they can help  a board move beyond the role of compliance to a deeper assessment of health and prospects:

Financial health, operating performance and risk each require separate attention.  A company can show good operating performance while financial health…is in decline. Dot-com companies, for example, were notorious for delighting their customers with fantastic (or fantasy) products and services while bleeding cash.  Similarly financial health can appear to be sound when in fact the guts of the business have been severely compromised.  Any risk can be underestimated, especially when it is assessed piecemeal, rather than in totality.

The reason that the Technology Committee is a good idea for  public technology companies is that the worlds of innovation and execution are going to collide, and a board cannot deliver value by simply checking off a box on a governance worksheet.   What do you know, for example, about the real performance of key technology executives  without a deep insight into how they would be evaluated by their peers  and competitors?  How do you know that an acquisition based on a couple of good financial quarters and self-congratulatory product  press releases has no market advantage over an in-house solution?   That’s not the kind of question that due diligence is going to ask. After I left the company, I watched the downsizing of research and heard often from former friends and colleagues who thought one decision or another was wrong-headed, and I often  wondered about how effectiveness the committee actually was.  And then I would see something preserved that made no short-term financial sense, although everyone knew how important the technology would be some day.

When I joined the board of RSA Security, I was definite about my plans.  “Look,” I told CEO Art Coviello, “RSA’s performance is a three-legged stool, and the board needs to be as informed about the technology and markets as it is about finance and operations.” Ram Charan would have said the three legs are Finance, Operating Performance and Risk. I said the risks are Technology, Markets and Organization. Both Art and Chairman Jim Simms were on board, but it was not an easy proposition to sell to the rest of  RSA’s board, although I did.  The RSA Technology Committee had a big impact on board dynamics and ultimately on the long-term health of the company.  It is one of the WWC success stories that I will tell in more detail in a later post.

I can’t think of any reason that the board of directors of  a public company — especially a technology company — needs seven CFO’s, but that is the profile of far too many companies.  Even  on boards where the majority of the non-management directors are CEO’s, financial expertise overwhelms all other skills, and it is not healthy.  It’s hard to find a technology company that has failed in recent years where the  roots of failure were not widely known on that other planet outside the boardroom.  I emphasize public companies only because they are great targets.  Later stage privately held companies would also be wise to pay attention to board dynamics and find some way get a handle on the company’s technology.

Once I got over the stomach ache that Tom Perkins gave me, I realized why technology had a seat at the table of his boards.   Kleiner-Perkins got to be the world’s greatest venture capital firm by delving deeply into the  technology implications of business decisions.  Engineers have the impression that board rooms are filled with accountants who know very little about the details of the  business but are not shy when it comes to talking about it.  Enter the Technology Committee.

I always liked the scene in Annie Hall where Alvy Singer, the Woody Allen character,   is getting more and more annoyed by a guy standing behind him in a movie theater line who is carrying on about Marshall McCluhan, trying to impress his date:

Man in Theatre Line: It just so happens I teach a class at Columbia called “TV, Media and Culture.” So I think my insights into Mr. McLuhan, well, have a great deal of validity!
Alvy Singer: Oh, do ya? Well, that’s funny, because I happen to have Mr. McLuhan right here, so, so, yeah, just let me… [pulls McLuhan out from behind a nearby poster]… Come over here for a second… tell him!
Marshall McLuhan: I heard what you were saying! You know nothing of my work!…How you got to teach a course in anything is totally amazing!
Alvy Singer: Boy, if life were only like this!