Swiggett traces the origins of his faith back to a day in 1967 when he stood on the edge of the production floor and watched some of his company's 500 employees moving through the complex patterns of their individual enterprise. The company's name was Photocircuits Corp. -- it later merged with Kollmorgen -- and it was a model of traditional, rational management. Indeed, there were more than 1,000 open orders out there on the floor, each one with a different set of manufacturing requirements, often 50 process steps long, and each one passing through 10 or 15 different departments. "It was a classic case of confusion," Swiggett recalls. "Later, when we began to analyze what it took to get an order through the shop, [we realized] we were lucky ever to ship anything."
That landscape, which for so long had seemed to Swiggett the natural and fruitful condition of a traditional, centrally controlled, functionally structured organization, had turned hostile and threatening. Something was missing out there, some unifying first principle, some elemental sense of design, and its absence was confounding the company's future.
Photocircuits's primary business was the manufacture of printed circuit boards. The company had, in fact, pioneered the field, which in turn had revolutionized electronics-assembly technology. Before the advent of printed circuits, each of the myriad capacitor and resistor joints on a terminal board had to be soldered by hand. The printed circuit board allowed mass soldering and automatic assembly of electronic components, and later fertilized numerous other technologies.
The company's first big breakthrough came in the mid-1950s, when it obtained an agreement to make half of the printed circuit boards for computers being used in a new continental air defense system. According to Jim Swiggett, Bob's brother, who joined the company in 1953, the deal"contributed about $1 million a year until [the program] petered out in 1967." These were significantly larger revenues and responsibilities for a company that had, until then, been operating out of a garage, a cellar, and a basement beneath a bar.
"We had a minimum of management skills," Jim recalls. "It was definitely the dark ages all the way. I mean, you had to take your used pencil to the accounting department to get a new one. It was just a bunch of guys trying to get something done." Deciding that it was time to acquire the accoutrements of a real business, Jim Swiggett hired a consultant, who helped him rough-in the framework of a traditional, centrally controlled function-managed corporation.
As the business grew, so did the new management structure, but in time the company found itself resorting more and more frequently to distinctly nontraditional operating tactics. The impetus came from new, smaller printed circuit companies, which frequently won business at Photocircuits's expense because they could respond more quickly to the customer's needs. In order to meet this challenge, Photocircuits would often organize a small, dedicated task force to solve particularly urgent problems. Invariably, this task force, which operated without cost systems or formal scheduling and with utter disregard for the precepts of modern management theory, bulled its way to a solution. The idea proved so successful that it was institutionalized in 1960 when the company established a so-called Proto department.
Although the Proto department was originally set up to make prototypes of new production business, it soon became a small-quantity, quick-turnaround business in its own right, with its own list of customers. There were only 35 people in the department, but they could turn around an order for a new type of printed circuit board in I to 3 weeks, as opposed to the 6 to 10 weeks normally required. What's more, the Proto department was the most profitable part of the company. "The Proto guys had one game," Bob Swiggett says, "and that was to satisfy the customer. The other people in production were playing departmental games, like who has the best score for efficiency in their department. To them the customer was only a job number."
It is one of those ironies of history that Swiggett, even with the evidence right in front of him, couldn't see in the Proto department the very substance of what Skip Griggs would later read in the Kollmorgen Philosophy. It was all there: the importance of small groups of individuals acting autonomously, the profitability, the customer satisfaction, the innovation and growth. But to Swiggett, the Proto department was somehow tangential to the company's main operations, a arenegade of sorts meant to have little impact on the status quo. Besides, he was totally preoccupied with building the business in a more traditional manner.
From 1957 to 1967, Photocircuits nourished an intense effort to diversify the business and overwhelm the competition. "We couldn't deal with competition," Swiggett says. "We wanted to have something the other guys didn't have." Routinely spending 10% of sales on research and development, the company accelerated its chemical-engineering research and established a product-development operation. By 1967, it had come up with a number of new technologies that promised substantial additions to the company's $10-million sales base.
Perhaps it was this flurry of activity that obscured the subterranean rumblings of approaching disaster. In any case, when Swiggett finally heard them on that day in 1967, it was nearly too late. Somehow Photocircuits had trapped itself in a paradox of self-defeating success. "Rarely did we meet promised deliveries," Swiggett recalls. "Quality problems were enormous; profit performance was erratic; morale was poor. Production managers burned out quickly. Functional departments fought with one another. Only the rapid growth of the market and the even more disorganized condition of our large competitors sustained us."
