To Bob and many of his colleagues, especially those who had worked on System 70, Jim's intuitive leap to team manufacturing was actually a stunning setback. "To give up modern management technology for something simpler," Bob says, "to throw that out meant to all of us at that time that we were giving up on another pioneering effort, and we didn't want to ever give up." But within six months, Photocircuits doubled its output per employee, and its on-time delivery rate rose from 60% to more than 90%. "In the middle of a depression," Bob says, "what could've been a disaster turned into a real good money-maker. So we really had it burned into our souls that small teams can lie terribly effective."
Bob Swiggett had found his faith at last. It had taken 20 years, and it hadn't come easily, not bathed in light during a moment of contemplative tranquility, but grudgingly, with grunts, groans, and confusion. "I don't want it to appear that I did anything fancy," he says, "that one day I just dreamed all this stuff up out of thin air. It came from desperate experimentation, and I've always had a lot of help. We tried a few things first because we had to, then we found something we liked and kept at it because it worked. Later, we read the books and found out there were good reasons why it worked."
As soon as the decision was made, Jim Swiggett went to work on what Bob describes as "a chaos of empire shattering." Using the Proto department as a model, Jim and his wrecking crew first broke up the company into some half dozen teams, each with an average of 75 people, and differentiated them by product line, market segment, or customer group. A manager was chosen to lead each team and was given responsibility for the team's profits, losses, and balance sheet. Then they threw out the standard cost system and eliminated most functional manufacturing and overhead departments, including customer service, order processing, production control, and quality control, all of which were turned over to the teams. Every manager was expected to deal directly with customers or field salespeople, set prices, bargain with other product managers for machine time and overhead allocation, and take monthly physical inventories in person.
"In spite of the yelling, almost magically everything improved," Bob Swiggett once said in a speech. "Customers were happier, pricing was better, profits rose, inventories turned faster, troublesome book-to-physical-inventory variance surprises disappeared. Morale rose with the evidence of success."
Today, this grand process is known throughout the company by the unfortunate term "productization." It is regarded as a powerful, but generally neglected, elixir that can make sick companies well and dullards into champions of innovation and growth.
The discovery of productization's curative powers occurred none too soon: Shortly after the Photocircuits merger and resurrection, Kollmorgen itself took sick. In 1971, the company recorded an operating loss, as its eight divisions went about reenacting the confusion Swiggett had observed once before from the edge of the production floor at Photocircuits. These problems were exacerbated by conflicting management styles among the three men who occupied the "president's office." "Dick Rachals was an intellectual," says Swiggett, "a solid engineer, not a great people-motivator, but very logical; Norman Macbeth, the flamboyant sales deal maker; and John Maxwell, a quiet man with a great sense of justice and order. I loved them all, but they really didn't get along so well, and they were all so polite that they really didn't work their problems out." The three group vice-presidents, of which Swiggett was one, were also squabbling over style. He himself stood for "team manufacturing, openness, small profit-centers, and bonus-sharing," while the others fought for "strong line control and no communication other than by the chain of command. [Their attitude was,] don't come to see my divisions unless I'm there."
"We had more guys in management then than we do now, and we were only doing $40 million in business," says Allan Doyle, Kollmorgen's vice-chairman and chief financial officer. "It all had to get sorted out."
"The time had come," Swiggett adds, "for Kollmorgen to achieve some type of corporate consciousness. We had to answer basic questions like, What do we want to do?, What do we want to become? and How do we relate to the divisions?"
In late spring of 1972, all of Kollmorgen's corporate officers convened for a weekend of deliberation at The Old Tavern, in Grafton, Vt. The discussions were, to say the least, vigorous. After the Saturday dinner meeting, Bob Swiggett was fired in a fit of pique for disloyalty. "I simply said that I felt Dick, Norman, and John weren't clear on what they were trying to do," he says, "that they were thrashing around and were frequently counterproductive." Later that day, Swiggett was rehired when the principals reviewed his presumed transgression and found it more an expression of vital concern than disloyalty. He was invited to try his luck with Kollmorgen's difficulties, a move soon seen by the two other group vice-presidents as adequate grounds for their resignations. "By 1973," Swiggett says, "we had a clean slate. I'd read the literature, and I was telling a pretty good story. It fit together theoretically and pragmatically because it worked."
Swiggett was no longer a neophyte; he was by now a seasoned practitioner, as well as a serious student of a new, essentially self-taught management art. He set about reorganizing Kollmorgen's eight divisions as if each were a small Photocircuits in need of productization. Henceforth, they would stand free, with no centralized manufacturing and overhead departments to rely on. Every division, he said, must be an "autonomous profit-center," and he meant "autonomous" in the sense of being strong enough to go public. Next, Swiggett pushed the same responsibility as far down into the divisions as he could by creating small profit-center teams arranged by product, process, market, customer, contract, or whatever logical method presented itself.
