In fact, the division had already set up groups to explore other potential markets, including robotics, military systems, and general automation. But, "although they understood what the board was saying about the increasing risks, there they were with the highest backlog in their history, and business was still strong," says Jack Walnes, chairman of the Industrial Drives board and Griggs's predecessor as division president. "So the feeling of urgency wasn't the same between the board and the division."
Then, in the second quarter of 1982, the national economic recession caught up with the machine-tool industry. The division's bookings dropped by 40%. Business continued to decline throughout the year until, finally, Industrial Drives reported a loss during the first quarter of 1983. The board helped as best it could, and Walnes himself talked with Griggs continually But, through it all, Griggs was left to make his own decisions.
"If the best genius in the world had been running his business, I don't think it would've been anything different," Swiggett says. "Everybody in this office talked about Industrial Drives and looked at every single option 52 ways, and nobody could second-guess Skip on a better way of handling it. I don't think there was a thing wrong with our system; I think it was fabulous."
Griggs and his team successfully introduced some 20 new products during the remainder of 1983. By year end, machine tools accounted for only 40% of the division's total business, compared with 80% in 1982. In 1984, Griggs expects bookings to increase more than 20%, shipments to grow more than 40%, and earnings to almost double. "I think the merits of our approach show up in the way the division has come back so quickly and so strongly from that trauma," Doyle says. "It never could've happened if the order to do something had been given from the corporate office."
In addition to the divisional boards of directors, Swiggett and friends also designed a forum, similar in spirit, to review each division's actual operating results and projections. Now, once a month, every profit-center team gives its division president a financial statement detailing its operating results for the past several quarters and projecting results 12 months out. These are then sent to corporate headquarters for consolidation, along with a statement from the division president reflecting the operating results of the division as a whole.
In this manner, more than 50 statements are submitted each month. When all are in, the corporate officers spend the next day around a conference table reviewing each one of them by telephone with the division presidents and project managers. Says Allan Doyle, "The real strength of our system is that, in times of adversity, there is no pressure within the system not to communicate what the division president or product manager sees in his markets. The only way people get into trouble really is by surprising other people. They don't get into trouble by saying, 'Hey look, we've got a problem here.' And here it comes out very early in the process."
Swiggett adds, "The boards and the statement meetings are both ways of growing the business without enlarging the corporate staff very much." This is a remarkable understatement, given that the entire company is "run" by only 11 corporate officers, 2 of whom are senior scientists.
Kollmorgen is sometimes described structurally as a holding company supervising a portfolio of small technology companies, but Doyle contends that this description ignores a crucial difference. "In portfolio-management theory," he says, "individual companies are viewed largely as temporary elements in the portfolio, to be traded much like stocks. Here, every division is regarded as an integral part of Kollmorgen's future, to be nourished accordingly." This sustaining commitment to businesses and people finds its highest expression in what Swiggett calls the Kollmorgen "culture."
At some final and irreducible level, culture appears to rest on an act of faith in which individuals experience the company's vision in very personal terms. They are not "sold" on the vision; they commit themselves to it voluntarily because they perceive it as essential in shaping the meaning and significance of their own lives. Culture, then, is created employees give life to the values of their shared belief. Management cannot control, nor even ensure, the moment of its flowering, but it can prepare the soil.
Swiggett himself goes to extraordinary lengths to foster the Kollmorgen culture. Twelve times a year, he leads so-called Kolture Workshops, designed to "keep the fires burning and spread them broadly." These workshops are either one or three days long and include from 35 to 100 people. At the three-day session, Swiggett reviews the history of Kollmorgen and, using a relaxed, Socratic method, examines the philosophical issues that inform the company's culture. "Do you think this philosophy can work in a corporation?" he asks. "Do you think it can work at Kollmorgen? Is it working now? How can we improve it?"
The participants are unusually well-equipped to address these questions. In each spent about 40 hours reading from McGregor's The Human Side of Encerprise; Alexis de Tocqueville's Democracy in America; Martin Luther King Jr.'s "Letter from the Birmingham Jail"; Machiavelli's The Prince; and numerous articles on leadership, innovation, and economics.
Through the Kolture Workshops, the company articulates its vision, over and over and over. At the least, the process bears witness to the potential of that vision; at best, it becomes part of a self-fulfilling prophecy. "Actually, it's very simple," Swiggett says. "We preach trust and the Golden Rule, and we're very careful that what we do is the same thing as what we say.
Accordingly, there are no time clocks at Kollmorgen, no policy or operations manuals, no information monopolies, no cafeterias closed during breaks. All such things are signals" that belie lofty rhetoric, and employees read them unerringly. "Once we had a rule book," Skip Griggs says, "that said you get three days off if your mommy or daddy dies, but if your neighbor, whom you've known for 35 years, dies, you get no time off. We threw it out."
