Conversation with John T. Connor

e

0wersutio)z

...with John

T.

standing

Connor

is a member

of what

is customarily

as the Establishment, with undeserved exclusivity, but curately thought

and

less

in eminent

and Company,

the last 10 as president

chief executive

officer; two years as Lyndon

and

to

its overtones which more

of ac-

Johnson’s Secretary of Commerce; and most recently (from 1967 to the present) with Al-

should

be

meritocracy.

Of

lied Chemical, where he has served since 1969 as chairman of the board and chief executive officer.

middle-class origins-educated first at Syracuse and then the Harvard Law SchoolConnor spent three years with a top Wall Street law firm (Cravath, De Gersdorff, Swaine and Wood); two years as general counsel, O&e of Scientific Research and Development (OSRD) ; three years as an officer in the U.S. Marine Corps during World War II; a year as special assistant to the Secretary of the Navy;

CONNOR

referred

pejoratively

of as an American

JOHN T

18 years (194765)

with Merck

He is also a director both of the General Motors Corporation and the Chase Manhattan Corporation, vice-chairman of The Conference Board, and founder of the Martin Luther King, Jr. Scholarship Fund at Harvard Law School. We could go on with more accomplishments, awards, and honorary degrees, but we have said enough about John Connor’s credentials to mark him as a key

33

member When

of the Establishment-eastern we think

members

of some

over

(whom

Connor

ment),

Henry

the

Stimson,

John J. McCloy,

Lovett,

Rockefeller, a mark

What

have

concern

business-government nificant identifying them

have moved

of the eastern Certainly

for public service and for relations are more sigcharacteristics. Most of business

to

served

with

been close to the levers of power both inside and outside large organizations during most of their

adult

lives. They

are at home

with

but the President continually asked

is here to stay and grow Granted this premise and

and prosper.” granted the further premise, shared by all, that capitalism should be here to stay, the problem of working out an effective partnership between government and business to preserve a prosperous nation becomes preeminent. They all fear a collusive short-

if

him that. As

more comfortable if you carried out his decisions without them.” We suspect that as a breed,

Establishment

types are given

ing lots of questions,

many

to ask-

of them

tough,

and are ill-disposed to accept easy, half-baked answers-all of which makes them and most uneasy

but increasingly

We don’t want

Connor

more

we think it has will show, John

is very much his own man, thought-

ful and concerned, than

necessary

to overdo the Estab-

lishment thesis, although merit. As the conversation

more fearful

most Establishment

the growing

thesis

as

of Commerce,

didn’t enjoy people who questions. He was much

they would

to Connor’s

such

it, “I asked a lot of questions,

their public utterances,

that “government

disposed

of the future

figures,

at least in

and therefore

perhaps

to accept the inevitability

role the federal government

of will

play in the economy. The process of more government intervention and more government planning, Connor views as irreversible. The challenge is to find ways to control the economy

that

will maintain

will

satisfy

our

a high standard

citizens

and

of living.

little or not

The point is most striking in his reasoned plea for setting up a national planning commission to undertake responsibilities for planning that will be more difficult and

True partnership rests on mutual understanding of each other’s problems, which is why Connor wrote, “The most exciting prospect I see ahead is that of business

even more important in the years ahead, “responsibilities that people in the executive and legislative branches are not fulfilling, and cannot fulfill, in my opinion, under the present circumstances.”

sightedness

between

those who fear business

and those who trust government at all.

34

Secretary

power and comfortable with big organizations. With varying shades of enthusiasm all subscribe

that

service is easy. His experience

else, would have taught

and

have

has no illusions

nothing

politicians

Dillon

desirable,

development

Johnson’s

bedfellows.

like Douglas

a highly

management

Lyndon

public service more than once in their careers distinction under presidents of both political parties. None of them, ideologically, is against in part because all have big government,

indeed

part of their own

course.”

he expressed

party. To be sure, there than Democrats among

private

careers,

necessary,

government is

of distinction.

from

that some years of govern-

Connor

Weinberg, them should

in common?

not the same political are more Republicans them-but

among

do the members

Establishment

W.

even

Douglas

to name a few-it

clear that to be counted be considered

Sidney

deciding

business

Forrestal

Robert Patterson,

Robert

and Nelson

years-James

people

ment should be an integral

significant

assisted in the Navy Depart-

Averell Harriman, Dillon,

wing.

other

(This

interview

was conducted

Organizational

DOWLING :

In a conversation

I had with with Peter Drucker,

job of board building by George

Merck

board building What

CONNOR:

and Vannevar

on the board.

new medicines,

In particular, chemicals,

have among

not for their reputations,

who

he wanted

people

and related

products.

Research

in addition

scientists.

Dr. Richards

chaired

company

and was a consultant

on medical

fields should

physicians,

in the program.

committee

and Robert

G. Denkewalter,

within

some people

in great detail and then went of what should

important,

what

The work of that committee research,

new made

and it’s legendary

team in those days, led by Doctors was probably

the

to that committee

and, most

to the success of Merck

now that the Merck research

of the

the war. So

and other professional

program

be discarded

research

to being on Merck’s board of advisory

for it. He attracted scientific

should

be included

a great contribution

he was able

during

back to Mr. Merck and the other officers with an appraisal what

that

scientists-

dressing.”

(OSRD)

In addition a scientific

biochemists,

the company’s

be emphasized,

believed

to Dr. Bush, Dr. Alfred N. Rich-

and Development

directors,

chemists,

Merck

one or two prominent

of the committee

he had two outstanding

who reviewed

with an outsider’s

Bush to join the board.

He was able to attract,

outstanding

leader, and ex-

The business of Merck was developing

its members

ards, who had been chairman Office of Scientific

inspired

backgrounds

but for the quality of their minds-and

Dr. Vannevar

that

success of Merck.

was an

with differing

He didn’t want them, in other words, as “window Exactly.

that the best

at Merck?

Merck,

directors

of the business.

drugs,

the board should

CONNOR:

George

of outside

view as to the nature

DOWLINC :

editor of

Bush and later by you. He believed

about board building board.

a majority

to persuade

he commented

h a d a great deal to do with the tremendous

It was an excellent periences

F. Dowling,

he had ever seen was the job done at Merck, originally

was distinctive

wanted

by Dr. William

Dynamics.)

the most productive

by

Max Tishler team

that

has ever been assembled. DOWLING : CONNOR :

Dr. Bush was a part-time Yes. He became became president

part-time

chairman? chairman

and chief executive

after Mr. Merck’s death,

at the time I

officer at the age of forty. It was quite

a challenge as well as a very happy and productive relationship for me to work with Dr. Bush, who had a distinctive style of management-as I first found

out when

I was his general

counsel

at the OSRD

during

World

War II. DOWLING :

What

was special about Dr. Bush’s style of management?

35

CONNOR:

On almost

the first occasion

lowed a procedure lem, a process

that I worked

on a problem

that he called the scientific

that seemed

to me to coincide

call the legal process. Whenever

with him, he fol-

process of analyzing

a prob-

quite well with what I would

I would come in, he would

lean back in his

chair and say, “Well, now, where did we leave this before?

Let’s see if I can

summarize

he would

the facts as we last talked

about them.”

Then

short summary

of the facts and ask, “Do you want to add anything

The discussion

would then proceed on the basis of a common

of the factual material. you think

our alternative

five alternatives, would

Next, Dr. Bush would say, “Now,

and

Dr. Bush would

then

he would

ally conclude

say, “What

He would

that particular

action along with the timing

up by deciding

required

judgment

very

carefully

was invariably

and

sound,

it more closely.”

a conclusion, reached

He

the following

on a particular

and the person

ing it out. By the time we had reached the alternatives

I

it, and

course of action and usu-

now, let’s not overlook

“Well,

wind

do

four or

for supporting

say, “Let’s pick that up and examine

them by saying,

discuss

do you recommend?”

and give my reasons

would give reasons for and against consequences.”

understanding

let’s see. What

courses of action are?” We might

focus on one alternative

give a

to that?”

course

responsible

of

for carry-

he would have explored

a reasonable

and the actions

taken

conclusion.

His

on that basis were

well carried out. I learned to decision brilliant

more from Dr. Bush than from anyone else. His approach

making

mind

was the best I ever encountered.

along

with

a command

advice to any young manager

looking

outstanding

person

from. That

is much more important

And, of course, he had a

of many

scientific

for a position

as his or her boss-someone

disciplines.

My

would be to seek out an

he or she can really learn

to his or her future

than the salary or

the job title. DOWLINC:

Drucker

implied

that there was a definite

this was one of the things cal corporate

board

work plan for the directors-that

that distinguished

on which

outside

the Merck board from the typi-

directors

don’t spend much time on the activities directors were well paid, they went

spread

themselves

thin

and

of the company. Partly because the along with a regular system of

assignments. CONNOR:

There

was a system

of working

that

depending

on the nature of their problems.

executive

committee,

finance

it was unusual

of that committee. various

committee

chairmen

covering wanted

to meet

to the usual was a scien-

of course, were the mainstays

Before each board or committee agenda

expected

In addition

and audit committee-incidentally,

Dr. Bush and Dr. Richards,

receive both a prepared necessary members

committee,

were

in those days to have an auditcommittee-there

tific committee.

36

committees

regularly,

meeting,

members

the items that management

on it and a position

would and the

paper giving

the

facts and information to prepare them for the meeting. The board were very conscientious about doing their homework before meet-

ings. In consequence, most of the decisions

the discussions were pointed were the right ones.

and comprehensive,

and

DOWLING :

I read an article by Louis Cabot in which he described

his experiences

on the

board

directors

were

totally

what

was going

of the Penn

dependent

Central.

on the operating

The board’s structure

Obviously,

officers for understanding

did not permit

time to get an objective

the outside

picture

any outside

I cannot

conceive

particular

of a board’s

operating

boards of very important

companies

of top management.

in that

They

were

way, but apparently

that

to rubber-stamp

From

this is decidedly

a minority

situation

been associated,

by and large, follow between

board

at General

committees

authority

to make

Allied Chemical. to the board;

the decisions

today. The boards the procedures

committees

DOWLING:

The Merck

the board

or recom-

I would

say that

with which

that

I have

I described

with

Motors, for example,

its board and Merck’s is one of degree-that Motors

final decisions

on the other

some years ago for

my observations,

respect to the Merck board. I’m on the board of General and the differences

on.

enough

people fine.

board did. And we know that it was common

mendations

Motors,

to spend

of any aspect of the situation.

kept in the dark, which suited the operating CONNOR :

director

more

responsibility

do board

and Allied

as a whole

hand,

have

than

committees

Chemical

makes

the company

decisions

now are made at board where decisions

meetings

more or

are advisory

any final decisions.

have the final say on many decisions.

meetings,

and

at Merck

committees

is so vast and

is,

At General

complex

that

the

Even so, more and more

rather

than at board

committee

were made in Alfred Sloan’s day.

Why do you believe that the whole

board

should

make

as many

decisions

as possible? CONNOR :

Participating respective

in all board decisions committees

keeps

pitch. Also, it is helpful important DOWLING:

CONNOR :

to the company

I gather

that you were influenced

building

at Allied Chemical.

Very much so. I think

do you think

having

a woman

vania

Corporation

although

by your Merck

in any

of special-interest

on corporate

for example?

so far as to put a student

should

we who

boards-

The First Pennsyl-

activist

activist resigned,

on the board,

saying that he or

dressing.

if they are not qualified member

because

backgrounds-people

representation

it didn’t work out. The student

Each board

in your board

of the board.

or a black on the board, went

experience

It doesn’t make any sense to have people on the board interests

of their

at a high

to participate

at Allied Chemical

people with diversified

she had been used as window CONNOR :

directors

for all directors

we’ve been fortunate

add much to the deliberations What

than in just the decisions of individual

policy decision.

have a board of competent

DOWLING :

rather

the interest

on an overall

be selected

representing

basis to be board

on the basis of experience

special members. and the

37

ability

to understand

and act upon the broad problems

the case of black directors, past prejudices,

to make limited

Although Sullivan,

in the game,

it was probably

exceptions

not an executive

who joined

trialization

however,

Centers

to that general

of a large

the board of directors

had a business

background

for black people

lishing and operating

activities.

He first participated

has become

a member

view is of great

in Philadelphia

important

pretty

involved

on the audit

skill and judgment. that come

in other aspects of board

committee

and more

policy committee,

to the other members

early Indus-

and other cities. Estab-

management

point of view on problems

of the public

interest

the Rev. Leon

Motors

as head of Opportunities

before the GM board, but he has become

In

rule.

company,

of General

thos.e centers required

Not only can he express a “minority”

of the company.

a good idea, because of

where

and where

recently

his point

of

he has made

an

contribution. Then

there’s Mrs. Patricia

Harris,

who sits on The Chase Manhat-

tan Bank board with me. Of course, she is well qualified any company

because of her experience

is both black and a woman persuaded

Kay Graham,

was an extra dividend. publisher

to be a director

as a lawyer and diplomat.

of Tlte

At Allied Chemical

Washington

Post,

of

That she we

to join the

board. DOWLING : CONNOR :

Wasn’t her father one of the founders Right. cause

She had a personal her father,

after World Chemical which

Eugene

interest

in the activities

Meyer,

helped

of Allied

Chemical

put the company

together

War I. So the Meyer family were major stockholders from

Allied

table. With

the beginning,

Chemical

and Kay Graham

and its activities

this background,

she had turned

down

boards.

She is able to make

many

is familiar

company

with most of the business

She protests

of Allied

up in a family around

problems

her activities

automatically

in

the dinner

to serve on other

because

beright

for her to join our board,

invitations

a contribution

officer of a large publishing

grew

were discussed

it was natural

though executive

of Allied Chemical?

ensure

even

corporate as chief that she

that come before our board.

from time to time that she is not a chemist

and doesn’t under-

stand many of the big words, but I- console her by telling her that I am not a chemist either. DOWLING :

Does Allied Chemical

CONNOR :

No. We have seriously

have any black members considered

on its board?

a couple, but without

success to date. We

have sought blacks who are otherwise well qualified to be directors. For example, we invited Dr. Andrew Brimmer to join our board. I worked with him when

I was Secretary

Commerce

for Economic

President

Lyndon

Johnson

on the Federal Reserve directors. Unfortunately,

38

of Commerce

and he was Assistant

Affairs,

I strongly

when

and

Secretary

recommended

he was being considered

him

of to

for membership

Board. He would be an addition to any board of Du Pont arrived at the same conclusion one week

before we did, and he is now a director

of Du Pont.

DOWLING :

Do you see any future that is quite common

CONNOR:

I think

in employee

it is a great mistake.

union

representation

work

the union

on the boards. in board

side, this inevitably negotiations.

decisions.

in decisions

techniques,

the possibility

operations

leads to problems

Of course,

it sometimes

issues with unions,

George

union

I dis-

should

is appropriate

a conflict

in their

of new

or necessary

of

bargaining the right

machinery

to

or new

or shutting

be decided

it’s not desirable

I

decision-making

into new businesses,

that rightly

is right. with union

representatives

the introduction

but certainly

Meany

that it interferes

they demand

giving

of going

where

In a way, it involves

what

hand,

about

Britain,

sit on the management

will influence

On the other

participate

in Great

But I think

If the union representatives

and the Netherlands?

leaders are going to push hard to get

this with him, and he believes

to participate

interest.

on boards-something

West Germany,

I was recently

cussed this trend. Apparently have discussed

representation

in Scandinavia,

down

by management.

to negotiate

some such

to have them on the same

side of the table. DOWLING:

Do these objections

also hold in a nonunion

CONNOR:

I think

go back to my basic thinking

so. I would

who should executive

be on boards

experience

participation

of directors;

company?

they should

who are able to bring

in decision

advantage

in the kind

meetings.

I don’t think

making

about the kind of people

in other activities

of discussions

that

that the average

be people

to the board

with

broad

a background

of

that can be used to good

take place

employee

in your

own

from the ranks

board

is quali-

fied to be a board member. DOWLING:

Drucker

makes another

neys or bankers

on its board director.

He draws

the accounting

an analogy

with

He has a point, Motors,

and general outside

but I would

for example,

not a member member

accountant

counsel,

which

lawyer, Orville

In other

respect--outside

directors

or company

with

but is

our vice-president

Merck,

for

I don’t think,

consist

and a

example-the

of the board and has been very

range of problems

of the company

situation.

At General

meetings

is both an officer of the company situations-at

in a broad

of the board

here, too.

has a formal

rule.

sits in on board

Schell, is a member

and objective

attor-

board of directors.

it as a general

counsel

Brian Forrow,

board.

have a majority

When

profession,

not apply

the general

to look at the individual

DOWJJNG :

is a conflict of interest

can sit on a company’s

do with his firm’s representation

business

There

that a company’s

they lack the objectivity

of the board. In our case at Allied Chemical,

of the

constructive

think

of directors;

that is crucial in an outside policy that no outside CONNOR:

point that he doesn’t

belong

of people

no personal

having

in legal matters. however,

nothing

that it is best to

who are objective

or institutional

to

You have

interest

in every in the

except as stockholders.

you took over at Allied Chemical,

that was far from flourishing.

I wonder

it was if not a sick company, if you applied

one

the management-by-

39

objectives people

approach

developed

that you developed general

objectives,

tives. Then they submitted reviewed review

them

at the half-year

objectives

financially.

and personal

by ratings

who

There

was a

at the end of the year by

The person

who achieved

In fact, you said the approach

rewards

objec-

superiors,

and attainable.

and their superiors.

scope and material

As I recall, your top 150

to their immediate

they were realistic

point followed

executives

was rewarded

provided

these objectives

to see that

the individual

at Merck.

specific objectives,

for the individual,

his

not only

but also constituted

a form of psychic reward. CONNOR :

I installed

the Merck

system

of management

the game at Allied Chemical, tem of management

by objectives

enables

each executive

against

the objectives

several superior

provides

to review

own eyes from the gradual

fixed earlier,

division

Chemical

was sympathetic,

antagonistic

too quickly.

and the interest

modifications

and then seeing

performances

that

of the company

because

from sys-

the head

of that

presidents

were

drastic changes

on an

people that something

is in

as a whole.

it on a companywide

in the procedures

with their result

the management-by-objectives Division

You have to persuade

we did install

with

rewards

and interests.

I don’t believe in forcing

their interest years,

objectively

while some of the other division

organization several

we started Chemicals

or disinterested.

It

as measured

The psychic income comes from executives’

of new capabilities

in the Industrial

in

for participants.

and receive monetary

in their own development

attainment

early

well. The sys-

discuss the performance

year to year the improved

At Allied tem first

real incentives

officers, be rated accordingly,

actively

pretty

exceedingly

his or her own performance

on the basis of the performance. participating

by objectives

and it has worked

Over a period

basis.

that I had followed

We made

of

some

at Merck-but

by and

had no effective management

develop-

large, it is the same program. In addition, ment program.

now have a strategic lutely essential intensive

Allied Chemical

By now we have a good one in place. Equally planning

program

in the management

All of these programs That

persistence

of a business were taken

I had seen them

to overcome

try to make changes

work

the massive

too quickly

It strikes me that the key to effective his subordinates?

The problem

vice to the idea. The manager he knows

job a manager reward CONNOR:

40

that

as diversified

we

is abso-

and as capital-

from my 18 years of experience

at Merck gave me the courage

opposition

in an established

ager’s own boss. Does the manager

-and

in effect-something

as Allied Chemical.

at Merck.

DOWLING :

important,

management spend much

that you encounter old-line

it. This suggests

development

is doing in developing

is the man-

pay only lip ser-

for developing

two questions:

organization.

time and effort developing

is that most organizations isn’t rewarded

and

if you

How

his key subordinates?

his subordinates

do you evaluate

the

And how do you

him?

In most cases, the results speak for themselves. At the end-of-the-year evaluation of performance against objectives, one important factor is management-

development

results.

You look

at the people

manager

and see what has happened

whether

they have succeeded

in broadening

ment

report

to a particular

the scope of their interests

skills, and what results they have attained. managers

who

to them, what they have accomplished, By comparison

and

with what other

have done, it is clear that Mr. Doe has done a much better develop-

job than

Mr. X or Mr. Y. In Mr. Doe’s case, we consider

ciates for promotion divisions,

into jobs elsewhere

even though

the manager

there are just no promotable

his asso-

in the company-whereas

himself

may be competent

people reporting

in other and effective,

to him. So it’s a dry hole with

respect to the kind of cross-fertilization

that you need in a company

where you are in quite a few different

businesses.

Y are failing

the company

in an important

DOWLING :

How does Mr. Doe’s superior

CONNOR :

It’s a quantifiable statistical

with him. Usually

over and above the amount

formula.

In describing

clear that management

it takes the form

that emerges

our executive

development

responsibilities.

show up in his remuneration?

factor that is discussed

of a plus amount

area of their

performance

like this

In short, Mr. X and Mr.

incentive

from

plan,

the base

we make

is a factor that helps determine

it

the size

of the award. DOWLING :

In this strategic

planning

specific quantitative holder equity, percent CONNOR :

activity that you believe is so important,

objectives

for each division

for me to send out to the corporate planning

program,

those memos,

we provided

and indicated

various

planning

program.

In addition, the various

economic

presidents

element

tests that are outlined about

each

projections

figures

in terms

in the

that show

of profit

margin,

and quantifiable

and the relative

tests.

place of our busi-

environmental

in the format how

background

objective

and other external

a recommendation

on the

into consideration

then compile

is doing

they look at the competition

memos

presidents

will cover the next ten years. In

cash flow, and other

nesses vis-a-vis competition make

which

be taken

business

staff prepared

officers and division

that should

The division

on investment,

is typical. Let me describe

planning

some general

factors

how each particular return

planning

the end of last year, the corporate

1976 strategic

on stock-

return on sales, and so forth?

I am not sure that our system of strategic it. Toward

do you set

in terms of return

factors.

Using

that they all use, they then

particular

business

should

be

classified. We have more each one is classified process. should

than

from

The “D” category get out of within

for those businesses time-not

immediately, contracts

businesses,

consists of those businesses a prescribed

that we decide

long-term

we usually indicate

70 separate

or profit

centers,

year to year as part of this strategic period should

that we conclude

of time. The be phased

that within

we

“C” category

is

out over a period

of

because we may have too much capital

that have to be renegotiated

and

planning

or other

involved

such factors.

or But

a period of, say, two or three years, or before

1980, we will phase out this business. The “B” category consists of those businesses that we call “Hold.” We decide to stay in these “B” businesses

41

but not to do anything capital.

Nevertheless,

spectacular

in them. The “A” category be expanded; of all kinds The

of capital to ensure

“E” category

projects

that

to recommend

the necessary

we review

involved.

This categorization presidents

we want

submit

:

CONNOR :

You have about 70 businesses. Nine.

In the strategic

committee days from strategic with

How

analyses

program,

members

we review

of businesses

early in the year

of each of our busicategory.

the members

of the board)

the start of the year until individual

of the executive

meet for a total of about 25

the final presentation

of the lo-year

of the board. Early in the cycle, we meet along with the appropriate corpresident,

division

about that particular

their recommendations.

meetings

of division

we have a two-day

Gradually

presidents

management

and corporate

posed objectives

one by one. Everyone

to speak

for a particular

up or forever

set of financial

objectives

the whole capital

hold his piece about

to the July meeting

significant overview

group has the

what

is proposed

of the board a final rec-

and the directions

have an opportunity

that

include

plan, proposals

investments,

and

we have personnel

them-that

last,

and the pro-

in this top management

that are raised by the business

Finally,

to

And

the whole group of divi-

we discuss

other

and public

with

respect important

spends

roughly

financial

Overall,

the board

businesses

policy

we have a

we are going

to anticipated

policy objectives-a

details as to how the individual

Top management

In addition,

the way in which

the board.

of where the company

on the important

objectives.

with

we want

to see how this whole plan

is built up step by step, and they can concentrate

finance

businesses.

these businesses

plan for the business of the company

to take. The board members questions

and then

our discussion

business.

We end up by taking ommended

related

at which

officers review

business,

we broaden

having

meeting

sion presidents opportunity

DOWLING :

We determine

plan at the July meeting

each

flow,

of time.

acquisition

many divisions?

porate officers who know something group

begins

as to the appropriate

planning

(all internal

program.

to go into the kind

their separate

nesses and their recommendations hWLING

or possible

of all our businesses

of

and resources

over a fixed period

developmental,

as part of this planning

if they are successful,

of

that we decide should

of more people

expansion

is for research,

large amounts

and we want to stay

to the board the expenditure

and the assignment

whether,

when division

are satisfactory,

consists of those businesses

we are prepared

large amounts

in the way of providing

these businesses

income,

to

cash

considerations. broad

range

of

gets both some

are doing as well as an

is going as a whole. one month

a year on this strategic

plan.

ning process? CONNOR :

Yes, that’s the strategic

planning

process.

Then

in the autumn

of the year,

we have short-term planning. On the basis of the strategic plan that we have concluded by the end of July, we focus in more detail on the plans for next

42

year and then, in less detail, for the two subsequent

years. This is when we

put the plans under what

strategic DowLING :

a microscope

our objectives

Do you ever have problems up in divisions?

in the planning

by your corporate

If you have differences,

We do have disagreements. program

that a division

porate o&ials, tions.

This

programs

Usually

together,

or not justified

possible

attainment I would

CONNOR :

when

presi-

that was roughly

twice

the projects

decision

on a highly

making.

selective

it for others.

It is important

that all

to state their cases as strongly

that it is humanly

The last thing

the capital

by the division

for some and denying

be given the chance

with the final decisions. disenchantment

because

in this next period of time, particu-

capital available

and, to the extent

capital

by profit expecta-

problem

came to a total amount

some very difficult

for capital

the plans

and that, in the view of our cor-

we could finance

basis, making

requires

scribed

the

those drawn

they take the form of a proposed

will recommend

larly the next three years. We reviewed

claimants

reconciling staff with

“A” and “B,” as recommended

as much as we believed

DOWLING :

By contrast,

how do you reconcile them?

is more or less ambitious,

in categories

or priority

process

planning

past year, we had a very difficult

dents, when added

This

very closely to see just

years ahead.

plan covers a ten-year period.

that are recommended

CONNOR :

and look at them

are for the immediate

possible,

we want

the full cooperation

to have them

is continuing

of everyone

as

agree

criticism

is essential

or

for the

of our objectives. think

it would

be a miracle

in the kind

if you didn’t end up with a measure

On this occasion, our business,

we had some disenchantment.

for example,

receive larger

capital

the managers

allocations

than

just had to accept the decisions

of situation

of disenchantment

you just desomewhere.

In one particular

in charge

thought

we made available

part of

that they should to them,

but they

that we made after full consideration

of their

points of view. That doesn’t mean that they liked them or even agreed

with

them in all cases. DOWLING :

You mentioned

in a speech that the man in charge of strategic

your executive

assistant.

whoever

is in charge

chief executive CONNOR :

I believed

you advocate,

of corporate

planning

that

it was extremely throughout

to me. Frankly,

important

the company

should

report

planning

was

principle,

that

directly

to the

our program

under

to have the chief planner

in getting

report

there was much opposition

planning at first. Some very high executives time, and it took several years of experience it was worth

as a general

officer?

way and accepted directly

Would

to the concept of strategic

thought that it was a waste of with it to convince them that

the time and effort that went into it. During

that period, some

of them didn’t give it their full support.

I believed

portant

and in detail and to do it through

Doug

for me to participate Ross, my executive

personally assistant

at that

time.

that it was extremely He retired

im-

last year, and

43

because

the whole

management

concept

throughout

of strategic

planning

is now well received

I no longer consider

the organization,

by

it necessary

for the person in charge to report directly to me. Another

factor was the existence

tween the central planning staff had to be responsible planning over

process.

this;

figures.

the

different controller

nature

planning

figures

duplication.

for pulling

Human

We found

staff

ourselves

period

principle

planning

Exactly.

This year I will spend on the strategic

planning

on-but

for the moment,

I think

tive officer’s responsibilities the board on the future

involved

That

to be personally

of the business

in which

seems to be irreversible countries

by what elsewhere

happens

around

of activities

people in this country

theme

because

the world,

in the world,

more

for their

to

do this

was the inplanning

of the pressures

including

even the

bodies. We don’t live on an island,

elsewhere

undertaking

He cannot

this process as irreversible.

the process

uninfluenced

plan-

process as it evolves.

a common

from other

and other international

strategic

and more government

Unfortunately,

governments

with

to make recommendations

in the planning

intervention

as time goes

part of a chief execu-

of the company.

States. You seem to regard

kinds

report

effort is estab-

may change

associated

be prepared

and influences

economic

for

in the early stages

up the operation

it is a very important

of your speeches

Nations

it this way. So far it

time as I did last year personally

program.

should

of more government

in the United

to him.

the central

you would say that it is important

as much

unless he involves himself intimately

United

unit reports

and

it is no longer necessary.

ning because he personally

CONNOR :

planning

officer. But once the planning

working

I read a number

and a man

problems

is one step in between

and to have the person heading

to the chief executive

evitabilty

that

and business

officer to be quite intimately

lished and accepted,

we corrected

all right.

In other words, as a general of strategic

own with

Hal Buirkle,

unit and me. This is the first year of doing

the chief executive

its

of working

of our vice-president

of the total business

aspects of it, the central

directly

However,

for administration)

to me; thus there

as part of this

assembled

situation

capabilities

not just the financial planning

DOWLING:

occasions

He, in turn,

reports

together

it is, there was some rivalry

of time.

(now called vice-president

seems to be working

CONNOR :

several

of the personal

with good understanding

DOWLING :

on

what

of effort be-

staff because the financial

the figures

being

in the confusing

for a short

Because

of some duplication

group and the financial

and

citizens.

to want to imitate

them.

more This

and our people social

naturally

I think

welfare

see and

causes some

it is an unfortunate

trend because we can end up down the line with the government controlling the economy in a way that will not be satisfying to our citizens and that will result

in a much

desirable,

44

lower

but the trends

standard

of living.

are unmistakable.

that we ought to try to do something

So I don’t

think

the result

is

We have to face up to the fact

about it while there is still time.

DOWLING :

You made

a number

consequences

of specific

of increased

esting idea is that an important for businessmen

the future

ical, to try to build ment pattern CONNOR :

same corporation. to the possibility

experience

experience.

I do think

executives

like Allied

in

Chemdevelop-

basis in any one corporation.

When

they rarely return

that any corporation can encourage

governmental as possible

is at-

should

to the

be constantly

alert

into its ranks people who have had government

Or corporations

on part-time

process

into the career

job to go into government,

of bringing

that

If I under-

of their executives?

It is very difficult to do this on a planned people leave a corporate

process.

large corporations

this governmental number

development”

at a couple of levels. Is it desirable

especially

of a substantial

the

One inter-

You contend

of the governmental

actual experience

for corporations,

in government.

the governmental

this understanding

only through

help moderate

of the economy.

and vital part of “management

do not understand

you correctly,

tainable

that might

control

is to have some experience

most businessmen stand

suggestions

governmental

assignments.

some of their senior people to take It is important

to understand

for as many business

the governmental

process-to

under-

stand how and the extent to which politics will play a role in the determination of policies and as a result be realistic about what can be expected expected

of governmental The

strong

Ford’s

program

federal

government

support

of trying

among

the business

to terminate

and putting

in disappointments. performed

When

activities

you understand

their remaining

under

the reason

DOWLING : CONNOR :

What

that corporation

governmental

to have

The Post O&e

control,

should

were

it may be a waste

get out of them and let

the Post O&e

will continue

separated

to be influenced

even if it is run by a so-called independent can operate deficits

Congress

to appropriate

is expected

of the postal system

to expect that Congress

money is going

money is being spent. Unless its performance that the postal system

from

the

by political

corporation

unless

its facilities at a profit or at least break even. Up

to now, the operating reasonable

why functions

do you have in mind?

for example,

federal government. considerations

by the

sector can result

by private business.

kind of activities

It is debatable,

of President

controlled

in the first place and the political forces

of time to argue that the federal government them be assumed

community currently

them back into the private

by the federal government

that support

or not

activities.

can continue

have been substantial.

If

to cover the deficits,

it is only

to attempt

how that

improves

to be operated

to control

greatly, I am not sure by a so-called

indepen-

dent agency. DOWLING:

On the other hand, you have advocated influences

is to have the private

the idea that one of the moderating

sector take over at every level some of the

functions

that are currently

functions

could be carried out more efficiently and presumably

by the private

sector?

performed

by the government.

What

kinds

of

at lower costs

45

CONNOR:

Even though ment, past.

the postal system again becomes

it can be better organized There

is no compellin, q reason

postmasters

in all the communities

way qualified greater

be well managed require

There

dents

Johnson

and

permeates the ongoing

their terms of office. They

themselves proving

the organizational

structure

the best possible management government

and adding

The President

his first term. experience-as

president

University.

of Columbia House

usually

have

come from the Congress, no management

and foreign

operations

programs.

experience

That’s

installing of the federal

since he

of the Army

people

experience

of Congress

and an inadequate

necessary.

not too surprising,

Unfortunately,

no management

to im-

in recent times was Presi-

chief executive

and members

were out for

himself

new ones only when and where absolutely

during

Presi-

with carving

who dedicated

in existing

will

not have

of the federal government-to

practices

had had management White

could

of the government

new domestic

who came closest to this approach

dent Eisenhower

This

structure.

for example,

to see a President

of

cannot

on the part of the

both were obsessed

places in history by starting be very refreshing

function

considerations.

functions

as

to a position

the whole federal

Nixon,

select

who are in no

be promoted

there are political

Richard

cared less how well managed

It would

should

people

to the need for good management

because his influence

Lyndon

during

Congressmen

is no reason why a governmental

even though

more attention

President

why

govern-

than it has been in the

in their districts

for the jobs and who cannot

importance.

a part of the federal

and better managed

and as

who get into the whatsoever.

are notorious

understanding

They

for having

of the need for

good management. DOWLING: CONNOR :

They are lawyer-politicians. That’s

right-to

management ment

a great

extent-or

experience.

There

now where appropriate

tracted

out either to business

many defense private possible,

particularly

function

practice

with

for temporary

as the excuse for building

known

at OSRD

in contracting

dimension fashioned DOWLING :

46

amount

the private

government

rather

in commenting

in management,

which

neither

in government sector whenever the familiar

that never can be Recently institutions,

and have created

the business

a well-

on the work we did

to private

to a new form of federalism

schools of public administration

brand of public/

than

or is changed.

functions

be con-

need for a new service or

up a big bureaucracy disappears

no

such as we see in

We need managers

assignments,

expert in public administration,

such practices

govern-

or universities,

upon a temporary

cut back even when the function

with

of work can be and should

the idea of using

of seizing

backgrounds in the federal

or to a kind of hybrid

such as COMSAT.

in accord

bureaucratic

segments

examples

organizations

and research activities,

corporation

conceptually

they have other

are many

schools

said a new

nor the old-

have yet learned how to deal with.

Concerning the problems of New York City, do you see any possibility of achieving economies by contracting out some functions to private business? I have one example in mind. Last spring, a student of mine at Columbia

Business

School wrote a paper in which he contrasted

garbage

in New York City with collection

City. The

cost discrepancy

the public collection

by a private

per ton was enormous,

contractor

with

of

in Jersey

the private

sector

doing the job much more economically. C~NNOR :

The Economic

Development

that has been in existence chaired

made

many

Lindsay

turing

some of the functions

recommendations

of the activities These

to Mayors of government

with demonstrable

recommendations

parent to everyone

situation

coming

from

planning

to receive much

has struc-

out of some and people.

more attention

in

than they did in the past. It is now ap-

it sounded

a businessman-was corporation.

have it subsidized

about

to perform

the same services

cost.

One idea that you advanced-and national

and Beame

in terms of money

that the city cannot continue

at an ever-increasing

in New

by George Champion,

to allow contracting

savings

are now going

view of the city’s financial

DOWLING :

Committee

York City for several years, most recently

your

like a radical

at least

plea for the establishment

How would this work?

by the federal

proposal,

government

but

of a

As I recall, you would free from

government

control to the fullest extent possible. CONNOR:

Frankly,

I don’t understand

ning to be so essential the idea of the federal capability,

particularly

why so many businessmen

in their own operations government’s when

having

we know

who consider

are so completely access to a national

that our natural

and will have to be used with more discretion

resources

and restraint

plan-

opposed

to

planning are finite

in the future

than they have been in the past. Any planning political

influences

tablished

function

as much

has to be set up carefully

as possible.

as a semi-independent

It would

need

scientists,

but also of physical

a great number ment experience

corporation

an independent

comparable

scientists

final decisions, important

and

political

and engineers

and

people along with some people with manage-

industry.

Working

basis. Of course, the President in which

the

have to be es-

to, say, COMSAT.

such as geologists together

tion, they could come up with plans to suggest on an advisory

to minimize

it would

staff not only of economists

of professional in private

Therefore,

political

in a small organiza-

to Congress and Congress

considerations

necessarily

and the President would make the would

play an

part. To deny the federal

government

the opportunity

of having

some

intelligent planning done in the face of future prospects for drastic changes in our way of life and drastic changes in our sense of priorities is to put your head in the sand and deny the harsh problem is that limited oIKcials-congressmen, planning

or have it done because everybody

~ understands beyond,

that what President

or perhaps

~ be in office.

realities

that lie ahead.

The key

terms of ofice make it impossible for our top elected senators, and the President-to do any long-range

beyond

Ford

within

the federal

government

today says will be done in 1980 and

1976, may not happen

because he will no longer

47

DOWLING:

Do you think Roosevelt

this is an idea whose time has finally come? I think

set up a commisison

choice of chairman cause of conservative I think

opposition and

incorrectly.

executive

branch

the support executive

much attention

because

to something

will not have

period

of the

of time pays

be put into effect during

amounts

to prejudice

of money

during

current

to programs

his term

himself

to the

cause it thinks

to popular

on trying demands

that will meet our energy

illustrates

commission

the point.

among

best

national

levels of capital

planning

had confidence,

would

be entitled

and

by the need to be elected I don’t think

Certainly

system adequate

investments

to

because people generally

others,

approach.

make it clear that in our economic

up

of their recommendations

not be influenced

bill o ff ers the

reasonable

branch

the soundness

would

a year or two hence. For that reason, Humphrey-Javits

than coming

in 1985 or 1990 or 2000.

commission

and the executive

could be made to understand that such a group

needs

staff in whom people generally

of such a planning

much respect in Congress

sub-

to roll back prices berather

If there were an independent

with a competent

the recommendations

by assigning

won’t be visible for

of course, is in the energy field. We

is focusing

with a program

results

has to start doing this kind of planning.

illustration,

it is responding

that

his term of office. It takes

programs

whose

see all too clearly that Congress

and

of the

who has to submit

his constituents

The most dramatic

should

it was

not be part

every two years is going to vote to spend money on a project

ten years. And yet our government

know

But I think

independent

in oflice for a limited

no congressman

a rare bird to be willing

This

should

planning.

if it is, it probably

that cannot

uncle. It

to do and, in part, be-

It really has to be somewhat

will not be seen as helping stantial

his 89-year-old

was ineffective.

of committee

No president

of office, and certainly electorate

kind

of government

of Congress. branch.

Delano,

to the concept of national

it certainly

This

Franklin

in the early 1940s. His

it was never given very much

you’re right,

structured

planning

was strange-Frederic

died, in part, because

CONNOR:

on national

by business

any

that the legislation

corporate

profits

are essential

ob-

jectives. DOWLING:

What

kind of person

mission CONNOR :

When

would

you put in charge of a national

planning

com-

like this? I worked

for Secretary

and I had many discussions responsibilities. academic

and

after getting

out of the Marines, to handle

he

public

His belief was that a public official should have had some On the other hand, he thought that experience.

business

the best business academic

Forrestal

about the ideal kind of person

executive

would

be someone

with recent governmental

or

exposure. The

head

of such

an

organization

and

his principal

assistants

should be people with broad management backgrounds and differing experiences so that they understand the nature of the economic system and how the various segments fit into the entire economic process. ‘Of course, they should also have an understanding of the political process because it

48

would

be a waste of time for them

to come up with

recommendations

so

theoretical

that

President

they

wouldn’t

receive

Also, since they have no authority,

DOWLING:

who command

CONNOR :

any serious

popular

from

the

they would

within

have to be people at the top

respect.

That’s right. If the head of the commission is well regarded outside

consideration

and Congress.

were an academic

his or her own professional

the field is very limited,

economist

who

field but whose exposure

you could not expect the recommendations

of such a person to receive wide public support. DOWLING

:

CONNOR :

Do you have an ideal candidate? No. In similar

situations,

the President

people who are well qualified. a good example;

it contains

I think

has always

been able to call upon

the board of directors

a judicious

mixture

of COMSAT

is

of people with broad experi-

ence of various kinds. DOWLING :

The difference dealing

is that because

would have to command CONNOR :

the national

planning

commission

with topics that are so large and so intensively much more popular

I would argue, for example, is too much confined grounds.

It would

management though

experience

monetary

widespread can talk

be more

on the Federal

Reserve

Board back-

if more

of its members

in either universities,

business,

or labor unions.

problems

to the general

are technical

in nature,

that you should

public-who

their

irnluences

had

You would

are so

have people on the Board who

aren’t

limited

to talking

jargon

have to be able to attract

planning

of directors,

commission,

full-time

people

to such a national

in addition

to part-time

to

who would

be willing

planning people on to make

career of this kind of work. I think the work of such a planning

group,

ever,

therefore

would

Al-

or bankers.

board or national

satisfying,

be

and people who have only financial respected

in the economy

fellow economists

the board

widely

would

its top people

support.

that membership

to economists

political,

be so important

and

so mind

expanding,

and

a

howso

that it would be able to attract the right people.

DOWLING :

Are you at all optimistic

CONNOR :

No, not with

our present

approve

the establishment

opposed

by most business

of his Cabinet.

about the board’s getting

It might

their responsibilities.

structure.

I don’t think

of such a board, executives

Congress

would

vote to

and I’m sure that it would

and even by the President

be considered

The problem

off the ground?

to be an infringement

is that these planning

be

and members on some of

responsibilities

are

responsibilities that people in the executive and legislative branches are not fulfilling and cannot fulfill, in my opinion, under the present circumstances. And

they will become

years as our natural

more and more limited growing

even more

resources

difficult,

and more important,

and our financial

and less and less adequate

needs of a larger and larger number

or capital

resources

in future become

in terms of satisfying

of people.

the

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