An elegant approach for building a business


By Candace Stuart

It only takes the first three pages of “The Eye for Innovation” to understand the reasons for the successes behind Control Data and Robert Price, its former chairman, president and chief executive officer. Technology, Price writes, equals know-how. Innovation stands for problem solving.

So much for gizmos, gadgets and the fuzzy, long-winded descriptions that litter corporate board rooms and business school classrooms. Price distills business concepts to their essence in a fascinating analysis of a company that was founded nearly 50 years ago to provide high-end data processing and equipment primarily for scientific and defense users. It metamorphosed from computers to peripherals and finally services. It now exists as Ceridian Corp.

While Control Data may no longer be a well-known name in the world of high tech, one of its founders remains an icon. Seymour Cray, architect of supercomputers and the engineering genius behind several of Control Data’s early blockbuster systems, was among the dozen pioneers who helped grow the Minnesota startup. Within 12 years, the company went from having no products and only $600,000 into a corporation with a global presence and revenues in excess of $1 billion.

“The Eye for Innovation”
By Robert M. Price
(nonfiction, 329 pages, published in 2005 by Yale University Press, $30 in hardback)
Click here to enlarge image

Price, who rose up the executive ranks from general manager in the 1960s to president by 1981, credits a company culture that encouraged staff to use their know-how and problem-solving skills to beat competitors like IBM. Know-how led to a diverse set of products, from Cray’s powerful supercomputers to educational software and shareware. Problem-solving abilities helped managers recognize and create business opportunities.

Control Data added peripherals to its portfolio to provide a low-cost solution to support its computer business. Services took center stage when it became clear that clients needed more than hardware and software. Price takes some pleasure in noting that IBM, Control Data’s nemesis for most of its existence, has shifted its focus to services.

In many ways, “The Eye for Innovation” resembles the standard how-to books found in the business section of a bookstore. Price uses Control Data’s decades-long history to illustrate industrial, academic and governmental partnerships, employee relations and even civic responsibilities. He weaves stories of Control Data’s novel products, services and workplace concepts to guide managers.

If you want innovation, for instance, accept failure. Cray continued to head up a laboratory in Wisconsin despite some expensive design duds. That sent a strong signal to innovators that Control Data was sincere in its mission. But by 1985, Control Data’s enthusiasm for all good ideas created an unfocused and unprofitable business.

“There was too much attention to what might be the next opportunity and too little to the problems of the opportunities already in hand,” he writes. “... Every new services opportunity was exciting - it clearly had potential, even if poorly defined, and it was a great challenge to our capacity for innovation. What could be more enticing? And now the price had to be paid, and it was: in 1986, thirteen business units were sold or shut down.”

The cautionary tale reminds me of companies involved in emerging and platform technologies such as microsystems and nanotechnology. Innovation can become a siren song if it is isolated from customers’ needs, Price argues. Control Data survived its crisis, but not without scars.

I often wondered as I read the book which of today’s micro and nanotech companies will prove to be their generation’s Control Data. Are nanomaterials specialists such as Oxonica, Carbon Nanotechnologies Inc. or Nanophase Technologies poised to become leaders, like Control Data circa 1960? Are mature companies such as BASF, 3M, GE - and of course, IBM - breeding innovations, as Price claims Control Data did for its first three decades, that are based on micro and nanotechnology? The Control Data saga offers a compass for them all.