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NATIONAL SALES MEETING AGENDA Table of Contents |
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Frontiers of Progress Expanding Frontiers Resources for Expansion Planning the Expansion Resources for Development Crowding the Frontiers Planning the Breakthrough Applying the Resources |
The End Results Resources Behind the Scene Behind the Scene Activity Knowing the Ground Rules Applying Your Knowledge It Resources in the Field Where's the Pay-Off? Here It Comes Challenging Frontiers Our New Challenge Frontier Off -Shore
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Table of Contents (cont) |
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Off-Shore Sales Barter with Other Tribes New Mother Lodes Acres of Diamonds Scalp Counting The Great White Father Broad Frontiers
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Far Frontiers and Outposts Near Frontiers Back at the Ranch Frontier Service Prospecting There's Gold in Them Hills II A PORTRAIT OF THE COMPUTER DEPARTMENT III ACTIVITIES
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Official Picture, 1961 National Sales Meeting
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RONALD REAGAN
Hello: I'm Ronald Reagan speaking for General Electric. At General Electric, you know, "PROGRESS IS OUR MOST IMPORTANT PRODUCT". But, all progress must have a starting point. All great human enterprises begin at a frontier. The pioneering of hostile lands. ..the mushrooming of the Atomic Age with its mixed blessing of destruction and construction. ..the rolling back of space frontiers beyond the planets to the stars. ..and the beginning of the information-handling revolution. ALL these had -a common starting point --a frontier of PROGRESS. Webster has defined a frontier as: "An advanced or not fully explored region." That is an almost perfect description of where the computer industry is today--in an advanced or not fully explored region. The broad expanse of this region is almost limitless.
General Electric Company, with its tremendous resources is continuing to invest in the exploration of this region through accelerated improvements of its present products and their related facilities, and through added research and development. General Electric recognizes the computer business is an exciting frontier. The traditional pioneering efforts of the Company in this field have already resulted in dramatic new technologies. Many of you are undoubtedly aware of the Company's major contributions--such as solid state computers and magnetic ink character recognition techniques. But---where and when did the exploration of this information handling frontier begin? Who initiated it? Was it the business machines manufacturers? Was it the Federal Government? Was it in 1954 when the first large scale. ..electronic computer system for business data processing was installed by General Electric. ..at Appliance Park in Louisville, Kentucky? The answer to these questions is, of course, NO. It was GENERAL ELECTRIC COMPANY. But the year was 1920! That was the year that General Electric engineers developed the first practical electric computer in the entire industry --a D-C calculating board. This computer reproduced in miniature hundreds of miles of transmission lines in vast power networks. Forty-one years ago. And, over the years General Electric has continued to acquire more computer systems know-how through wider scope of applications than any other organization. Forty-one years. That was a long time ago- beyond the memory of many in this audience. 1920---It was the year that Babe Ruth joined the Yankees--as a pitcher and hit 54 home runs... The year the 19th amendment permitted women to vote for the first time --and the 18th amendment closed man's last haven: the corner saloon! Man 0' War was a three year old--winning $166,140 for his owners that year!. ..and, the hopes and prayers of a war-weary world were pinned to the League of Nations first meeting at Geneva, Switzerland. It was the year when some of General Electric's top salesmen wore dresses. ...and bared their charms to a cold frontier! It was the year that General Electric first penetrated the computer frontier and inaugurated the information handling revolution. As Victor Hugo so aptly puts it in his "Les Miserables": "Would you realize what revolution is, call it progress: and would you realize what progress is, call it tomorrow. " As the 20' s rolled by, General Electric engineers continued exploring the frontiers, while its salesman was already carrying the ball. Then came the 1930's---and another step forward into the frontiers of computer progress. General Electric announced the A-C Network Analyzer--resembling a telephone switchboard in appearance, the machine was built before the mathematics were available, and from this computer came the mathematics that ultimately explained to the systems engineer how his transmission system really worked. These were the Gershwin years and General Electric was pioneering many other new ventures. Now---our salesman---was also beginning to be known. And... the frontiers were becoming more challenging. Prior to World War II--about 1938--GE engineers and scientists developed a differential analyzer for use in the study of Radar, rotating machinery, and airplane stresses. They were the only practical computers available to the United States at the start of World War II. During the war, the computer-control systems
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were so accurate that fire control far exceeded that of any previously
developed plane in this country or abroad.
Following the war---while reviewing the past of those hard-sell years General Electric pioneered many computer frontiers. They were using differential analyzers at White Sands, New Mexico to obtain trajectory data for firing V -2 rockets. There was OARAC, a specialized development for the U. S. Air Force. Then came a "Robot Psychologist", known as a Psychological Matrix Rotator, developed for the Department of Defense. It is still used to literally "see" that the right man gets the right Army job. And, during the Korean War, many additional specialized computers were developed by the Company for controlling flight and gunfire of speeding jet planes during combat. It was not until late 1955, however, that General Electric decided to concentrate its computer activity into one component. At that time, some 200 engineers through-out the Company were pioneering in both development and applications of computers. At about the same time, the Bank of America and Stanford Research Institute were winding up a five-year development effort designed to give the Bank an Electronic Recording method of accounting. They called it ERMA. They had successfully developed a crude prototype machine that proved the feasibility of processing bank checks with magnetic ink character recognition techniques. But much still remained to be done. The Bank of America needed a top manufacturer to refine the complex and cantankerous prototype into a workable, practical electronic system. The Bank of America was also knocking at the frontiers of progress. What they did here is a remarkable story. Let's listen.
This is the story of ERMA and Seth Clark Beise. He heads up the Bank of America. This bank has been around for a long time and seems apt to be around for a long time to come. For Seth Clark Beise is a good businessman and here in 1949, the bank is doing well, --it gets more business each year. Seth Clark Beise frets a little. He knows he still lives by the good sound business principles that built Bank of America up to the largest bank in the country. Of course, he doesn't like the uncontrollable factors that face every banker these days --such as rising labor costs, climbing material costs, soaring equipment costs---but he figures that he can live with them as well as his competitors can. This morning, he had listened to a presentation by a Business Machine manufacturer. Seth Beise listened carefully, but after 30 minutes, was sure Business Machines Manufacturer could not satisfy his needs. I am the Spirit of Computers. There is a better way to up-date your business methods. There are great advances coming, in electronics -Mr. Beise -in electronics -which you can use in your business. Come with me into the future---l0 years. from now---in 1959---listen to your Vice President and executive officer for operations. Come with me into the future --and listen to Frank M. Dana. Soon after the close of World War II, it became evident to us at Bank of America that a better tool must be developed to help us process the steadily increasing volume of paper work flowing in and out of our branches every day. The need was most acute in the area of commercial bookkeeping -the Checking Account. To solve our paper work problem, we looked for a system which would operate at a higher speed than anything known at that time ---be completely accurate eliminate routine and repetitive chores handle all sizes and quality of paper and be economical to install and operate. Electronics offered the most promise in reaching our objective. But this field was relatively new and we felt that neither we, nor the banking business as a whole, could wait for business machine companies to develop this equipment in their normal course. The paper work problem was too pressing. Accordingly---in 1950, Clark Beise, now our president, contacted Stanford Research Institute and told them what we wanted. Their engineers went to work, and in late 1955, completed the prototype ERMA- ---an automated system which could completely process commercial accounts. Satisfied that ERMA was practical and economical, we selected General Electric to adapt electronic developments of the preceding six years and to manufacture the system for us and, through acquisition of our rights, for other banks as well. ! 1 j ! j .
Thank you, Mr. Dana. General Electric got the order and at that moment set into motion a project that took over three years of research, development, engineering and production necessary to turn the prototype into a manufactured working installation. It meant not only the gathering of the the right equipment but also building of a new plant and the expansion of its computer business. The man in charge is Mr. Clair Lasher, General Manager of the General Electric Computer Department. Yes, gentleme!1, we got the order, the largest commercial computer order ever placed--30 million dollars. The chain of events that put General Electric on the track of this order began in the late 1955' s--with a short notice in the Stanford Research Institute quarterly review.
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An alert General Electric opportunist, well aware of the computer studies underway in General , Electric had circled the notice of ERMA and bucked it to Syracuse. The newly formed Industrial Computer Section was electronified into action.
So a representative was sent to the Bank of America, ---but there were 29 experienced competitors who also recognized the value of the opportunities involved. Let me emphasize here that it was no superman who called on the Bank of America. Rather, it was a confident, dedicated aggressive General Electric salesman---highly motivated to make the Company's new computer business a success---one who recognized that the reward would be worth' the thirty million dollar risk---one who recognized how imp'Jrtant the impetus of this order would be in gaining a foothold in this new market. The Bank of America had already invested more than two million dollars in a prototype. They knew, or thought they knew, what they wanted. While 29 competitors tried to persuade Mr. Beise to change his mind and work with available business machines" because they knew and so did we ---that a complete re-design of the s. R. I. ERMAprototype was required," ---we agreed to -adapt their design wherever we could---without restricting our own ingenuity. The contract did not -mention the S. R. I. ERMA. It specifically called for automating the Bank's Checking account bookkeeping system.
Awarding of the contract was announced on April 25, 1956.
From a four-man team with nothing but office space, ---we had committed the company to a new b'lsiness. Engineering work began immediately in Palo Alto, California, close to the customer and S. R. I. in rented facilities. We built a team of engineers. But we needed space to operate---space to manufacture. It was the beginning of a new General Electric Department. Within six months from the Department's establishment in Phoenix, Arizona, manufacturing was begun in a 50,000 square-foot rented facility known as the Peoria Avenue Plant. One year later, ground was broken for the permanent home of General Electric's new Computer Department. With the Peoria Avenue Plant already bursting at the seams, time was at a premium. Construction proceeded rapidly. It had to. Explosive growth of the Department's business required bringing together the functions which were widely-scattered over a 25-mile radius. The accelerating tempo of the computer business couldn't wait. Before the building was completely finished, administrative personnel began moving in---just six months from the beginning of construction.
The Computer Department is proud of its new building---and justly so. Since its dedication by Arizona Governor Paul Fannin and Department General Manager Clair Lasher, the building has become the home of many computer firsts. We have developed magnetic character reading---the machine readable language that is also eye-readable. In September 1959, we announced the first completely-automated banking system using magnetic character reading --the Bank of America's ERMA system. This is ERMA, Gentlemen, the machine that put General Electric into a.young, vigorous and growing business, which today is valued at I. 5 billion and will reach 2. 8 billion by 1964. Now that the real ERMA is working, she supports herself, and has paid back most of the allowance advanced to her while she was growing up. Largely due to the contributions of this young lady, we are capturing an increasing share of the computer market. Direct spin-offs from ERMA include. ..the GE 210 Computer System, sold to 14 leading banks--an order for automation of another banking function transit, ---and new applications of Magnetic Ink Character Reading. For example, MICR will be used by the General Electric Credit Corporation. Spunoff from MICR, we are in these new product lines encoders, sorters, and re-entry printers. With our medium sized 225 Computer System and our Industrial Computer line---General Electric is now a major factor in the Computer industry---Most important, we have made a major customer happy. Here's what Mr. Beise, President of the Bank of America had to say during a recent press conference. "ERMA is a new concept in banking. Its effects will be far reaching, touching such things as bank architecture and new banking services undreamed of today. Because of electronics, we have an eighteen months' lead time over all other banks in this amazing era. ..thanks to General Electric." Seth Clark Beise is a changed man. His business will be a changed business. He is combining sound business principles with modern business technology through creative, customer oriented selling, coupled with a willingness to accept a business challenge and the attendant risks.
Both General Electric Company and the Bank of America are in the Age of the Computer.
Thank you, Mr. Lasher. The ERMA story represents another milestone in General Electric's march through the frontiers of progress. This 3
documentary of General Electric's 41 years of computer experience has been both exciting and informative to me. It's quite a history. Many more chapters will unfold in the years ahead. Plans are being mandetory to carry General Electric to a leadership position in the information-handling revolution. And now, let's turn the program over to the salesman who life parallels that of the General Electric Company's milestones of progress in the computer industry, Bob Sheeley.
L. R. SHEELEY
Thank you, Ronnie, you have established the theme of our meeting, Frontiers of Progress. We are truly on the verge of a revolution. ...the information handling revolution. The frontier. ..this expanding frontier... is unfolding before us. It is this frontier that we will be talking about for the next four days. Exploring with you the boundaries of the frontier and the many methods and plans available to us to push back these boundaries. The past years can be described as years of change. No one knows that better than you. The future, however, is not static. Change is inevitable in a dynamic industry such as ours. Changes to meet the expanding frontiers. Changes to meet the challenge of competition and changes to meet our volume objectives. As a matter of fact, you should be proud that your organization is capable and willing to make changes. It proves that our department and its management is dynamic. ..flexible. Flexibility is essential in this fast moving business. ..the keynote of success. The ability to move fast and turn around in a hurry. This is flexibility. You will see and hear much in these next few days. ..much that will contribute to your ability to represent the General Electric Company and the Computer Department. You will see examples of our flexibility. ..our ability to turn on a dime. We are sure some of these examples will surprise you. Some may even amaze you. But all are for your benefit. All will contribute in one way or another to the achievement of our and your objectives. We have mentioned the flexibility inherent in a small business. ..the Computer Department. We have not mentioned stability. ..the stability of the General Electric Company. This is a definite advantage that none of our competitors enjoy. The flexibility of a small company with the stability and resources of a very large company. You are going to hear much more on this subject from Paul Chamberlain, our Department's sales consultant.
P. L. CHAMBERLAIN
This introduction reminds me of a three day symposium on communications that I attended about three years ago. Bill Merrihue of marketing services opened the meeting by telling us of a friend of his who had a very large, very virile, tom cat. He said that this tom cat spent every night tom catting around the neighborhood and causing quite a disturbance. The friend decided that this could not continue, so he took the tom cat to have him altered. Some two or three weeks later Bill met his friend and said, 'I assume that your cat now spends his evenings at home quietly by the fireside?' 'In which his friend replied, 'Like hell he does, he's out with the other cats every night serving as a consultant~ At which point Merrihue introduced his consultants. So now you know just what a consultant is. Seriously though, I have functional responsibility for advice and counsel in the areas of product and market development, sales and distribution channels, sales incentive compensation plans, guidance to sales managers in the technical aspects of their positions. When I came here in January, Bob Sheeley placed no. I priority on the study of our government sales setup, both at headquarters and in the field. After checking into what we had in place I made eight recommendations which were as follows: 4
1. Transfer responsibility for the general sales activities with all government agencies to the field sales organization. 2. Transfer present Washington D. C. personnel to the field sales organization.
3. Transfer Huntsville representative to the field sales organization and consider Atlanta as the base of operations. 4. Set up separate quotas for government business for each region and each district manager and salesman who has assigned government customers. 5. Set up manpower to cover government customers in all regions. This responsibility may be at least' in part assigned to present personnel, on either a part or full time basis.
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6. Realign the headquarters sales unit as follows:
1 senior sales engineer air force 1 senior sales engineer army and NASA 1 senior sales engineer navy and AEC 1 sales engineer special computers and systems and Rand D. 7. Establish an application engineering group in the headquarters sales unit. The original group to consist of: 1 senior application engineer, two application engineers.
8. Appoint an acting sales manager.
These recommendations were approved and some of them have already been implemented. The others are in the process of implementation. Another activity on which I have spent a great deal of time in the last three months has been the planning for this sales meeting. I have already done considerable collecting of information on current incentive compensation plans, both inside and outside the company. This in turn has lead to plans for a rather complete market study and survey about which you well hear more from the next speaker. I have recently concluded visits to a number of sales offices in the central and eastern region. I had a very frank exchange of information and ideas at all locations and I think that you will find some things taking place as a result of this trip. Other field trips are planned for the near future. In talking to many of you in Phoenix over the last several months and also on this field trip, it was quite apparent many of you are new to General Electric or to the Computer Department, or both. I feel that many of you do not fully realize the strength of the General Electric Company, and I hope that during this four day meeting you can align your thinking in terms of General Electric versus other computer manufacturers rather than the Computer Dept. versus other computer manufacturers. -
This slide is one indication of what I am talking about. This is a tabulation of the fifty largest manufacturers in the United States. It shows General Electric in the number four position surpassed in size only by General Motors, Standard Oil of New New Jersey, and Ford. In going through this list I fiI)d the next computer manufacturer, RCA, is in twenty-fourth position, while ffiM is in twenty-sewnth place. Sperry-Rand is thirty six. There are no other computer manufacturers in the first fifty and I have not gone further in the descending list to locate the others. So that we all may have an up-to-date picture of General Electric's size and resources, I am going to talk from some slides that were used by Mr. Cordiner at the April 26th share holders meeting in Syracuse. Since the end of World War '1\110 your company has moved from a centralized company to a decentralized modern organization of 113 different business units, each with its own seasoned management team and meanwhile we have developed a sound structure, patterned to fit our five major market areas, consumers, industry, electric utilities, government, and international market in the decade since 1950 we have grown from 129 manufacturing facilities in ninety-eight cities in the United States and Canada to a hundred and sixty eight manufacturing facilities in a hundred and thirty four cities plus an expanding network of manufacturing and sales facilities around the world. Sales doubled in the same ten years growing from two billion dollars in 1950 to over four billion dollars annually in recent years. The physical plant has been almost completely rebuilt mmnwhile at an investment of approximately one billion, four hundred million dollars since 1950. Today our company has the capacity in place to produce at the rate of six billions dollars worth of products efficiently and profitably. But greater than our change from centralization. ..greater than our modernization. ..greater than our growth in capacity. ..is our basic change from a manufacturer of tradition electrical equipment "to one of the most diversified product manufacturing businesses in the world. It is as though we had built a completely new General Electric side by side with the old one. The new one working in the nevI fields of space, atomic energy, of jet engines, gas turbines, electronic equipment, chemical and metallurgical products, missiles and of course, computers. Your company has advanced through this period of radical 5
change not only finareially strong but well able to finance profitable new mentures and with foundations for constant growth in the most exciting new areas of economic development. Today your company is not simply growing within already established industries. It stands at the advanced outposts of the most complicated technologies of our time. There are very few companies in the world that could even attempt to solve some of the fantastic technical problems posed by space exploration or development of nuclear energy, for example. But General Electric can solve such technical challenges and develop new businesses from them I have mentioned the company's exciting new business developments. They are expensive ventures, in some of the mQ) t advanced technologies of our time. But these- are the coming sources of economic growth, new employment and greater profits. They include such advanced technical businesses as atomic energy, fuel cells and other power sources, gas turbines and jet engines for commercial use, computers and information handling systems; automation of industrial, commercial, and government operations; modern electronic components such as transistors, diodes and micro circuits; exploring the business potentials of thermoplastic recording; desalting of sea water, and space vehicles for scientific military and commercial purposes. In addition to the domestic market the international markets are increasingly attractive because they are in many cases growing even faster than the United States markets. In 1960, the company's foreign sales including exports, Canadian General Electric, and foreign affiliates amounted to six hundred million dollars. By the middle of the 1960's, this will be a billion dollar business and that is only the beginning in a world that is electrifying as fast as it can. Today we have plants in twenty-one countries, truly 'the sun never sets on General Electric~ We have a number of basic strengths which will enable the company to rise above the present sales rate. There is, first of all, the strength of our superb body of employees, perhaps the most creative team in history. We have a quarter of a million skilled and productive employees, including 37 thousand college graduates of whom 26 thousand are scientists ~nd engineers. These employees are organized into 113 business departments and the research oriented functional services. Each under the experienced leadership of seasoned managers. Some 01 the departments are a quarter of a half the size of the entire General Electric Company twenty years ago. We have at our disposal 108 million square feet of completely modern manufacturing and laboratory facilities, most of it built or equipped since World War Two. In 1961, 160 million dollars more will be invested to modernize and expand these facilities. Your company has an established market position in every segment of the economy here and abroad including consumer, industrial, commercial and government markets. Thus, it has the channels to establish new ventures quickly and soundly.
General Electric has ample financial resources to develop profitable new markets and product lines and handle any other financial needs that may emerge. The company has, as a consequence of this diversity, a unique capability to produce completely engineered systems, nct merely individual components and products, for industry, electric utilities, national defense, commercial and residential installations and for municipal services. Such engineered systems enable us to sell many of the company's products at one time to the advantage of the customer as well as General Electric. As I mentioned earlier, these slides and much of the accompanying script were lifted directly from Ralph Cordiner's talk at the share holder's meeting. I have taken your time to go over this because properly applied, these customer resources and contacts can be a great source of strength to you in the sale of computers. You have already seen the influence that can be exerted at the proper time by our financial people in the field of banking. In the next few days you will hear from the man who heads up the defense field operation, who will talk to you about the help that they can give in contacts with the government. You will hear from one of our better known Regional Vice Presidents who will discuss their function. And you will hear from the man who directs our advanced management school at Crotonville, from Harold Strickland, our Divisional Vice President and a member of the office of the president. I believe that these people and the other speakers will ;give you a whole new dimension of the company and how it compares with our competition. In closing, I would like to tell you one of the few computer stories that I have run into. It has to do with an old line army colonel of the 306 and bayonet school. It seems that his staff had been trying to get him to consider a computer for several years, but had not gotten very far. Finally, during a recent computer meeting in Washington the staff persuaded the colonel to attend and they eventually got him over to a GE 225 that was on display. And after a good deal of discussion they finally persuaded the colonel to ask the computer a question. The question he asked was 'where is my father?' The answer came back.. .'Your father is in Alaska.' The colonel snorted and said that he knew these machines weren't any good. 'My father is dead.' Wayne Wright who was in charge of the display was quite perplexed, but finally suggested that the question be rephrased to 'where is the colonel's mother's husband.' This time the computer came back with. ..' the colonel's mother's husband is dead, but tell the so and so that his father is still in Alaska. ' 6
O. K. LINDLEY
As many of you know, since leaving the Eastern Region I have been assigned the job of manager...Sales Analysis and Planning which is a sales subsection function reporting to the manager of sales. So much for titling, and what it is worth. ..what does it really mean. Very simply, it means planning, organizing, integrating and measuring... good old Crotonville poim. " even though I express this as simply it is basic to every detail of this function. As we all all know, the sales organization is a major contributing activity in the achievement of the department's objectives for volume, market position. " that is percent of available... and profitability. The sales objective is to sell the maximum quantity of the product or service through the most efficient sales and distribution channels within the planned selling expense. And since sales volume does not always vary in direct proportion to selling expense, the sales sub-function must determine the relationship of selling expense for various levels of sales volume to be considered by the manager of marketing in establishing volume and permitted selling costs objectives.
Now, let's first talk about sales planning. One part of sales planning involves the formulation of sales objectives, specific plans and policies by product, market and customer required to carry out the over all marketing plans of this department.
Another part involves plans and programs designed to stimulate the selling organization and to keep enthusiasm high. To do this function, it is necessary to formulate sales volumes objectives in appropriate detail, that is, by product, market, trading area, customer, channel of distribution and individual salesmen, if so desired. It also includes the formulating of market participation objectives, percent of availability in appropriate detail, and determining the proper sales approach by product, by market and by customer We must also determine the optimum sales effort manpower, that is manpower and expense, required to meet these various sales objectives we must recommend or changes in sales channels within and outside the department. We must formulate plans and timing for seasonal compaign~, special sales activities, special local promotions, .
timely well planned sales meetings, both at headquarters and in the field and introduction of new product lines and models and product specialists meetings, as well as possible incentive compensation plans. Another improtant function involves the development of merchandising plans with the help of advertising and sales promotion, as well as integrating the plans of the marketing sub-functions with the sales plans and programs for the department. I believe I have defined and described the sales planning function, now let us talk for a moment in the sales analysis area. Here in this function we analyze the available business and sales results by markets, industries and customers, including location. In order to do this we must evaluate product acceptance and position on the growth curve, and at the same time, constantly be appraising new uses and applications, analyzing competitive practices, determining customer buying habits and trends, appraising selling prectices and trends, surveying customers on results of sales campaigns and promotional programs. The data resulting from this sales analysis work is necessary for the development of the sales and marketing plans, including the assignment of manpower, location of field sales personnel as well as recommendations for product planning, advertising and sales promotion, sales and distribution channels, market development activities and sales methods. This sales analysis work, you will see, re quires the necessary assistance from marketing research and integration with product planning studies. So much for what this job function will con tribute in your overall, everyday work assignment. Now, let's take a closer look at what has actually been accomplished, and is underway to your benefit. For the first time in Our department history, and as of January 1st this year, each of the respective three regions had their commercial orders received budget as well as their commercial and administrative expense operating budgets, and since that time, for measurement purposes, the regional budgets have been broken down for each of the districts, both as it pertains to orders received and their C and A operating budgets. As of May 1st the Regional OIR Budget has been increased by seven million dollars. ..1. 5 million to Western. ..1. 5 million to Central. ..and four million to Eastern. This increase represents the government and military portion of our business for 1961. I had to laugh the other day when reviewing the monthly sales report of one of the unit managers who had been traveling the districts recently.' He made the statement to tlie effect that the distrIct people were unhappy with their budget of orders received and unhappy with their operating expense budget. This is a healthy situation and indicates we have done a good job. The report went on to say, however, that they expected to exceed both. By far the majority of the time and effort has been devoted to field 7
personnel work consisting of organization, budgets, placement. When it comes to the placement of people, a few of us back here at headquarters feel as though we have been playing with God, but at the current date there is every indication that the respective regional managers and district managers are now beginning to take over from a recruiting, hiring and placement of people within the various district areas. Since we are talking personnel we should understand that personnel budgeting is fundamentally based on marketing strategy. Therefore, this budgeting wj.ll be done as a part of this function, reviewed with the regional managers, and implemented by all contributing groups. I am sure you will be interested to know that we have started and assigned eight men, representing about a two man year effort, to make a very detailed study as it pertains to both sales analysis and sales planning in our planned prime market area which are. ..banking, electric utility (but not gas utility or telephone) aircraft and missile and federal government (USAF, USN, and non-military) elec trical-electronics, petroleum, chemical, steel and automotive insurance service, research and consulting organizations and computer service bureaus. The main areas of investigation in each of these markets will be: definitions of industry studies, participants in industry factual description of pre.sent information handling needs, present computer applications, anticipated future customer needs, in-dustry as a market for computers, identify important potential customers for computer department. This study of prime markets areas is, as you can see, quite detailed and since the study will be developed to the finest point geographically speaking, we expect the final results to become the basis for better marketing strategy. Better marketing strategy which will accomplish. ..consideration of incentive compensation better placement of personnel, opening of strategic new offices, positive approach for direction of your pre-sales planning and efforts enabling you to properly assign sales responsibility by type of customer by geographic location. Aid in better selection of type of customer you will concentrate on with what product offering. Another example of thoughts and efforts in your overall behalf, you should have received at your regional and district locations by this time, a complete complement of framed pictures for you respective offices. Another small item of annoyance I hope will have been licked shortly, and that is your time clock card reporting. Of course, intermixed in all of this is the individual requests from you respective people in the field, particularly the Regional Managers and the District Managers, wherein you come to either Bob Sheeley or myself for information requiring effort on our part to better enable you to perform your sales functions in the field. You should all reasize that we people back here in headquarters are at all times thinking, working and performing with your uppermost interests in mind, enabling you to do more direct selling, which is your prime responsibility. At the same time, you must realize that whether it be timeclock routines or framed photographs, and because of the fact that many other functions and people are involved it all takes time. If I can, in this small alloted time, impress you to the point that you will leave here and return to respective locations with the factual impression that we are planning and producing for you behalf, then my turn here on this podium has been accomplished.
Yes, we admit that there are any number of things pertaining to personnel, market analysis, advertising, sales promotion, product planning, as well as many other areas which need to be looked into and bettered from your standpoint. We wish to assure you that given enough time and enough pills for blood pressure, metrecal for overweight condition, milk of magnesia for ulcers, these jobs will be done. RESOURCES FOR DEVELOPMENT
L. W. GOOSTREE
How a New Product Is Born
The General Electric Company is in the business of manufacturing and selling some 200,000 different products every working day of the year. The products range from toasters to turbines; lamp bulbs to jet engines; man-made diamonds to plastic table tops. With this gamut of products you may wonder how the company can ever come up with new products. The answer is simple in addition to manufacturing and selling products. The General Electric Company is also in the business of invention. 8
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General Electric has long been a leader in this industry of invention. According to government patent records it is the most inventive company in the United States and probably in the world. It has more than 30,000 patents to its credit. That is an average of about one patent per day for every single day of the 83 years General Electric has been in business. Today it is almost impossible to glance around you and not see a product in which the General E).ectric Company has had some influence and yet it continually comes out with new significant and sometimes startling products. Let's consider why this is so. .1
Consider, for example, that General Electric spends more money in a year on research and development than it earns in profits. Consider also that of its some 1/4 million employees, more than 37,000 hold college degrees, and that more than 26,000 of those degrees are in engineering and the physical sciences. And then consider that more than 1,000 of those degrees are doctorates. It all adds up to this: in every area of technology and science related to the company's activities. ..whether in nuclear physics or chemistry electronics or metallurgy. ..General Electric is able to call upon a huge reservoir of technical skills and -experience that is unsurpassed in industry. Where are these skills? Many of them are in engineering groups among the more than 113 product departments across the country. Many more can be found in the forty major laboratories throughout the company that are devoted to research and development in many different technologies. In addition, -thousands of specialists throughout the company are showing that savings can be effected, costs lowered, and the conduct of business improved through the application of research methods to engineering manufactur ing , marketing, financial activities, and the company's relations with its employees and its public. All of these activities contribute to new products and new areas of activities for the General Electric Company. The research laboratory at Schenectady is devoted to pure research where scientists are encouraged to explore any area of interest. From this laboratory have come such significant developments as methods for using'Tungsten for light bulbs; the X-Ray tube; Alnico Magnets; man-made diamonds and thermoplastic tape. The General Engineering laboratory at Schenectady is credited with much pf the company's early work in computers, talking movies, electro-cardiograph equipment and thousands of specialized instruments ranging from A as in amplistats to Z as in zymometers. Man-made diamonds is an excellent example of how a product is born. Announced as a research development in February 1955, the making of diamonds was the result of more than four years of intensive research. Examining various materials subjected to combined high temperature and pressure during this research, special techniques and equipment were developed to maintain for the first time temperatures above 5,000 degrees fahrenheit at pressures in excess of 1,500,000 pounds per square inch. Following announcement of diamonds, more research went into the product and little was heard of the results. However, 33 months after the original announcement, the metallurgical products department announced it was in pilot production. During this time General Electric had invested $2.5 million in research and facilities. Today the metallurgical products department is in full production of diamonds for industrial markets. Recently I read where the man-made diamonds were being introduced to the consumer market as needles for Hi-Fi sets. Man-made diamonds is just one example of how research and development has paid off for General Electric. Between the original development and the pilot production, however, much effort was expended in product planning, marketing research, and applied engineering before the laboratory development became a practical and marketable product. A good example of a basic research development which has not yet reached the marketable phase is thermoplastic recording many of you are familiar with it. There are hopes that this development will someday be used in the products you are selling. .. computers. Thermoplastic recording was announced to the press in January of 1960. TPR, as. it is called, is described as a technique combining 'the processing speed and much of the versatility of magnetic recording and the storage capacity of photography while offering some advantages over both of these systems. ~ Initially, the research laboratory, the chemical development operation and the electronics laboratory are working on the special tapes used in the process. The General Engineering Laboratory is investigating applicatIons which could contribute heavily to world technology. And, our own Computer Department Advanced Development Laboratory, as you will hear, is studying applications for computers. The Industrial Electronics Division has been assigned responsibility for developing recording and play-back equipment for commercial application of the new technique. To date, thermoplastic recording is only an infant, and its commercial applications will come about in the future only after considerable development work. The effort will include more basic research, many hours of applied research, much frustration by product planners, arguments among practical engineers, and slowly but surely, products incorporating the development will reach the marketing phase, where you will become involved. We realize, of course, that General Electric does not have a monopoly on research and development. Competition is also becoming more able and 9
more aggressive, and we cannot expect succes$ to come automatically. The paths into the future will be marked by accelerating technological obsolescence, as heightened competition between companies and countries places a premium on the ability to develop new products and processes. However, using previous experience as a guide, the company expects that at least one-third of the products General Electric will be making in the 1970's are now either totally unknown or are simply. ideas in the minds of the men working in the company's forty major laboratories many of these ideas will apply to future products of the computer department. For example, in 1963, 72 per cent of the orders received for business and scientific systems will be' for products not now available. One year later, in 1964, the percentage will have risen to eighty-four per cent. Meanwhile, we will not be forgetting our current product line. We are accelerating innovation and emphasizing better customer values. The computer industry presents a challenging opportunity for General Electric to intensify its traditional innovative efforts, enhance its productive performance and step up even further its competitive vigor. Over the next four days, you are going to hear about the various steps the Q)mputer Department is taldng to assure creative innovation, productive performance and competitive vigor. We are proud of the team we have developed, and are continuing to develop a team that is experienced not only in the evolution of new products and new businesses, but also in taking a pioneering approach to every function of the computer business. We intend to intensify our efforts against major competitors. ..in every phase of the department's activities General Electric is not new to the struggle against major competitors. We have never had the market to ourselves but have always fought hard against some mighty tough odds to become leaders in such areas as the vacuum cleaner market; the major appliance market; and the communication market, to mantion a few. We are going to put up the same fight in the computer market.
Whether we can accelerate or even maintain our present rates of growth will rest largely in getting your wholehearted support and cooperation. Success will depend upon how the market-place evaluates our products and your services. The entire department is with you every step of the way. The products we now have are proven. We have made competition sit up and take notice and in some cases, have made them realize that the top is a slippery place. With the many new plans and products you will hear about during this meeting, we have every confidence that you will help General Electric rise to its responsibilities and opportunities in the computer industry.
CROWDING THE FRONTIERS
Dr. C. F. Spitzer The charter of the Computer Laboratory states that is is this Laboratory's function to supply to the Department new technology and to recommend areas for advanced development. As seen in Figure 1, the Computer Laboratory reports to the Manager of Engineering and its personnel currently represent about 16. 5 percent of the Department's engineering staff. The names of the laboratory's support technical units and their managers are shown on this organization chart. Eighteen personnel represent the technical and administrative support functions. In addition, five employees reporting to other department sections are assigned to the laboratory as local representatives of General Accounting, Materials, and the Patent Operation. The technical staff consists of about fifty. The present distribution of professional training is shown in Figure 2, together with our tentative long-range goal. Operating experience will teach us, whether these goals will require later modification. The currently planned expansion of the Computer Laboratory is shown in Figure 3, At the end of 1961 the total staff should be about 100, and continued growth at about thirty per year would bring us near 300 by about 1970. Figure 4 shows a forecast of budget and overhead rate. With staff increase must, of course, come an increase in physical facilities. Currently we are housed in a 20,000 square feet rented building in mountain view, California (Figure 5). A second rented facility less than 100 feet away, was occupied on May 1, bringing our total space to about 20,000 square feet. Approximately one year from now, our permanent facility in the Sunnyvale International Science Center should be ready for occupancy. Its 36,000 square feet on 5.6 acres of land are designed to accommodate at least 150 personnel, and will therefore be adequate until mid 1963. Space is provided for a computer, and for its service personnel (Figure 6), Total cost for the fully equipped facility will be about $1.5 million. 10
I , It is essential, to frame laboratory projects against the background of product plans, applications experience, product engineering readiness, and manufacturing capability, in order to maintain realistic coupling with the non-laboratory world. On the other hand, it is the laboratory's further obligation to broaden the scope and vision of our market-place oriented organizations. These functions could present impossible tasks to our relatively smaillaboratory, and are made possible only through very close coordination of our own work, with that of othex: company laboratories. This coordination is particularly intimate with the computer system and oriented components of the research laboratory, the General Engineering Laboratory and the Syracuse Electronics Laboratory. Information is freely exchanged, and fairly frequent visits ensure friendly relations based On mutual respect, giving us the confidence that comes from knowing that the research and development strength of the entire co mpany stands behind us. Figure 7 shows, in terms of vis itors to the laboratory, the intimacy of our liaison with Phoenix personnel and with the rest of the company. The trend toward more frequent contacts in unmistal.able, and hopefully it is a sign that, before very long, we will have taken our place among the outstanding company laboratories. We feel pleased and honored that this attention has become as regular pattern, and we sincerely hope and expect that it will continue. The division of our effort is such that about 70 percent of the work is aimed at the satisfaction of -recognizable short... or long-range product engineering needs. The remaining thirty percent are of an exploratory, or research nature. In both categories, we draw heavily on the ingenuity, Imagination and advice of personnel in Product Engineering, Manufacturing, and Marketing, and of others, outside the .Computer Department. We do not by any means believe that only ideas developed by laboratory personnel are worthy of further consideration. It is a widely-recognized observation, that the output of laboratories requires, in general, a considerable Product Engineering effort before becoming a manufacturable product. Indeed, the words: 'another worthless idea, if we had not taken it over' are product engineering by-words known to almost anyone who ever worked in a laboratory. I have, after these many years, arrived at the conclusion that this comment is in reality a significant compliment, on one hand, laboratory projects not ultimately taken over by Product Engineering would, in fact, be worthless to the company. On the Other hand, a laboratory should not carry its developments so far that they require no further Product Engineering. The Computer Labora tory is no exception to this rule, and we attempt to keep the Product Engineering subsections carefully informed of our progress. Every three months we formally present the laboratory's developments to Phoenix personnel, and we receive a return visit of the Product Engineering subsection managers during the interval. Many other contacts outside these formal presentations supplement the information exchange. It is, of course, the function of the Computer Laboratory to serve first, foremost, and above all, the needs of the Computer Department and of the process computer section. However, as frequently pointed out by our Division General Manager, essentially all the Division's work relates to the processing of information. It is to be expected, therefore, that the results of the laboratory's efforts should be made promptly available to the other departments of the division. For example, we have scheduled a conference of the division's Managers of Engineering for next month, to share our latest understanding with them and to learn, in turn, about their own advanced developments and development needs. Conversely, we have much to learn from the computer users in the company: for example, a seminar held last month at our laboratory, of. the company foremost computer experts, has helped us greatly in forming new concepts for future systems. Copies of our monthly status reports go to key mangers, within the division and in the centralized company laboratories. Since the computer field encompasses aspects of all physical sciences, and their related technologies, it follows that the laboratory's work covers a wide range of scientific activities, in its four technical units. The advanced circuits unit actually concerns itself equally thoroughly with materials development, device fabrication, and circuits research typical projects relate to the study of electroluminescent phosphors and photoconductors for display devices and logic elements; thin magnetic films as very fast memory devices; cryogenic materials for potentially very small and inexpensive computer elements; tunnel diodes in novel circuit configurations; and research and development on transistor logic circuits operating significantly faster than any currently marketed computer. The problem of evaluating the systems aspects of new components is assigned to the special projects unit. Their work is concerned with the logic potential, of such new elements as tunnel diodes, cryotrons, lumistors, etc. Components technologies of the future will take the form of integrated electronics, and relatively large circuits will be fabricated in a single sequence of processes. The problem of yield will then be of foremost importance. A small effort is, therefore, devoted to the problem of improved yeild through logic design. Optical information precessing techniques will be of the greatest importance in future computers, and one such system is currently under evaluation. It may have a significant impact on future computer design schemes. The earliest pay-off from any of the computer laboratory's work may be expected from the computer organization unit. This group has already contributed significantly to the department's present product lines, by proposing superior organization concepts. It is highly probable that a far more competitive machine can be designed by approaching 11
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more efficient utilization of all the equipment composing a computer system, than can be done by designing for higher speeds of operation of its components. Two of our projects are therefore devoted to studies related to improved organization. Another effort of a far more theoretical nature concerns the theory of machines. We hope that this work will culminate in a comprehensive understanding of the behaviour of all sequential machines regardless of their codes, programs, or specific organizations.
The peripheral equipment unit's work thus far this year, relates primarily to the general problems in optical character recognition.
Concurrent with participation in the American Standards Assocatiods work on a successor to the ~ 13 B Font, this unit has designed and built equipment to read and recognize characters of the new ASA numeral letter font, both by magnetic and by optical means. Other work is concerned with basic problems in optical pattern recognition, and with the use of thermoplastic tape and slides, as high-density storage media. Even though we have, as an advanced development laboratory, been in existence for only about one year, we have accomplished some noteworthy results, , summarized in the following list:
Transferred Projects Sorter Feeder
Transferred and integrated into Product Engineering.
Computer-Organization Proposed machine organization incorporated in the design of the planned product line.
Electroluminescence
Fabrication know-how communicated to manufacturing engineering, and used in checkout of printed circuit ,boards. Multichannel Reader In process of transfer to Product Engineering. With both magnetic and optical reading heads.
Maturing Projects Cryotrons:
Significant improvement in fabrication technique, circuit design, and logic design.
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Electro-optical information search machine under construction.
Font Design
Participation in American Standards Association work in defining 'a font tolerant of print defects. Significant Progress List Structures
Better understanding of improved use of computer memories.
Yield Improvement
A small number of redundant elements may dramatically improve the potential yield of high-density mass-fabricated electronic microsystems. Thin Magnetic Films
Equipment almost completed, for deposition and evaluation of memory films.
This listing is not intended to be complete. On the other hand, some of the projects transferred to product engineering are not to be considered anywhere near ready for manufacturing, let alone sale, and considerable Product Engineering effort will be needed to develop them into products. As projects are transferred, time and personnel become available for new work. Future projects being evaluated for their promise include a new method of character identification, novel high speed memories, and studies of asynchronous logic, to name but a few. Most probably, we will give our particular attention to the problem of non-erasable mass memories, with the initial aim of more than 20,000 bits per dollar of shop cost. Other potential future areas relate to studies in the mathematical identification of industrial systems, man-machine relations, process control computer reliability, and redundancy studies. In summary, let me state emphatically that, as a departmental laboratory, our aim is not the advancement of knowledge for its own sake; but rather, to select our projects carefully and in such manner, that we will at all times serve the foreseeable department needs by receiving our direction from the Product Engineering subsections, while trying to meet unforeseeable needs by making our best possible guesses as to where the 'frontiers of progress' may be in future years. In this manner we shall attempt to carry out our responsibility to you today, tomorrow, and in the increasingly successful years to come.
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PLANNING THE BREAKTHROUGH
R. F. BARNES
Gentlemen.. You and I are part of an exciting team. ...Marketing Research and Product Planning. ..A team that is bringing you one complete new computer system each year for three years. ..A team that is producing unique peripherals. ..document handlers, card readers. ..optical character recognition. ..All to make it easier for you to beat Clair Lasher's orders budget. To show better how you and we fit together to make your fut~re selling more effective, I've arbitrarily broken this presentation into two parts. ...Marketing Research and Product Planning. I say arbitrarily, because both these functions must be and are closely tied together. Both are aimed at answering two questions. What will we make? Who will we sell to? Let's answer the second question first: 'Who will we sell to: Wao's selling to them now? And how big is the market? To .bring you aboard our Marketing Research efforts, here's Chet Rice.
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PLANNING THE BREAKTHROUGH
C. T. RICE
McGraw Hill in this year's Annual Economic Report of the Electronics Industry started out by saying, 'Electronics markets will be untouched by any business downturn this year.' 'Not to be outdone by McGraw Hill, Marketing Research is pleased to say that the same applies to the computer market. In fact, we are predicting a pronounced jump this year in computer shipments.
The first slide shows our last year's forecast and our present forecast of the total electronic computer market growth. This shows a 15-20% per year growth rate, which is a rapid growth rate even when compared to other markets in the fast growing electronics industry.
One interesting feature is the dip in the chart which we detected in 1960. This is primarily due to IBM's transition from tube machines to transistorized machines, 2 years after G. E. Originally, IBM planned on shipping out a sizable quantity of 7070's during 1960. Remember, now, that this machine was announced in late '58 and they started taking orders all during '59 for shipment starting in early '60. Unfortunately for IBM, they ran into some serious technical problems with their first production machines and they had trouble getting the first installations working. At the same time, IBM was phasing out of production of their various tube machines such as the 650, 305, 704, 705, 709, etc. Thus, their factory output was seriously down in 1960. Interestingly enough, because IBM has such a stranglehold on many of its customers, the total market actually dipped and those customers waiting for 7070's were not picked up by the rest of the industry.
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Note also how our forecast goes up in 1961. This is due to expected large shipment of 7070' s, 7080' s, 7090' sand 1400 series. ..all transistorized computers well into production. Now that you have a good picture of the growth rate of the overall computer market. The next slide shows how it splits up into the top 15 user industries. This analysis was done on a little different basis than actual computer hardware shipments as shown on the previous chart in that this one shows cumulative orders received for computer hardware since the computer industry began in the early '50' s thru the end of 1960. Because, by the end of 1960, some orders had been received for computer systems to be shipped in 1961 and 1962. It gives us a little peek into the future, but, primarily, gives us a snapshot picture as of the end of 1960 and does not show the dynamics of each of the individual market. It is true that some markets are developing faster than others, but a similar analysis done two years ago by Jay Greene showed remarkable similarity. Note the rankings of the electric and electronic markets and the banking market.. .Both popular with the Computer Department. ..But also, note that if we had grouped the non-military Federal Government, the U. S. Navy, Air Force and Army into one big Federal Gov't market, it would total over 20 % which makes it the largest customer industry classification .for computer systems. ..and incidentally the pioneer of early computer purchases.
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Let's now look at what the Computer Department has done in the market-place. This slide shows how the Computer Department's cumulative orders received have split among user industries. Those 304 computers sold to NCR were not shown since they were subsequently sold to a variety of markets and, therefore, do not show the emphasis of our own sales organization's efforts. I don't believe that it's a surprise to anyone that we have strongly concentrated in the bank market. Electrical-electronic is next because many of our internal General Electric orders fall in that category. Incidentally, don't get the idea that opportunity is anywheres near exhausted in the bank market because a recent marketing research study showed that we have concentrated heavily in the top 180 banks and for these we emphasized the GE 210 for demand deposit accounting. There is lots of opportunity for expanding into medium-sized banks with our 225 and there are many other possible applications that demand deposit accounting. For example, many of our customers are talking of automating a bank's payroll. Now let's turn more specifically to Marketing Research and how we do our work. Let me assure 'you at the outset, that the proverbial crystal ball as a Marketing Research tool became obsolete with the introduction of the computer. Off the record, you might get me to admit that we drag the darn thing out occasionally and dust it off, sometimes, when management asks us a question which the computer can't answer. But our program in Marketing Research is to automate our task of gathering facts and statistics on the ever-changing business environment, so that we can assimilate on a systematic and continuing basis a huge amount of information with a minimum number of personnel. By utilizing a computer, we can constantly store information and then manipulate this up-to-date information when needed. With the possibility of stepping on Rem Rand's toes, we call this' Real-Time' Marketing Research. Through automation, we hope to be able to assist management in making sounder business decisions and formulate better strategies by replacing hunches or preconceived opinions with facts. The slide shows the way information flows in Marketing Research. M:Jst of our input comes from newspapers or magazines plus letters and reports, some of which come from you salesmen in the field. We figure we scan over 10, 000 pages per m:>nth. Out of the initial screening comes a series of clippings which contain information pertinent to the computer market. These clippings vary in size and importance, for example, from the price of the new Philco Model 2400 satellite computer to a whole article from Fortune Magazine on Sperry Rand Corp. These clippings then take one or more of three paths. One is directly into one of our 14 file cabinets. Another path is the Marketing Research Newsletter which is shown on the next slide. I am sure that most everyone here is familiar with' this publication. What we do is publish the first few paragraphs of each of the week's top news stories in the computer and automation fields. We add to this, a keyword headline, which we later index using punched cards. This index we publish and distribute semi-annually. For those of you who don't already get the newsletter, all you have to do is give me your name and address and I'll add your name to the list. I'm happy to add that it's still free! For those of you who already do get the newsletter, I would like to remind you that we accept contributions, particularly clippings from your respective local papers. I especially want to thank Gene Agerton from Philadelphia who is a recent contributor as well as Jim Kessler from the Dallas office. Incidently, we get contributions from other sources too. ...G. W. Alexander up in the Minneapolis ASD office is a faithful contributor and we even got one the other day from J. B. Lanbert in Rio de Janeiro telling about machines bull opening its first office in Brazil. 14 PLANNING THE BREAKTHROUGH
R. F. BARNES
An example of the third and automated path is shown on the next slide. This shows how information flows into our installation report. Information from anyone of three sources is formated and keypunched, providing a punched card which represents a new computer installation. The three sources are (1) magazine clippings or (2) a 'yellow card', and more about that in a moment, or (3) a salesman proposition report, which itself is being automated by Marketing Administration. This one card by itself doesn't mean very much but when this is placed into a deck of cards, each of which contains similar information on many other installations, we have a powerful Marketing Research tool. We have recently put this data through a sorter and had printed up an installation report a copy of which was sent to the manager of each field sales office. This is a l;1andy document and we want you to become familiar with it and use it. For instance, the other day, Ralph Zani wrote me from Boston, stating that he was recently assigned the state of Rhode Island as his sales territory and wanted to know all the computer installations in that state. Although, we don't have everyone listed, we probably do have 75% which is a good sample. In his case, it was easy for him to look up, because we have the data sorted out by state and city. Similarly, Bill Beagle asked for a list of all the computers in the New York City area for N. Y. office. Besides these general requests, we sometimes get detailed requests like a recent one from Jim Kessler. He asked for street addresses for two computer users in Waco, Texas whom we had listed in the installation report. When our information proved correct, Kessler reported that even the local Waco Chamber of Commerce didn't know those manufactures existed~ To keep this report up-to-date and more useful to you, we have provided 'yellow cards' on which to send in new installation information. Tom Horton in Los Angeles has already sent in three 'yellow cards', and I want to thank him a lot for his cooperation. These 'yellow cards' were used to verify some questionable data we had from another source and it was then fed right into the system. As you can see Marketing Research is a two-way street. By feeding our systematic collection system factual bits and pieces of information, we will be able to feed back summarized information which will help to make your sales task easier.
------------------ Thanks, Chet. Now that you fellows are current with Marketing Research, let's look together at the second part of my talk. ..Product Planning. Four important phases for you to be acquainted with are: What we do. .. How we do it. .. Who does it, and a look at future results. To describe what we do, let's look at what good Product Planning isn't.
Customer needs. Here your regular sales contacts are important to point out where a future product change will be valuable. As a Product Planning team member, you can improve our inputs by bringing these to the attention of Product Planning, as well as arranging depth discussions with selected customers, and consultants, as required. Product spects. Here's where customer needs, sales tactics, engineering capabilities, and manufacturing requirements are hammered out by the product planner into function specifications. Product appraisal. Performance, features, attractiveness and cost are compared from the sales and customer viewpoint, Competitive analysis are made on current and forecasted offerings. Timing. For the team, product planning records the scheduling of the major key dates, bringing to the attention of microscopic people how they fit into the microscopic picture. From these schedules, announcement, order taking, and shipment dates of your new products are made available to you. Product line control. Your sales needs for an endless variety of ratings as a standard line are matched against the costs to produce and the probable results. Pricing. Value to your customer competitive levels now and forecasted, costs, sales volume, profit goals, selling tactics are all considered in
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arriving at those prices which stand the best chance of helping you meet your goals. So much for the work elements of product Planning. Since it's a creative, evolutionary, and a team process, a brief moment on how it all fits into your field selling efforts. Starting at the left, ideas for products. ... hardware and software.. .may come from any place. Three major sources are: One Engineering, including the lab, ideas on how to do a present job better.. .faster, cheaper, more flexible, more saleable.
Two. ...Joint analyses of competitive offerings.. .techniques, features acceptance.
Three.. Sales and customer requirem~nts over and beyond current products. Here you fit in importantly. Promising ideas are then synthesized by the product planner into functional specifications to which engineering, applications, and manufacturing address themselves. The time cycle from specification to a deliverable product includes the type of invention, design, manufacturing required.. .plus, the priority of this new product in relation to others going through the same process. In the computer system .business, headquarters sales tactics determine when, during the engineering manufacturing cycle, the product will be announced and orders taken. On a -planned basis, orders are filled and customers use the product to satisfy their needs. As manufacturers -introduce more and more new products, hopefully to obsolete all but their own products, the product planning management of this team process becomes as competitive as the product itself. The pressures to shorten the process time cycle become as insistent as the pressures for increased product performance. As a member of this new product team, you can markedly improve the output. ..in time and product. . ..of this process by insuring that your inputs and feedbacks get to product planning for evaluation with ~,ngineering, manufacturing, applications, and other sales people. Headquarters backup to keep you in the Product Planning and research flow of information includes Chet Rice, Dick Fay and Ray Washburn, trainees Bob Lyons, Don Graf ( 225), Pete Scola (new computers), and Al Case (optical character recognition and the new document handler) Case Krygsman and Howard Carter (3100, 3101, data communications) Ross Reynolds, Don Falk (Site,) Rod Mead (1000 CPM Reader, ) Archie Watson (TPR), and May Doyle (proof encoder). Part four of my brief talk involves a quick look at our new product objectives. In supporting your present and future sales efforts, new product goals are aimed at increasing volume, broadening line, and creating new growth businesses. In business data processing; we currently have the 304, 210, and 225 computer systems aimed at pieces of the IBM overall line. As a result of close analysis of selected customers, competitive comparisons and in conjunction with Arnold Spielberg's group, and those with Art Critchlow, we have in active planning and implementation a broader market basket. As Lacy Goostree stated, this will mean in the business processing area alone, seventy two per cent of your 1963 orders will be for products not now available. In 1964, eighty four per cent of your orders will be for new products. These new lines (and it will be more than one line) have not yet progressed to the announcement stage. I can say that we are aiming at a line smaller than the 225. ..and one larger. The timing of their availability depends heavily on your current success with the 210 and 225. ..Getting the orders and resultant income so we can afford the major expenditures in new hardware and new software. On peripherals, our objectives are twa to design, manufacture and sell our own products to (1) better match peripheral performance to system needs, and (2) obtain greater profits and controlled source of supply by in plant manufacture. The General Electric document handler, full field proof encoder, 1000 card per minute reader, and OCR are examples of one or both of these objectives. Peripherals, as you are well aware, are the important interface between the customer and the information system. Working closely with Ken Manning's group, our plans are to make these electromechanical marvels more and more of General Electric design and manufacture. With the peripheral content increasing to well over fifty per cent of the total system cost, and the tailoring of systems to selected applications by unique peripherals, our new business systems will hinge on General Electric peripherals. In the next three days you will hear much of our new team approach to the product plans. ..that we are currently talking about. You have an important part to play in this team process of planning products to beat orders budgets. The perfect product has been defined, from conflicting viewpoints as: From Sales. ..A low price, immediately available from stock, with obvious unique sales features every customer wants and no competitor has. From Finance. .High net income and low investment, \ preferably none. From Engineering. ..A patentable contribution to the art. From Manufacturing. ..1000 a week output, never change the rate, one model only, requiring fancy machinery to produce uneven, but acceptable quality. The challenge of Product Planning is to weld these diverse views into one timely department plan which will satisfy you and your customer. ..and will build confidence that General Electric's plans for future products will enhance your personal stature in your customer's eye. 16
APPLYING THE RESOURCES.
R. R. JOHNSON
A few weeks ago, the Computer Department received a letter from a high school student in Pittsburgh. 'Dear sirs,' it began, 'I am a data processing student and I would appreciate any free material and samples you might have on this subject.. .' Now, while this letter is amusing enough on the surface, let's pause and consider it for a moment. For, in this relatively innocent request, we can put a finger on two vital issues in this com-plex business of selling data processing. First, from our engineering point of view, it stands to reason that we can not furnish free samples, that even the simplest of our products represents dollars in development plus dollars in hardware. On the other hand, your customer, like our youngster from Pittsburgh, often would appear to be looking for the most for the least with everything but green stanps thrown in at bargain prices.
Moreover, I believe we have a new brand of customer. For, is it not true that many of your customers today feel their organizations have hovered on the brink of a recession. ..have had time to hear talk from dissatisfied computer users. ..and have become cautious when automation is offered as a pill or panecea for their business ills? How then may we bridge this lack of free samples when our end product is probably the most expensive time and money saving device the ingenuity of man ever invented? Both the equipment we have to sell and your sales techniques depend upon a common factor. This factor is information. So, I am here today to give you a review and preview of Computer Department products from the engineering point of view and to discuss briefly the philosophy of the Engineering Section at work. A philosophy which we believe is producing and will produce an increasingly attractive family of data processing equipments capable of broad applications, long life, and efficient service. There is a Chinese proverb to the effect that it is wise to make haste slowly and I am certain that you learned at your grandfather's knee that haste makes waste. Yet for all the wisdom which may exist in old saws, the Computer Department Engineering Section scarcely has had time to cease running since Bank of America almost six years ago selected the General Electric Company to automate a major portion of its banking procedure. How fast that running has been may be simply illustrated by a few figures from Ergineering personnel rosters past and present. For example, in January of 1957, there were 101 individuals assigned to Computer Engineering. By January of 1959, this had grown to 240. Current figures for the Engineering Section set the figure at 452. Although Com;.:>uter J;)epartment Engineering and Erma had to 'grow up' together, we were very fortunate in achieving two major and enviable objectives. These were a big, solid-state computer and a satisfied customer. So much at the moment for ERMA. From her, we went on to the GE 210 system which will be discussed presently. Meanwhile, back in Engineering, another computer system was under development. This was the NCR-304 electronic data processing system and the subsequent 304-B. With the NCR 304, the Computer Department Engineering Section entered actively into a design automation program, and it should be noted historically that a considerable portion of the 304 was designed with the aid of another computer Today, we are using a 304-B to run design automation programs on current and future computer models. We are confident of the value of using a com~:>uter to aid in the design of a better computer. We have learned that proper design automation techniques will: 1. reduce computer design cycle tim,e; 2. reduce engineering design manpower; 3. provide better documentation for the designed computer; 4. assure greater reliability built into the computer; 5. determine optimal computer design; and 6. most of all, perhaps, remove much of the' coolie labor' from ~he backs, or more precisely, the minds of the design engineers. This year has seen us double the size of our design automation team which means that as the year passes, more and more of the routine and drudgery of computer design will be handled by computers. As our sales representatives, it is extremely important to you that we use computers to design better computers. Design automation is one of the strongest tools in the industry today with the key competitive advantage that it is possible to explore any number of design possibilities before freezing the design. It is also our intention in the future to extend the benefits of simulation to customer requests where they enter the area of performance ability in new equipments. But this must depend upon you educating our customers to the idea of our working out their problems in an elegant pseudo language such as COBOL, ALGOL, TABSOL or fringetobe processed by our general compiler program, GECOM. 17
Before leaving the subject of design automation techniques, one thing more remains to be said. Design automation and simulation depend upon computer programs. As I am certain Dr. Sassenfeld would be the first to agree, computer programming is not inexpensive. Still, weighed against the tremendous expense of a new product line, design automation is money well spent and perhaps the best 'life insurance' we have as we move to the future. Now let's consider our current frontier~, the products we have and how we in Engineering can help you in this day of the 'harder sell'. First the General Electric Company intends to assume a major role in the computer industry. In the Computer Dept., it is spending large sums of n1oney on engineering and applications efforts to assure our ability to provide you with more than adequate equipment for your customer's needs. It is our fullest intention both in hardware and software to increase our position in the field as dynamic contributors, and to continue to furnish you with highstandard, high-fashion, high-reliability computers. So, what are we in Computer Engineering doing about this big obligation.
Byron Burch will tell you how GE 210 grew out of Erma and will delineate its present capabilities. -Originally working with checking accounts, it has broadened its activities to process mortgage loans, -and eventually will be applied to all bank accounting functions. As you noticed on your copy of the General Electric 1960 annual report, the GE 210 is a show horse as well as a work horse. It's a truly spectacular set of prestige equipments. The bank without GE 210 is not a handsome as the institution that has "one. And while this certainly is not the chief bit of business we sell when we sell a computer, it's not an item to be over-looked. To illustrate what I mean, I was reading the other evening a account of the history of the British military uniform. Now it's a long jump from a nineteenth century soldier suit to a twentieth century electronic data processor, but I couldn't help noting that when the British Army of Queen Victoria's day was faced with a dull, unpatriotic period of peace on earth and the recruiting fell off, it increased what was called the seductive value of the uniform to attract young men into service. So let's not ignore the possibility tliat we may build a more seductive computer, and I am suggesting most strongly that neither engineering nor you can over-look the appearance factor and the value of a strong General Electric product image. Grant the GE 210 is the banking computer, it also is something considerably more. And, taking advantage of the know-how gained through it and ERMA we are now preparing to move strongly into the 7070. ...1401 span of the general purpose computer market. It will be the pleasure of Mr. O'Rourke and Mr. Levinthal to present to you the major virtues and capabilities of the GE 225 and I am" certain that I can add little to their remarks. But I would like to call your attention to its extreme flexibility as a computer. For here, at last, we have a truly modular machine, a computer developed in the building block philosophy which adjusts simply and quickly to any size task. The GE 225 can cover a range of applications from conventional punched card approaches to a highly sophisticated management information system, demonstrating equally high performance in general data processing or engineering and scientific calculations. Moreover, its ability to incorporate a variety of peripheral devices by means of its special common connecting device, the 'controller selector function' mark it as a big step toward tomorrow's computers which must emphasize compatibility among all computer department product lines and equipments. Before we leave the 225, a word of caution. We like the 225 and we're glad you like it, too. But please, gentlemen, think twice before you offer a customer a new option you've just thought of. The 225 does just about everything now short of bird banding and counting goldfish, and I suspect if one of you ran into an individual who needed a computer with a bird bander and automatic fish counter built in, you would sell him a 225 with the bander and counter as optional peripherals. Actually, in the field of special applications for computers, we're better set up to serve your individual needs than we were. At the beginning of 1961, we established a new Engineering Subsection, Special Computer Systems under Mr. William Bridge and this is the function in engineering which has been assigned the very important job of customizing our computer devices and systems to serve particular and unusual assignments. The formation of another new subsection in engineering also has occurred since last we met. This is Peripheral Equipment Engineering under Mr. Ken Manning. And on Wednesday, Mr. Manning, himself, will talk to you about the big new look in General Electric Computers. the addition of a strong and substantial line of major peripheral equipments. Naturally, this change will not take place over night. Obviously, there is a long and difficult road ahead. But in less than a year, we have made tremendous strides. From a handful of individuals, we have built a full-fledged, exceptionally competent Engineering Subsection. Moreover, the subsection, as Mr. Manning will tell you, has gone to work. Some of its products are in the development stage and others are close to the point of release to manufacturing. Among these are: sorters, a proof encoder, card readers, a large random access memory, a flexible disk memory, a low speed printer, and an optical character reader. Other products are in the planning stage both in the peripheral engineering function, and as Dr. Spitzer has revealed, at the computer laboratory. 18
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Therefore, one of the important facts of this sales meeting, gentlemen, is that the Computer Department in general and computer engineering in particular have moved into the peripheral field with the means and intentions of building some of the finest computer peripheral equipment that have yet headed to market. Still in the area of engineering's reorganization, I am most happy to announce to you today the creation of a third new engineering subsection. This is small automation systems and devices engineering. The small automation systems and devices engineering subsection will emphasize and implement our interest in low cost, self-standing, automatic devices for industry. These will be data processing units and systems aimed at those individuals and industries who don't like the ultra sophistication of highly priced, highly involved on-line data processors. The GE 3100 and GE 3101 are data collecting systems designed to serve the management and business functions of any industrial enterprise. These devices handle such areas of activity as shop production, inventory control, shipping and receiving, stock and warehousing, cost accounting, and any other important functions which the individual industry feels may require monitoring. Perhaps, I should point out here that we are not interested in assuming the ful:ictions of industrial computers, but we are most interested, indeed, in exploring and developing those supplemental services -of a strictly business nature. The 3100 and 3101 systems are spring boards into an enormous area of computer applications. They will permit us to do business wherever our kind of business is done. Regardless of the merits of these several .products, as far as Engineering is concerned, they are not good enough. The best machine in the world is not good enough nor shall it ever be unless it achieves the quality of those perpetual motion devices man dreamed of in the seventeenth century. And oddly enough, as we enter the age of the computer, it is precisely a perpetual motion machine that we require most. ..That is to say, data processing systems capable of one-hundred percent up time. So, within the Engineering section, a constant program of product improvement goes on. Reliability is the rule of the day with sophistication and diversification of product application running neck in neck for second place. Other factors also enter into our constant search for means of upgrading our equipment. Standardization of equipment philosophies and components bearing across product lines will make the job of product service easier. Conformity of appearance design to present machines with a pleasing and uniform General Electric aspect, improved human engineering so that operator controls and displays are in the best possible locations, simplification of installation requirements, increased modulability, each of these is of major and immediate concern to Engineering as we seek to provide you with the best computers available in the trade. And here, I would like to remark upon the growth of Engineering's Industrial Design unite which has more than trebled in the last year. For, from these individuals has come and will come our most apparent product improvements. Last year, for example, Mr. Henry Bluhm .received the 1960 Wescon Award for outstanding computer appearance design. Much more work of the same caliber is in progress. I have mentioned the outstanding good looks of our 210. You are well aware of the neat, handsome and efficient aspects of the 225. On Wednesday, Ken Manning will give you a preview of the exceptional appearance of our new line of peripheral equipments. Looking now to future frontiers, what are some of the things we must achieve in Engineering. One is compatibility among our products. As I have mentioned when speaking of'the 225, we already are involved with this concept. In the future, it must concern us in every aspect of our design. Assuming the obligation of our own peripherals, it would be dangerous to limit their design to this particular system or that. If we are to achieve the growth which we must to survive in the battle of computers which lies ahead, it is important that compatability among our equipments and devices become a prime goal of the immediate future. Of equal importance is this business of a product image, and it is of major concern of all of us that we develop a General Electric computer image. Our Industrial ~sign people are immediately involved as they should be. But this creation of a firm product image must go much deeper than the 'finishing touches'. You can not improve the appearance of a cow by painting it purple. It is absolutely essential to all of us who are concerned with building and marketing computers that we think in the terms of a General Electric computer so that the final product will be indelibly and unmistakably stamped with the GE brand. Sales and service are as much a part of this brand, this all essential product image, as is its appearance design. Finally, gentlemen, the state of the art in electronic data processing is always fluid and dynamic. There are no indications anywhere that we can settle down to this type of device or that, that we can say this is our market and that is not. Therefore it is the intention of the Engineering Section of the Computer Department to continue to explore, initiate, innovate and develop engineering programs in support of new and expanding product fields. An indication of this intent has been given to you in the promise we hold for the 3100 and 3101. There are several other projects on the drawing boards. Big, exciting computers, small, extremely fast and efficient systems, but gentlemen, the time for their unveiling has not arrived. When it does, it is our belief that we will make a major step forward in the computer business. As devastating as it may appear to established sales routines, it is the business of your Engineering Section to obsolete our existing products technologically as fast as we are able. For, this is the only way in which we can achieve those important contributions to computer technology which 19
will put us in the forefront of a field where General Electric belongs. Thank you, gentlemen, for your attention.
THE END RESULTS
T.J. O'ROURKE
I am here today to tell you a frontier story about a gun that made history. You have undoubtedly heard the story of how the colt 44 opened up the west and made it safe for the early settlers. Well, this is the _story of a Rifle that opened another frontier. This rifle is kn~s the GE 100 computer system. In the early days, this frontier belonged to a certain tribe of Indians. These Indians were firmly established and roamed their hunting grounds at leisure. They were not bothered by an occasional settler, just as long as the settler did not encroach on their superior hunting and fishing areas. Life was difficult for the white man on the frontier in those days. However, one pioneer family was not deterred from stringing-out o | |
