A believer in reincarnation might well become convinced that Robert Owen had made a second appearance on this blue orb as William Norris, founder of the Control Data Corporation. Both were brilliant, farsighted entrepreneurs committed to helping those most in need—and equally messianic, deaf to the opinions of others, and, in the end, destructive of the companies they created and of their own reputations as well.
Norris and his twin sister, Willa, were born and raised on a cattle, hog, and corn farm in Nebraska in the second decade of the twentieth century. Together they attended a one-room rural elementary school, along with their older sister and seven other children. Norris later recalled the experience of being helped at the school by older students who taught him the value of working in teams—a lesson he seems often to have forgotten in his later career.1 After high school (where his sister claimed he knew more about physics than his science teacher), he matriculated at the University of Nebraska, where he obtained a degree in electrical engineering. Final examinations in his senior year were taken on the fly when he was forced to rush home to assume management of the family farm after his father’s sudden death. Despite that trauma, he had no trouble passing with flying colors. In the terrible Dust Bowl winter that followed, he saved the family’s cattle from starvation by feeding them Russian thistle, against the advice of fellow farmers who believed the weed fatal for cows. When those farmers’ cows subsequently died over the ensuing windy, freezing months, and Norris’s survived (in remarkably healthy condition, no less), he seems to have drawn the somewhat less than logical conclusion that “the majority is always wrong.” Thereafter, he invariably played the role of maverick in whatever context he found himself.
During World War II, Norris served in a top-secret US Navy cryptology unit engaged in breaking Japanese and German codes. Like their more famous British counterparts, Alan Turing and his colleagues at Bletchley Park—notably depicted in the 2014 film The Imitation Game—Norris and his navy colleagues made several technological breakthroughs that after the war proved invaluable in the development of digital computers. Leaving the navy in 1945, Norris worked for a variety of companies involved in the creation of mainframe computers, and in 1955 was named vice president and general manager of the Univac division of Sperry Rand. Less than two years later, saying that he’d “had a belly full” of top-management decisions he disagreed with, he joined twelve other dissatisfied Univac colleagues in a mass defection from Sperry Rand.2
Control Data
Within a matter of weeks, those engineers had started a new company, soon to be incorporated as the Control Data Corporation (CDC), with forty-six-year-old William Norris as its president. Norris was not the most creative engineer among the company’s dozen founders; that distinction went to the youngest of them, thirty-one-year-old Seymour Cray, who years later has become recognized as a highly significant figure in the development of computers. One of the biggest leadership challenges Norris faced at CDC was taming Cray, “a brilliant person who marches to his own tune.” Cray hated organizations of any kind, manifesting a passionate disregard for such standard administrative processes as planning, budgeting, and communicating.3 Only after Norris repeatedly nagged him to prepare a business plan did Cray submit the following:
Five-year goal: Build the biggest computer in the world.
One-year goal: Achieve one fifth of the above.
What his plan lacked in details, Cray more than compensated for in execution. In 1960 CDC delivered a supercomputer to the US Navy that was more powerful, faster, and cheaper—at a bargain $600,000—than anything IBM offered at the time (a second computer was soon sold to the British government agency that had managed the Bletchley Park codebreaking). Control Data was on its way to becoming the manufacturer of the world’s largest, most powerful, and highest-speed computers. In 1962, IBM’s legendary chairman, Thomas J. Watson Jr., testily asked his executive team how they had allowed the Control Data Corporation to gain the lead in superconductors: “Contrasting this modest effort [of Cray’s laboratory] with 34 people including the janitor with our vast development activities, I fail to understand why we have lost our industry leadership position by letting someone else offer the world’s most powerful computer.”4
For the next decade, CDC turned out a succession of ever faster, more powerful computers. In 1969, IBM, reeling from continually being bested by CDC, announced it was about to introduce a computer as fast as CDC’s fastest model. The effect on CDC’s sales was calamitous, as would-be customers sat on the sidelines for a year awaiting the release of the new IBM model. However, there was a serious problem with the new IBM computer: it didn’t exist. A furious Norris dubbed IBM’s unethical marketing tactic “FUD”—fear, uncertainty, and doubt—and brought an antitrust suit against Big Blue. No one expected CDC to win in court, and Norris’s colleagues advised him not to sue, warning that all he would gain from the exercise was unconscionably high legal bills that their chronically cash-strapped company could ill afford. True to character, he proceeded with the legal action, and when IBM settled the case by offering a package of concessions amounting to $80 million, a gloating Norris called the suit “one of the best management decisions in our history.”5
But none of CDC’s accomplishments satisfied Seymour Cray. He harbored the ambition of building a colossal computer, with capabilities beyond the imagining of most engineers at the time—and far exceeding the demands of CDC’s customers. But Cray was frustrated: existing circuit technology was insufficient to meet the needs of his dream machine, and getting the technology he wanted would require capital—lots of it. Norris, on his part, was reluctant to bet all CDC’s marbles on superconductor development; the profit potential simply wasn’t there. In fact, the bulk of CDC’s income was by then coming from its growing computer services businesses. He could not justify giving Cray the large sums he requested for what, increasingly, looked like a vanity R&D operation. Moreover, Norris knew Cray well enough to suspect that he would never be content working in a large organization, no matter how generous his budget. After a short tug of war between two rather immovable individuals, Norris and Cray amicably agreed to part company, and in 1972 the latter launched his own start-up, Cray Research. To help get it off the ground, CDC bought $300,000 worth of Cray Research stock (later sold for a threefold profit).6 Within a few years, Cray Research would be CDC’s major competitor in the supercomputer business, but the organizational growth that came with this success only rankled Cray. Less than ten years after founding his company, he resigned from it to do research of his own liking in a small lab—funded, naturally, by Cray Research.
Acquisitions and Diversifications
Unwilling to become dependent on either a single product line or CDC’s own internal R&D capabilities, Norris continually hunted for small companies with promising technologies that might fuel CDC’s growth and diversification. Between 1960 and 1979 the company acquired eighty-eight businesses, all through the exchange of equity. The largest acquisition, the Commercial Credit Corporation, was purchased in 1968 with three-quarters of a billion dollars of CDC stock. That marriage of a traditional financial institution to an unconventional technology company was not quite as bizarre as it may seem: CDC was in constant need of cash, and Commercial Credit came with a $3.4 billion dowry. Businessweek called the acquisition “marrying for money,” which was largely true; nonetheless, Norris claimed the long-term goal was to find ways to use computers to deliver the many financial services Commercial Credit offered. Although that promise was never realized, Norris did support the early development of electronic funds transfer, a process still in use today. Some of CDC’s acquisitions turned out to be “dogs,” as Norris put it, yet in total they paid off handsomely. By 1970, CDC was a flourishing international business in which thirty thousand employees generated $1 billion in revenue, up from ten thousand workers and $160 million in sales less than five years earlier.
Commercial Credit proved its value as a ready source of cash, allowing Norris to move into fields more closely related to CDC’s primary computer business, most successfully as an original equipment manufacturer. The OEM market for such peripherals as data-storage devices, disk drives, printers, and monitors emerged about the time CDC entered those businesses, and then ripened with the introduction of smaller computers, ultimately bearing full fruit with the advent of desktop models. In 1982, the year the company celebrated its twenty-fifth anniversary, CDC’s peripherals were a billion-dollar business, and the company had a half share of the world’s disk-drive market.7 It also dominated the data services market (since most companies could not afford to own mainframes, they remotely stored and processed their data on CDC’s supercomputers), and had introduced several successful computer-based customer-service businesses, such as Ticketron, a box office and lottery business, and Arbitron, a radio and television rating system.
During the 1970s, CDC was a Wall Street glamour stock. From its inception, the company’s shares had been widely held: it had initially been funded by selling six hundred thousand shares at $1 per share to some three hundred investors, and its ownership subsequently was spread broader with each company it acquired.8 Since Norris’s total personal investment was only $75,000, he was never the company’s controlling stockholder; nonetheless, he ran Control Data as if he were its sole proprietor. More precisely, he managed the company as if its shareholders—and the stock market itself—didn’t exist. Unlike most other enlightened corporate leaders, Norris had no interest in employee stock ownership, arguing that workers didn’t want to own stock, and they didn’t (couldn’t?) fully understand the complexity of share ownership. Most important, he was unwilling to expose his own employees to the vagaries of the stock market. At base, there was nothing about the market he liked. He was particularly outspoken on the subject of hostile takeovers, arguing that technology companies suffered greatly from the defection of their most creative employees when they became takeover targets. He also believed that executives were unwilling to make costly but necessary long-term investments because they feared that the consequent decrease in earnings would make their companies vulnerable to takeovers—an opinion he was not reluctant to share with investors. Norris had an opinion about almost everything, and was never shy about expressing it. For example, he didn’t believe there was any value in doing market research, arguing that everything CDC needed to know about consumer needs could be found in a newspaper. Indeed, he didn’t much care what CDC’s customers wanted.
Norris on the Road to Damascus
Even his closest colleagues said Norris was imperious, autocratic, willful, and stubborn. When I met with him several times in the early 1980s, I found him to be curmudgeonly, curt, irascible, and argumentative. Still, I rather liked him, or more precisely, I admired and respected his boldness, candor, and willingness to be an iconoclast and nonconformist. His most often quoted line was “When I see everybody going south, I have a great compulsion to go north.”9
And go north he did, beginning in early 1967, when he attended a seminar moderated by Whitney Young, head of the Urban League, one of the nation’s most influential civil rights groups. That year’s “long hot summer” was marked by a series of riots in several of America’s largest cities, including Minneapolis, where CDC was headquartered. After the violent Minneapolis uprising, which had led to the destruction of a large swath of the city’s Northside area, Norris flew to New York to discuss with Young ways in which Control Data might help to avoid a repetition of such violence. “Jobs,” Young replied. “Until these young blacks have jobs, until they have something to look forward to and work for, you’re going to have trouble in Minneapolis and everywhere else.”10
Norris returned to Minneapolis a changed man—literally a man on a mission. And that mission was for CDC to provide jobs for African Americans. Later, CDC’s mission would evolve and expand, becoming “to address society’s major unmet needs as profitable business opportunities.” By the late 1970s, Norris had developed, and largely implemented, a business model for CDC in which it endeavored to serve society directly through the goods and services it offered. This was radical stuff. Norris came to believe that meeting a company’s social responsibility should not be separate from its basic business functions. A few years earlier, US Steel’s chairman had declared, “The duty of management is to make money. Our primary objective is not to make steel.” In effect, Norris turned that statement on its head: CDC was not in the business of making money; instead, its business was serving society. The Wall Street Journal labeled this strategy “far out,” vilifying Norris as “eccentric.”11 At the same time, he was criticized by some on the left who portrayed him as a wolf in sheep’s clothing seeking to profit from poverty and social misfortune. Norris’s answer to such criticism was characteristically blunt and provocative: “No one objects to a reasonable profit on a can of beans. Why should there be objections to making a profit meeting the needs of disabled persons?”
The implementation of Norris’s new strategy had significant organizational implications. Unlike other progressive companies, CDC had no need for a special department of social responsibility or community outreach programs; in particular, it would not engage in corporate philanthropy. Norris was particularly contrarian on the subject of philanthropy, utterly rejecting the activity that was the special pride of his fellow leaders in the Minneapolis business community. In the early 1980s, forty-five Twin Cities companies were members of the “Minnesota 5 Percent Club,” each donating at least 5 percent of its profits to community organizations (another twenty-five local firms donated at least 2 percent). Norris made no friends among his peers by refusing to join their club, arguing that philanthropy never solved a social problem, nor could it: “Foundation after foundation, you look at their reports, and hell, there are hundreds of little projects, $10,000 here and $5,000 there, and what have they got to show for it? You can see, Christ, they’re not really accomplishing much.”12
Norris believed traditional corporate philanthropy—donations amounting, on average, to roughly 1 percent of profits—might be commendable, but it was far from adequate. In 1984 he explained to me, “In order to bridge the gap created by the [recent] Reagan administration budget cuts, corporate giving would have to increase by something like 150 percent.” Hence, he concluded that corporate giving was about as useful as “pissing in the ocean” when it came to addressing major social issues such as poverty, unemployment, and job training: “So we [CDC] abandoned the traditional do-gooder concept because it was too narrow, in favor of one that says we should address society’s unmet needs as profitable business opportunities. In that way, you’re not worrying about doing good or doing well. You’re really doing what needs to be done. And solving social problems is no longer a peripheral (and thus expendable) add-on to your business—it is your business. Now, it’s true that addressing major unmet needs is longer term than the traditional [business] strategy. But the traditional strategy is not working well these days.”13
The longer-term approach CDC developed had its inception in 1967, shortly after Norris’s visit with Whitney Young, when the company opened a hiring office in Minneapolis’s predominantly African American Northside neighborhood. Because Northside was some distance from CDC’s largest plant in suburban Arden Hills, Norris initiated a shuttle bus service to take newly hired people to and from work. But when few ghetto residents signed up for the distant jobs, Norris decided to bring the jobs to them. He rented a vacant Northside facility to serve as a temporary plant until an attractive new facility could be constructed in the same neighborhood. In 1969, that modern factory—built, in the main, by minority contractors—opened for business with a workforce composed of Northside locals, hiring preference given to the chronically unemployed, school dropouts, and in particular, unemployed women who were heads of households. Because Norris did not want the plant to be an act of charity, over the vociferous objections of the company’s manufacturing managers he directed it to produce peripheral controllers—at the time, a key part of CDC’s product line. He also didn’t want the plant to be seen as “an experiment,” believing that things done on a trial basis are doomed to fail (“If you leave room for failure, you’re very likely to fail”).14 As a top CDC executive later explained, peripheral controllers were “a vital part of our business. We had no choice but to make it [the plant] work or we were out of business as a company.”15
In subsequent years, opinions on the extent to which the plant was a success or failure would vary. From the start, there had been problems. Community leaders assumed that CDC was opening a plant in the ghetto simply to burnish its public image. Few neighborhood residents applied for jobs; many feared that whites would be too biased to hire them, and some who wanted to apply didn’t have the standard identity documents, educational records, and references the company typically demanded of new hires. Once those preliminary hurdles were overcome and a workforce assembled, training became an issue for the company’s supervisors, almost all of whom were white, and few with backgrounds supervising adults with little or no prior work experience. Skilled jobs at other CDC facilities were filled by employees with either experience or formal training, but the Northside workers lacked both. Hence, Control Data found itself in the business of offering the equivalent of an on-the-job technical-high-school education.
Over the next three years, the company was forced to deal with a raft of issues not found in its other facilities. Many Northside workers were unaccustomed to the discipline of showing up for work on time (or every day). Employees brought personal problems to work ranging from domestic violence to legal run-ins (on Monday mornings, a CDC manager routinely went to the local jail to bail out employees who had run afoul of the law over the weekend). No matter the problem, Norris was undaunted. “When you come to an obstacle,” he told his managers, “you don’t say you can’t do it, you just overcome the obstacle and do it.”16 For the most part, CDC was able to overcome the obstacles to the plant’s success. When it became clear that single mothers who worked in the plant frequently had to stay home to watch their sick children—or to care for them when friends or relatives who usually did so were unavailable—CDC opened a neighborhood day-care center, making the facility available to non-CDC employees as well. Somehow—often due to Norris’s sheer willpower—the plant eventually became an efficient and profitable part of CDC that he was proud to boast about, and boast he did, to all who would listen (as well as to those who would not). He was particularly proud of the day-care center, which he often visited, and where he was said to have been “absolutely enthralled by the children.”17 Like Robert Owen in New Lanark, Norris seemed to have had the rapport with children he lacked with adults.
Even before the Northside plant was running smoothly, Norris told his staff, “Let’s try one in Washington. There are a lot of blacks there who need jobs, too.”18 It took heroic efforts on the part of its managers, but a profitable CDC plant was eventually up and running a stone’s throw away from Capitol Hill. Norris then turned his attention to the other Twin City, opening a peripherals plant in a high-unemployment area of St. Paul. The plant was uniquely organized to provide jobs for those who couldn’t work full-time: a four-hour shift for mothers during the hours their children were in school, followed by a four-hour shift for teenagers after school, and a final shift in the evening for people seeking a part-time late shift. Unfortunately, when the plant was almost ready to open, demand for computers fell drastically due to a sudden, deep recession, and CDC found itself with the problem of overcapacity. But Norris was not deterred: the plant was quickly reconfigured to serve as a bindery for the company’s numerous manuals and other printed materials needing to be assembled, bound, and shipped.
In 1970, Norris decreed all new CDC plants were to be located in high-poverty areas, a fiat poorly received by his bitterly complaining operations managers. Norris not only held firm but doubled down, proclaiming, “You know, on our next poverty thing, we ought to try some burned out coal mining town somewhere in Appalachia.”19 And they did, opening a facility in Campton, Kentucky, the second-poorest American county at the time. That was followed by a new plant in San Antonio, Texas, where a predominantly Hispanic workforce was recruited and trained. Each of the new plants provided employees with extensive training, counseling services, and wellness programs. Based on what CDC had learned in its own facilities about training hardcore unemployed people, it then created a for-profit subsidiary—the Employment Preparation Service—which provided training in fifty centers across the nation on a contract basis for public agencies and private employers.
By 1980, Control Data’s long-term strategy of “addressing society’s major unmet needs as profitable business opportunities” was firmly in place. New divisions, subsidiaries, and product lines were being introduced almost as fast as Norris could invent them. Among these was the City Venture Corporation, a cooperative enterprise involving business, professional, governmental, and religious organizations dedicated to finding holistic solutions to urban problems. City Venture supported the formation and growth of new small businesses in run-down urban areas, offering residents a share of ownership in those enterprises. Operating in Toledo, Philadelphia, Baltimore, Miami, and, of course, Minneapolis, City Venture attempted to provide health care, job training, transportation, and affordable housing to the communities it sought to revitalize. But Norris wasn’t simply interested in revitalizing blighted urban areas. He also formed Rural Ventures, Inc. to bring the efficiencies of large-scale agribusiness via computers to small family farms like the one he’d grown up on. That was followed by Medlab, a mobile pathology laboratory that served isolated areas such as Indian reservations, and then Fair Break, a job-training and career-counseling program for high-school dropouts. And on, and on . . .
PLATO
Among all those initiatives Norris’s favorite, his pièce de résistance, his obsession (as many would say), was PLATO. His love affair with PLATO technology began in the 1960s, when a CDC salesman told him about an interesting experiment in the application of computer technology to the field of education. Professors at the University of Illinois had recently developed a computer-based system of instruction they called Programmed Logic for Automated Teaching Operations, aka PLATO. Norris immediately saw the potential of computer-based teaching systems not only for classroom use but also for occupational training. When he subsequently learned that the University of Illinois scientists were running their program on a clunky computer they had built themselves, he offered to lend the university one of CDC’s supercomputers rent-free. The professors then spent the better part of a decade perfecting PLATO’s computer programming and developing academically authoritative courseware for elementary and high schools, colleges, and universities, in subjects ranging from foreign-language instruction to mathematics and such business disciplines as accounting and finance. PLATO’s university-based developers were pioneers of what came to be known as CMI (computer-managed instruction) or CBE (computer-based education), the essence of which was a capacity for interaction between a machine and an individual student. The beauty of CMI was that it allowed each student to progress at his or her own pace, thus individualizing instruction. That’s what Norris loved about it: he felt CMI captured the best aspects of his old one-room schoolhouse, in which each student had been able to learn at his or her own rate. According to James Worthy, a longtime member of CDC’s board, Norris was the first business leader to recognize “that instead of dehumanizing the teaching/learning experience, the computer can be a means of humanizing it.”20 Convinced that PLATO represented the future of education, Norris entered into a partnership with the University of Illinois to develop and market it.
In 1973 CDC began to use PLATO internally in its digital computer training course for new hires, subsequently adding more advanced classes. A million dollars in software development later, Control Data Institute (CDI) learning centers began marketing a series of three courses leading to state accreditation in the field of digital computing. Six years later, CDI was offering a smorgasbord of technical and vocational subjects, all delivered on drone PLATO terminals located in its learning centers. In 1981 Norris claimed that PLATO had been “proven” to be cost and educationally effective in teaching basic academic subjects. As useful as PLATO was, alas, no studies actually existed to support his boast.21
All the computing power for PLATO was centralized at CDC’s superconductor facilities and distributed by phone lines to CDI’s network of learning centers in twenty-five American cities. Unfortunately, almost as soon as CDC perfected its distributed delivery of PLATO courseware, competitors began to introduce more cost-effective delivery of CMI on self-contained microcomputers and desktops. Norris, never willing to say die, directed his sales force to concentrate on serving school systems and colleges, where he felt it was still more efficient to use cheap drone terminals remotely connected to supercomputers. That might have been the case at the time, but few educational institutions had the financial wherewithal to cover CDC’s high fees for delivering PLATO. Moreover, few educators were experienced or comfortable with computer-assisted learning. About that time, the unorthodox partnership between the for-profit CDC and the nonprofit University of Illinois began to show signs of strain, so Norris ended the partnership agreement and hired his own team of academics to develop PLATO courseware. The cost of their salaries then was added to CDC’s ever-increasing investment in the development of PLATO.
Norris, creatively desperate in his search for markets for PLATO, decided to develop a program for high-school dropouts between sixteen and twenty-four years old. After a time-consuming—and expensive—period of development, the only market CDC could find for the program was in two prison systems. Looking farther afield, Norris set his eye on the nation of Iran, where the then-reigning shah was attempting to modernize and industrialize his country. Sure enough, the shah signed on. Unfortunately, while CDC was developing Farsi-language PLATO courseware, the shah was deposed. His successor, the Ayatollah Khomeini, had extremely limited interest in computers—or much of anything developed after the fourteenth century—and that venture ended as yet another write-off. An even more embarrassing error was CDC’s decision to sell PLATO technology to the apartheid-era South African government, which used it as a tool in the infamous passbook system used to enforce racial segregation. Norris, never willing to acknowledge a mistake, insisted that PLATO was used only to educate black South Africans.22
Nonetheless, Norris kept inventing new uses—and new markets—for PLATO: corporate training, agribusiness, the long-term unemployed, and homebound handicapped people. All were well intended, yet few proved economically viable. Norris continued to believe that the best use of CMI was in the classroom, and in hindsight, he was correct; nonetheless, he had the wrong technology with which to deliver it. PLATO’s el-hi courseware was first-rate, but CDC’s staff had a trained incapacity to adopt it for use with the inexpensive Apple and PC desktop computers that school systems were beginning to purchase. CDC’s programmers tried their best to convert PLATO courseware for delivery on the floppy disks used in those machines, but never managed to make the transition. Desperate to meet the growing PC challenge, CDC contracted with Texas Instruments (TI) to market PLATO courseware programmed for use with the personal computers it manufactured. A year later, TI exited the PC business, and CDC was back at square one. In 1984 Norris tried one last time to find a way to get PLATO into the nation’s classrooms, forming a wholly owned CDC subsidiary, United School Services of America, to reach the K-12 market. Like previous efforts, that one fizzled out, disappearing with nary a whimper. In all, CDC spent about $1 billion on PLATO and never turned a profit.
While Norris was becoming ever more deeply involved in the execution of CDC’s social mission, the company’s traditional lines of business continued to expand both domestically and internationally. The company’s customers included the US government, state and local agencies, foreign governments, corporations, engineering firms, and universities. With Norris occupied on other matters, someone was needed to manage all of that. Control Data was fortunate to have two long-term employees, Norbert Berg and Robert Price, whom Norris trusted. Berg, hired as Norris’s personal assistant in 1959, and Price, hired as a computer programmer in 1961, greatly respected (and were loyal to) Norris; more important, they were tolerant of his cantankerous disposition. Increasingly, Norris entrusted them with the day-to-day management of the corporation—Price running operations, and Berg dealing with areas in which the people skills Norris noticeably lacked were requisite. Berg appears to have been the only person who could speak freely to Norris, thus becoming the go-to individual for Control Data’s managers and outsiders who sought him out as an intermediary in their dealings with the notoriously difficult CEO. Indeed, if it could be said the antisocial Norris had a friend, that person was Norbert Berg. Fortunately, what Norris lacked in friends, he made up for in family. He and his wife, Jane Malley Norris, had eight children and twenty-one grandchildren.
Too Much of a Good Thing?
Over time, engineer William Norris—who had played a key role in the development of computers and been a pioneer in applying digital technology to the requirements of science, engineering, and industry—left all that behind to become a full-time business reformer, activist, and public scold. Like Robert Owen nearly two centuries earlier, Norris drifted away from his entrepreneurial, technical, and managerial roots as he became more and more concerned with alleviating human misery. Much like Owen, Norris never believed governmental action was sufficient, or efficient enough, to adequately provide the number of jobs, quality of health care, and levels of education needed by modern societies. Both Norris and Owen believed that enlightened capitalism was the best, and perhaps only, way to solve such social problems, although both also believed that government needed to be an active and supportive partner in such efforts. And both appreciated the fact that no one enlightened company—or even several—no matter how positive or virtuous their actions, could make more than a dent in such massive problems as poverty and joblessness. Ergo, at the height of their respective companies’ successes, both men turned their attention outward in attempts to convince fellow capitalists to adopt social missions.
Much as Owen had done before him, in the early 1980s Norris began to devote most of his waking hours to writing articles, giving speeches, testifying before legislative bodies, granting press interviews, and meeting privately with corporate leaders in fevered attempts to convert others to his secular religion of addressing social problems as business opportunities. He argued that all the charity in the world could not end poverty, and that adequately funding government antipoverty programs would require confiscatory taxation. Thus the only effective and economically viable course was for business leaders to transform solving social problems from costly activities consuming capital into profitable actions that created it. Sounding like a biblical prophet, Norris beseeched corporate leaders to see the light, exhorting them “to take the initiative and provide the leadership for planning and managing the implementation” of business activities that created social and financial capital. He repeatedly urged business leaders to join him in this common cause, because “no other sector of society has such capabilities for effectively planning, assembling the resources for, and managing the large and diverse programs necessary today.”23 Like Owen’s similar efforts, Norris’s largely fell on deaf ears.
Assuming Norris was correct, why did no other prominent business leaders enlist in his cause? It could be argued that many were convinced they were already engaged in solving society’s ills by addressing them as business opportunities; after all, isn’t identifying a need and filling it the essence of entrepreneurial capitalism? Alternatively, many business leaders may have been put off by Norris’s confrontational—and often condescending—know-it-all attitude. But the most probable explanation is that CDC’s poor financial performance made Norris’s arguments unconvincing. In the end, few of Norris’s social initiatives succeeded, and those rare successes were short-lived. Yet he oversold his ideas, too often believing that the dreams he envisioned had been realized when in fact they had not yet been implemented. And once he had launched an initiative, he almost invariably lost interest in it, PLATO being the exception. In the early 1980s skeptics had begun to take note of the short half-life of Norris’s initiatives, many of which seemed simply to disappear after ballyhooed launches.
That record might have gone unnoticed were it not for the unmistakable fact that, beginning in 1984, CDC’s primary computer businesses were in serious financial and competitive straits—the result of growing competition from Japanese companies and nascent Silicon Valley firms. That year, CDC was forced to spin off what once had been its core business, supercomputers. The next year the company lost $400 million. After defaulting on its short-term debts in 1986, Control Data’s board removed Norris from office, although they allowed him a face-saving “retirement.” In a clear rebuke, the board named Robert Price as CEO over Norbert Berg, who had been Norris’s choice. To keep CDC afloat, Price sold off at least half a dozen major CDC subsidiaries, most prominently Ticketron, Arbitron, and the Commercial Credit Corporation (the latter acquired by Sandy Weill, who subsequently made it a major component of Citigroup). Price soon was replaced by Lawrence Perlman, who promptly sold several more subsidiaries, including PLATO and the Control Data Institute. Most of CDC’s inner-city plants were closed, and many thousands of workers were laid off, though a few plants were saved by selling them to their managers and community groups. Over the next decade, the remaining bits and pieces of the company were either sold piecemeal or simply shut down. Today, vestigial parts of CDC continue to exist at Syntegra, part of the BT Group, and a Minneapolis peripherals facility acquired by Seagate in 1988 remains in operation.
Two competing views suggest why Control Data imploded so dramatically and disappeared so completely. The majority view, as expressed in Businessweek, is that the company’s problems stemmed from Norris’s “frittering away resources on offbeat social schemes and letting grand visions overcome the day-to-day details of running a business for profit.”24 The minority view, advanced by former CDC board member James Worthy, is that “less than 5 percent of the company’s assets were employed in the so-called societal needs areas,” so the unprofitability of those programs could not have been responsible for CDC’s massive financial crisis. Instead, Worthy puts blame on the red ink generated by the company’s basic businesses, including peripherals, computer systems, and data services.25 Yet neither Worthy nor any other of Norris’s admirers claimed that PLATO ever turned a profit on the $1 billion that CDC invested in its development, or that any of Norris’s other social initiatives proved viable for more than the short term.
My own perspective is that for many years Norris’s attention was almost exclusively focused on CDC’s social mission, and a great many of the company’s executives and managers were similarly distracted from the day-to-day operations of the company’s core businesses. In effect, CDC’s leaders had taken their eyes off the ball, and as a result the company lost its ability to compete effectively in the rapidly changing world of computers where technological leads vanish in the blink of an eye. Control Data thus stands as the only major corporation ever to have failed as the result of its commitment to enlightened business practices.
So what to make of Norris? Even his harshest critics admit that he was farsighted and, in areas such as the development of PLATO, a step ahead of his time. Even though he suffered from overweening optimism, he might have gone down in history as a great business leader had he limited his social initiatives to those directly related to CDC’s computer businesses, and devoted as much time and energy to renewing the company’s technology as he did to its social mission. During the late 1980s and early ’90s, the collapse of CDC was frequently advanced as a cautionary example to business leaders tempted to believe their corporations had a role to play in solving social problems. By the turn of the century, however, memories of Norris and the Control Data Corporation had faded, and few business leaders today know much, if anything, about either. At the time of Norris’s retirement, he told an interviewer that he “had accomplished maybe 10 percent of the work he plan[ned] to do in this world.”26 In fact, he was a burnout case; after his retirement, the world relegated Norris to an irrelevancy. At age ninety-five, he died in a suburban Minneapolis nursing home after a long struggle with Parkinson’s disease.
Coda: A Story Much Too Sad to Be Told
Control Data has the distinction of being the sole example of a publicly traded corporation that failed as a consequence of its virtuous practices; however, it is not the only company to have suffered such a sad fate. In 2001, privately owned Malden Mills, a textile manufacturer located in Lawrence, Massachusetts, filed for bankruptcy when it was unable to pay its creditors. Six years earlier the company had made headlines after the largest fire in the state’s history destroyed its three factory buildings. The company’s CEO-owner, Aaron Feuerstein, then became something of a national hero when he rebuilt the facilities, rehired all his three thousand employees, and paid their full salaries during most of the period of reconstruction. During that time he paid those men and women some $25 million, in the process earning the endearing soubriquet “the Mensch of Malden.”
Feuerstein’s benevolent actions generated disbelief from his peers in the textile industry. They pointed to the hundred or so abandoned mills in the American Northeast that had either gone belly-up or moved operations to Southeast Asia to secure cheap labor. Like most informed businesspeople, they were certain there was no future for their industry in high-wage New England; thus, they counseled Feuerstein to cut his losses and reinvest the $300 million he was due in insurance money in more verdant pastures. But he was of a different mind: he told CBS’s Morley Safer he had no intention of leaving his employees to fend for themselves, nor walking away from the economically devastated town. Citing the Torah as his ethical guide, he said he “felt a responsibility for all my employees to take care of them and give them jobs.” So he borrowed heavily to build a modern worker- and eco-friendly mill in which he put his unionized employees back to work, making its signature product, Polartec.27
Alas, Polartec was not patented, and soon low-cost operators were undercutting the price Malden Mills needed to charge to cover costs. Then, after a couple of unusually warm winters reduced demand for the product, Feuerstein was left unable to service the $140 million in debt he had incurred during the rebuilding. His creditors took control of the company, pushed him out the door, laid off half the workforce, and by cutting other costs allowed the mills to limp along until making a final shipment in 2007. When Feuerstein was asked what words he would like engraved on his tombstone, he answered “He Done His Damnedest.” In truth, there was nothing more he could have done. Out of principle, he had refused to read the handwriting that had been on the wall for decades: unionized American textile workers could not compete against cheap foreign labor.
About the time of Feuerstein’s relatively unnoted death in 2015, the CEO of the arts and crafts company Etsy was axed when investors tired of his benevolent business practices. His successor CEO explained the reasoning behind the dismissal: “Being good doesn’t cut the mustard.”28 That judgment would have made a fitting epitaph for Feuerstein, Norris, and a good number of other enlightened capitalists who failed to produce sufficient profits to keep the wolves of finance at bay.