MEMOIRS OF AN ICBM PIONEER Simon Ramo broke with Howard Hughes, then built TRW, the company that developed the U.S. missile. He says what went right then would go wrong today.
By SIMON RAMO Excerpted from The Business of Science, copyright (c) 1988 by Simon Ramo, to be published by Farrar Straus & Giroux/Hill & Wang.

(FORTUNE Magazine) – Simon Ramo, 74, is one of the elder statesmen of U.S. high technology. He was a co-founder of two FORTUNE 500 companies. One of them was TRW, an enormously successful defense electronics concern that put together the complex systems required for the first American intercontinental ballistic missile; it grew out of Ramo-Wooldridge Corp., which Ramo and a Caltech classmate started in 1953. The other company, Bunker Ramo, a computer venture, was acquired by Allied Corp., now Allied-Signal, in 1981. Ramo has advised Presidents, Cabinet members, and Congress on questions of defense and science policy. The Business of Science: Winning and Losing in the High-Tech Age, to be published in June, is the latest of a dozen books he has written on subjects from technology to tennis. In this first of two excerpts from the new book, Ramo recalls his work -- and eventual break -- with the eccentric Howard Hughes, reviews his experience with the smoothly organized ICBM program, and explains why collaboration among government, industry, and universities on weapons systems cannot work as well today as it did in the 1950s and 1960s. Ramo was born in Salt Lake City to Lithuanian immigrant parents who owned a clothing store. His entrepreneurial bent asserted itself early. As a high school senior in 1929, he invested the $325 he had saved toward college expenses in a violin that was a considerable improvement on the one he had been using. With it he won a regional competition -- and a scholarship to the University of Utah, along with more money than his original $325. The violin stood him in good stead again in 1936, when he was about to get a Ph.D. in engineering and physics at Caltech and faced a virtually nonexistent job market. He performed after having lunch with a General Electric recruiter, who seemed less interested in his impressive academic credentials than in GE's commitment to the community in Schenectady, New York, particularly the local symphony orchestra. Ramo was hired as a laboratory researcher and soon became the orchestra's concertmaster as well. He later asked the recruiter how he liked the concerts, only to be told that he didn't really enjoy music. In 1946, unhappy about GE's diminishing prospects in high technology and eager to return to California, Ramo joined Hughes Aircraft Co., which would shortly become the leading supplier of electronics to the U.S. armed services. Eventually the Pentagon developed serious misgivings about having to rely for so much crucial equipment on a company controlled by a man so bizarre.

WHAT PROVED TO BE an astounding high-technology research and development center was founded just after World War II at Hughes Aircraft Co. in Culver City, California. It came to house the largest concentration of technical college graduates, including the greatest number of Ph.D.s, in any single industrial facility of that period, except for the Bell Telephone Laboratories, the research arm of AT&T. By winning every competition, the new operation attained a virtual monopoly in certain critical military electronics and guided-missile technology. For decades, every airplane with the mission of intercepting enemy bombers entering North American air space was equipped with vitally needed radars, computers, and missiles developed and produced by that one source. In April 1946, when I came to Hughes Aircraft to institute high-technology research and development, it was far from the place it was to become. Howard Hughes, I was informed, rarely came around. When he did show up, it was to take up one or another trivial issue. He would toss off detailed directions, for instance, on what to do next about a few old airplanes decaying out in the yard or what kind of seat covers to buy for the company-owned Chevrolets, or he would say he wanted some pictures of clouds taken from an airplane. An accountant from Hughes Tool Co. ((started by Howard's father)) had the title of general manager but was there only to sign checks. A few of Howard's flying buddies were on the payroll, using assorted fanciful titles like some in Gilbert and Sullivan's Mikado, but apparently did next to nothing. A lawyer was on hand to process contracts, but there were practically none. In addition to the Spruce Goose flying freighter, a mammoth eight-engine plywood seaplane that barely managed to fly even once, there was an experimental Navy reconnaissance plane under development (which, with Hughes at the controls, later crashed, almost killing him). The contracts for both planes had been canceled. Perhaps, I said to myself, this is one of those unforeseeable lucky opportunities. Why not use Hughes Aircraft as a base to create a new and needed defense electronics supplier? During the next few years, some things happened precisely as expected. I received initial contracts from the Air Force for advanced military electronics and guided-missile R&D. Some outstanding engineers and scientists in the eastern U.S. quickly heard what I was up to and contacted me. I was able to hire them with no interference from other Hughes ''management.'' I found myself free to organize the venture as I wished. The limitations of a company with an absentee owner, legally the chief executive of the company but exerting no executive control, gradually became too great to ignore. Rival administrative teams -- overlapping accounting groups, for example -- became bitter adversaries. Accusations of serious misdeeds flew back and forth. The probability of further corporate-level chaos soared when Howard Hughes developed serious difficulties with other principal investments. It was the middle of 1950, as we were engaged in the challenging task of doubling our size, when his problems with TWA and RKO began to make front-page news. Hughes's long interest in moviemaking was centered in his control of RKO; his interest in commercial airline operations was evinced by his owning a majority of shares of TWA. Both these large corporations had public shareholders, so Hughes had to obey government regulations created to protect their interests, and he did not always comply. As publicity grew about his difficulties at TWA and RKO, Defense Department leaders expressed alarm that so large a fraction of their most urgent military-technology projects were in the hands of a company owned by Howard Hughes. One high government official who thought very poorly of Hughes was K. T. Keller. In 1950, President Truman appointed Keller, then chairman of Chrysler, to be his special assistant for guided-missile programs. Keller and other high government officials faced a dilemma. They could deliberately set out to rein in Hughes Aircraft by placing new contracts elsewhere. This would strengthen the competition and cut the risk that the ignorance and capriciousness of the company's owner might suddenly result in critical harm to national security. Yet they knew such an action would destroy Hughes Aircraft. Its best people would leave, and failure to perform would result. The government leaders themselves would have precipitated the disaster they were so anxious to prevent. This led the Department of Defense repeatedly to hint that it would be well if a few of the key people were to establish another company to create the competition that was needed -- provided the departures did not get out of hand. I set out to try to meet with Hughes to discuss general management and long- range strategy. I repeatedly left messages at his Hollywood communications center. Months passed with no response. ((Dean)) Wooldridge ((the Caltech classmate who became Ramo's principal associate in leading Hughes Aircraft's technical operation))* and I then sent ! him a memorandum stating that we could not go on working for him if we were not able to confer with him when necessary. We were ignored. So a month later we sent him a joint letter of resignation, naming an effective date two months hence. This brought a response. Hughes, Wooldridge, and I met at the Desert Inn in Las Vegas, where he had recently moved. ((Neither in this meeting nor in a second one between Hughes and Ramo did Hughes succeed in persuading Wooldridge and Ramo to stay.)) I RETURNED TO LAS VEGAS for a third meeting a week after the second. Wooldridge and I had decided meanwhile that we should tell a very few people inside and outside the company that we were leaving. Getting out was going to be a touchy business. We had to ensure that Hughes Aircraft would continue to be strong and that the Defense Department would respect us for the way we handled our departure. Until we actually left, we were still responsible for managing the organization, and we needed to do it competently. My next meeting with Hughes, I was determined, would be the last. I did not see how it could be pleasant. This time, his air-conditioned hotel room was icy cold, and I shivered visibly a moment after sitting down. Howard said, ''You're cold,'' and he stepped over and slid open the closet door. There I saw hanging one baggy pair of khaki trousers, three freshly laundered shirts on wire hangers, a zippered, tan cotton windbreaker, and a dilapidated, fuzzy brown wool sweater. He reached for the sweater and draped it over my shoulders. As I feared, he looked to me to start the discussion. Hesitantly, I said something like, ''I regret to have to tell you again, Howard, that the Department of Defense doesn't see you as appropriate for a major ownership position in a really important defense company.'' It saddened him to hear that, he said, but he appreciated my frankness. He went on intermittently, haltingly, adding more personal information about what he called his missed life. He said, for instance, that he was terribly disturbed, and when disturbed, he could not eat. He said the only food he had had for several days was milk. He looked thinner, his face even more drawn and pale than usual. He told me that, contrary to what most people thought, he was really like others, and he worried about what other people thought of him. I needed to be more patient with him, he said, to get to understand him. He was almost ten years older than I was, but I found myself thinking of him as still only about 18, the age when he was orphaned. We were making no progress, and I was increasingly uncomfortable. Fortunately, he said he wanted to think about it all some more and would call me. He did telephone every few days to invite me back to Las Vegas. Each time, I told him firmly that it made no sense for me to make the trip again. Wooldridge and I submitted formal letters of resignation, and on Friday, September 11, 1953, we left the Hughes payroll. But I found I was not yet finished with Howard Hughes. He reached me at the office the morning of that Friday and said he was coming into Los Angeles to meet with me the next day, since he now realized that I would not go to Las Vegas. I was picked up at my home on that Saturday morning by the customary Hughes messenger-driver in the customary Chevrolet. In those days, the elegant beach house built for actress Marion Davies by William Randolph Hearst still stood on a prized portion of the oceanfront in Santa Monica. When we entered the beach house, no furniture was to be seen, just fragments of newspapers and packing cartons scattered about on the terrazzo floor. Dust was everywhere, the windows were very dirty, and the chandeliers gone. Telephone equipment was being installed feverishly by three telephone men, who were being watched over by two policemen and two messenger-drivers, whom I recognized from Las Vegas. We went up the stairs to the top floor, where I was ushered into Howard's presence. HE WAS STANDING in a large corner room, its two inside walls mirrored, the two outside ones of glass, and the floor carpeted wall to wall with fluffy, thick white wool. Probably this had been the actress's bedroom. I guessed it was the only room in the house in use that morning, and the only furniture in it was a single folding cot. That Army canvas bed with its little ecru pillow and gray-brown blanket, and no sheets, made me think of a movie scene of a berth in a prison. Beside the cot, on the floor, were two quart-size milk cartons, one of them open. Two folding chairs were brought in by the young man who had driven me to the beach. Hughes placed them alongside each other, so that we would both face an inside mirrored wall. (Howard, who was hard of hearing, obviously feared our being overheard by someone down on the beach.) It was a comical side-by-side position, Howard looking despondent, his elbows on his knees and his chin in his hands. I sat as he did, except that, instead of looking at the floor, I stared into the mirror at the two of us, wondering which looked more ridiculous. I was no longer working for him; the Howard Hughes chapter of my life was finished. On Wednesday Ramo-Wooldridge Corp. would come into existence. Whatever happened here was not going to change that. Yet here I was, seated alongside the legendary Howard Hughes, gazing into a mirror in the empty bedroom used by Hearst's mistress, pondering how to preserve an organization critical to the nation's security. It was his plan, he said, to donate all his wealth to medical research when he died. His will would set up the Howard Hughes Medical Research Institute. To get me to stay, he would name me in his will as ''a principal trustee'' of the institute. I told Howard his idea was good but should be revised if he wanted Hughes Aircraft to survive. ''First, set up your medical institute right away. Second, at the same time -- you'll see why in a minute -- make Hughes Aircraft a separate corporation. Shift no assets to Hughes Aircraft. They now belong entirely to Hughes Tool Co. Leave them there. Merely have the tool company lease to Hughes Aircraft the buildings and land and all the equipment and facilities that it is now using, and, similarly, lend it the working capital it will need. ''Now, Howard, this is very important,'' I continued. ''Take that separated corporation, the new Hughes Aircraft Corp., and donate it right now -- I mean 100% of the shares -- to your medical institute.'' IF HUGHES AIRCRAFT had not been incorporated as an independent entity and its ownership given totally to the medical institute in late 1953, then, years later, in the chaos surrounding Howard Hughes's death without a will, the company, even if it had survived, would have been just another item in the contested estate. The once spectacular outfit would have shrunk quickly to a small mediocrity. It would not be the valuable company it is today, whose sale to General Motors for $5 billion will provide hundreds of millions of dollars a year for medical research. On the Monday immediately following the Saturday when I had my last meeting with Howard Hughes, Wooldridge and I traveled to New York to set up Ramo- Wooldridge Corp. Dean and I completed the legal formalities with our Wall Street attorneys on Tuesday and arrived in Cleveland early that evening to invite Thompson Products Co., an auto parts company that had been interested in buying Hughes Aircraft, to become our financial backer. They accepted, and we signed on Wednesday at noon. ((The two companies merged five years later to form TRW.)) On Thursday morning, after we returned from Cleveland, the two telephones in our temporary headquarters were so jammed with calls from engineers and scientists interested in positions at Ramo-Wooldridge Corp. that the Secretary of the Air Force, Harold Talbott, could not get through and dispatched a local Air Force major to our office to ask us to come to Washington for a meeting. Taking the night flight, we were in the Secretary's office on Friday noon, meeting with him and his R&D assistant, Trevor Gardner. When the afternoon ended, we had a letter contract calling for the new corporation to provide science and engineering analysis to back up a Defense Department strategic-missiles planning effort just begun by Gardner. It was nice to know that the new company would have only a week of startup expenses and would become profitable in its second week. But this first task for which we had a contract was but the tip of the iceberg. The project that was coming our way was far bigger than we could possibly have imagined.

That project was to develop the intercontinental ballistic missile -- a crash program even bigger than the Manhattan Project that produced the atomic bomb. Late in 1953, U.S. intelligence reports reached what Ramo calls the ''astonishing but unavoidable'' conclusion that the Soviet Union was well down the road to building an ICBM, which would bypass the U.S. air defense system. Not long after, the fledgling Ramo-Wooldridge Corp. found itself charged by the Pentagon with the technical direction and systems engineering for all of the elaborate new technology that had to be developed simultaneously if the ICBM were to fly: rockets ten times more powerful than any that existed, guidance systems that would deliver the warhead to a precise target despite the enormous stresses of acceleration and vibration, materials that would save weight without sacrificing strength and that could be used to fabricate a nose cone that would survive the scorching heat of reentry. The risky strategy of parallel development paid off. Five years later an Atlas ICBM had been test-flown successfully for more than 5,000 miles, landing accurately on target. Why did the ICBM program work so well, when so many less elaborate weapons systems since then have sunk into a morass of delays, cost overruns, and malfunctions?

& THE AMERICAN EFFORT not only defeated the Russians in the race to set up the first operational ICBM force, but also was remarkably free of major cost overruns, schedule slippages, waste, and fraud. Of course, the performance of the principal industrial contractors, of whom there were about 20, and of the thousands of second- and third-tier contractors, was not perfect. But there were no abysmal failures and no scandals. The Pentagon and military contractors in the 1970s and 1980s, as the public knows full well, did not do as well. Recent military projects -- fighter planes, bombers, missiles, ships, tanks, guns, and even toilet seats -- have been of a smaller scale than the ICBM program and have typically called for more modest advances in technology. Moreover, in comparison with the ICBM program, these projects have not involved the need to coordinate so many parallel steps in R&D, production, testing, and operational implementation. Yet they often have cost twice their original estimates and have taken far longer to complete than promised. Further, recent weapons have displayed severe shortcomings in performance. Disappointing weapons-system developments in the 1970s and 1980s have not hinged on any one factor. But there is a significant difference between recent years and the early ICBM era: It is ''business as usual'' today in the government; it was ''mission impossible'' on the ICBM project in the decade from 1954 to 1964. That some very large and complex project of high urgency and priority will arise in the future is virtually certain. It is difficult, however, to conceive of the government's being able to set up the tight, closely integrated systems management that proved so effective on the ICBM program. In the middle 1960s, the Vietnam war lessened the willingness of many scientists to work on defense projects. By the early 1970s, most leading scientists and engineers in universities had become unresponsive to invitations to engage in military R&D. President Nixon, angry with the academic scientists for their failure to support the war in Vietnam, stopped the annual awarding of the National Science Medal, the country's top science award, and in January 1973 fired his science adviser and disbanded the President's Science Advisory Committee. Equally foolish, Congress banned all Defense Department funding of basic research in universities, which in turn began to ban classified work on campus; the breach between academia and the Pentagon widened. Antagonism toward military projects continues in much of the academic world to the present. I see some university scientists and engineers almost weekly, either on campus or at meetings of advisory boards, symposiums presented by professional societies, gatherings of the National Academy of Sciences, or socially. A large number want nothing to do with classified work. They think the military and the Administration have exaggerated the nation's defense needs and that selfish interests are overriding objectivity and common sense in the allocation of resources for national security. Half the time, I agree with them. They want greater emphasis on education and on wide-ranging pure research that holds promise for major benefits to civilization. Here I agree all the time. Today U.S. high-technology industry sees possibilities for highly profitable commercial exploitation of new advances; at the same time it is worried about increasing worldwide competition. Business leaders are not eager to watch Japanese and Western European companies take over consumer and industrial markets while we assign so many of our best professionals to military programs. High-tech companies still seek military contracts because they can help establish a foundation for novel civilian products. However, most executives look today for a balance of military and civilian efforts; they no longer automatically favor the nation's military needs as they make their plans. TO ILLUSTRATE HOW DIFFERENT the environment is today for a high-priority project, let us do some imagining. Suppose the President were to announce in great secrecy to a small group of influential leaders in Congress -- as Eisenhower did with the ICBM program -- that the U.S. must undertake a huge crash program or the consequences to the country would be disastrous. What would result? First, the meeting would be leaked to the public, and the reasoning behind the President's proposal would be disputed by many politicians, media commentators, and scientists. The need for the project would be seen by some as exaggerated and by others as nonsense -- in part because of the poor track record of earlier claims. The bigger the proposed program, the greater the opposition, because various interests would see that it might involve a reduction in programs they favored. If the President were to include executives of industry and presidents of universities in our hypothetical meeting, pleading that they assign their outstanding scientists and engineers to this supercritical project, the executives would hesitate to commit themselves. They would fear handicapping their companies' competitiveness in the world marketplace if they shifted their talented scientists to the President's project. The university presidents would know that few of their best professors would leave their chosen research to work on a military project. IN RECENT YEARS, the voters, too, have become skeptical about the need for new, expensive weapons systems and have come to appreciate, to their credit, that national security involves much more than weapons systems. To be secure, the U.S. needs economic strength, social stability, skill in formulating foreign policy and negotiating with other nations, a healthy industrial infrastructure, assured availability of resources essential to national strength, and finally, adequate military forces. This list is long, and the military is only one factor. That component, adequate military forces, includes a rather varied set of subrequirements, just one of which is weaponry. (Another is trained manpower, for example.) And weaponry includes not only complex weapons based on radical advances in technology but also much mundane and simple military hardware. The state of the economy is very sensitive to overall efforts in science and technology. We must not place emphasis on sophisticated weapons systems alone and inadvertently deny ourselves the resources to create technologically advanced civilian products, because economic strength and international competitiveness are also requisite for national security. This would not be a matter of concern if we had resources to spare and a clear superiority over other nations in all technology. Unfortunately, such overwhelming preeminence no longer exists. Launching a huge crash program without controversy and delay is now impossible. There is another important reason the ICBM program went well. To cut the cost and time to complete any major project calls for streamlined administration. Today, bypassing layers of red tape is out of the question; approval must be granted every step of the way. Every conceivable sector in a bureaucracy now seems to have an active part. ONLY RARELY do political appointees risk making enemies of the established bureaucracy. They may start their terms of office with determination, but they usually temper it when the entrenched bureaucracy threatens to overwhelm them. / Every bureaucrat has countless allies. We were not greatly handicapped by political problems in the ICBM program, but we encountered a few. Harold Talbott was Secretary of the Air Force when the ICBM program was begun. At one point early in the program, a rocket-engine contractor who had lost out in the competitions succeeded in gaining Talbott's support to reopen the decision and elbow his way into the project. Talbott came to Los Angeles for the purpose of changing the contractor, a West Coast company, which the Project Office had chosen. The small meeting included Talbott's R&D assistant, Trevor Gardner; General Bernard Schriever, the Air Force officer in charge of the ICBM project; and me. The Secretary made the argument that the contractor for the particular task should be situated in the middle of the country (as was his candidate) because, in case of war, the two coasts would be bombed the most and the Midwest would be the safest. This was the ''dispersal'' policy Talbott had mandated for Air Force procurement. It made a weak rationale for reopening the selection process and dictating the use of his chosen contractor. The acknowledged paramount priority was for the U.S. to attain an ICBM capability before the Soviet Union. We were absolutely certain that the contractor Talbott was pushing, who had been properly evaluated against competition, was of marginal competence. It was critical to Gardner, Schriever, and me not to tolerate pressure to include unacceptable contractors who had used political influence to gain what management wouldn't give them. Each of us was reluctant to challenge the Secretary, and we sat there speechless at first, each gauging the effect of bucking a high-level presidential appointee. Schriever was an outstanding young general whose career might be ruined if he chose not to cooperate with the Secretary of the Air Force. I was the chief scientist on the program, but I was an employee of a private corporation, so the Secretary could not fire me. But could I refuse to cooperate with the Air Force's top executive and expect my company to go on doing business with that service? I was protected by the fact that my role did not include selecting contractors. General Schriever, not I, represented the government in its contracting with industry. Yet I felt I should say something to oppose Talbott, because, unless he withdrew his directive, he would badly damage the program. AS A MEMBER of the Secretary's staff, Gardner reported to him directly. Talbott could not dismiss him unilaterally because Gardner was a presidential appointee, but the Secretary's recommendation for his removal would be acted on within hours. Knowing Gardner as I did, I knew he would make a strong statement. His position in the government was in jeopardy, but not his life. It was General Schriever, the one with the most to lose, who beat us to the draw in replying. He told the Secretary that complying with the directive would impair the program and coolly explained why. Gardner and I immediately backed up Schriever. Talbott glowered, then lost his temper. He was a handsome, well-built man, elegant in attire and seemingly always poised, so it was scary to see him come apart, get red in the face, and with an ugly expression yell at Schriever: ''Before this meeting is over, General, there's going to be one more colonel in the Air Force!'' He had given Schriever an order, he ended his tirade by saying, and expected it to be obeyed. ''I can't accept the directive, Mr. Secretary,'' General Schriever said calmly, quietly, but with very clear enunciation, ''because I have a prior and overriding order. On being handed this assignment, I was directed to run this program so as to attain an operational ICBM capability in the shortest possible time.'' His manner displayed no challenge or disrespect. He added, after a pause, that perhaps Talbott might wish to put in writing an order specifically naming his choice of contractor to replace the one already selected, and at the same time lower the priority of General Schriever's assignment and put industry dispersal above the need for speed in developing the ICBM. The redness left Talbott's face and he turned pale. He made no comment and began to stare at the table, vigorously tapping a pencil on it and trying to pull himself together. He undoubtedly was thinking that if he put his directive in writing, he might have to cite more of his reasons for it than he would like. Also, Talbott's action would not go unnoticed. If the contractor was changed on Talbott's orders, it would be the talk of the industry. And there was Gardner to contend with. Talbott could expect Gardner to go have a talk with Defense Secretary Charles Wilson. Talbott would have to get Gardner removed from his job. He could not fire me directly; he would have to eliminate our company's involvement with the program. IN A FEW MOMENTS, his face returned to normal. With the fewest of words, he said to leave the contractor decision as it was, and left. I sat there wondering what Talbott would do next. If Talbott had been of a mind to do so, he could have harmed the project and all three of us personally. He chose not to. In fact, he went about singing the praises of the ICBM program's management team. Schriever had passed a vital test. If he had given in, he would have retained his title but lost control of the project. He was now firmly in charge. Not long afterward, Talbott's resignation was requested by Secretary Wilson because it had suddenly come to light that Talbott, using the Air Force letterhead, had been importuning government contractors to employ a firm he still owned. Perhaps the ICBM program benefited because it was lucky enough to have certain players on the team, but also because it lost the participation of certain others.

Besides an altered political climate, a diminished sense of national urgency, and the breach between universities and the Pentagon, still another important change has taken place since the halcyon days of the ICBM program. The U.S., which reached the zenith of its world leadership in high technology with the landing of American astronauts on the moon in 1969, now finds itself increasingly challenged by other nations, most conspicuously Japan. In the second excerpt from The Business of Science, to appear in the next issue of FORTUNE, Ramo sets forth his views on how the U.S. could strengthen its position in high technology.

FOOTNOTE: *Wooldridge, who retired in the early 1960s, now lives in Santa Barbara and has written two books about the mechanics of the brain.