Toward Bigger Contracts

Merely to state the sales volume, however, is only part of the task of describing and structuring a long-term corporate goal. Where the creativity of the group in Vermont was most needed and exercised was in the exploration and development of a new set of subsidiary or qualitative goals, which the company must pursue in the new multi-billion-dollar environment toward which it appears to be headed. In short, what you must plan to do differently as you grow to twice your present size.

Typical is the point raised by Rube Mettler on the issue of diversification. It has always been a basic policy of TRW — particularly in government work where cancellations can come suddenly — to eschew contracts of a size that would dominate division's business. Like many other companies in defense work, it would rather take on ten $20-million contracts than one $200-million contract. `We pride ourselves,' says Mettler, `on the fact that no one contract accounts for as much as 10 per cent of sales. And it is a policy that has been very useful in the past. But how important to us will it be over the next seven years, when the size of contract we now tend to shy away from will represent only 21 per cent of the company as a whole? We ought to start looking at some of these opportunities in terms of our new capabilities.

A problem of somewhat the same tenor is posed by Sid Webb in discussing his group's approach to the new micro-circuit technology. 'It will require at some point a major commitment on our part because there is no doubt that in the long run a company will have to be big to be a factor in micro-circuits . . . There's nothing that comes anywhere near matching the tremendous impact, both positive and negative, that micro-circuits will have on the electronic-component business. This is an instance of where we'll have to be much bigger or we're apt to be much smaller.'

If dissent from tradition appears to be brewing here, Wright and Shepard are not of a mind to quell it. Wright rises to say: `I think we'll all agree that our basic diversification policy is a sound one. We don't want to be locked in with one big customer as some companies in this business are. But in regard to a single large contract, why, as a billion-dollar company we can and we should raise our sights.' And Shepard calls over to Webb, 'As to how big your micro-circuit division should be, the answer is "No limit ".'