Leading microchip maker calls for 'systems thinking' among CU grads

By Linda Myers

From the natural environment to the Internet, the world is dependent on powerful, but sometimes-fragile, systems, James C. Morgan, chairman of Applied Materials Inc., told a packed house in Rockefeller Hall's Schwartz Auditorium Oct. 2. As proof, he pointed to the recent massive power failure in the northeastern United States, during which "millions of residents learned what kind of system their electrical outlets are connected to."

Morgan

Morgan told the audience that "the networked economy enabled by the Internet is accelerating the rise of systems that affect our lives. Complex systems pose challenges for the way we think about problem-solving, decision-making and leadership," he said.

Morgan's company is the world's largest producer of semiconductor equipment, and its systems help make virtually every chip in the world. He was on campus as Cornell's 24th Robert S. Hatfield Fellow in Economic Education. His talk was titled "The Networked, High-Tech Economy: New Systems Require New Thinking."

The Internet is a powerful system of interconnectivity that now allows such endeavors as a Mayan women's cooperative in Guatemala marketing its textiles worldwide, and a local public health group in Ghana collaborating on a malaria vaccine with the U.S. National Institutes of Health and the World Health Organization, Morgan related. But the Internet also is an example of how systems challenge our thinking, he said. "Here in the U.S., we struggle with maintaining privacy, freedoms and security in our online world. In other societies, the freedom and access to information offered by the World Wide Web poses a threat."

Systems also rule in the global economy. "In business you can't think of a market today that isn't part of a global system," Morgan said. Competitiveness is defined in terms of that system.

Systems nowadays even define political organizations. "Terror networks like Al Qaeda are systems," Morgan noted, adding that systems thinking is needed to defend against and respond to them.

But systems also have a way of bypassing barriers. "Few know it, but during [the initial phase of] the war in Iraq, the U.S. Defense Department relied on a whole chain of foreign suppliers -- including key suppliers in Germany and France," who operated unimpeded, Morgan said, despite their countries' strong resistance to the war.

Morgan said he learned his skills as a systems thinker on the job, but that Cornell gave him the critical thinking that equipped him for success later (he earned a B.S. in mechanical engineering in 1960 and an MBA in 1963 at Cornell). He challenged the university to harness the great work it is already doing and make systems thinking its hallmark, "providing a competitive edge among institutions preparing young people to lead. These will be leaders, the ones able to face the complexity of the interconnected global economy."

The best way to deal with complexity is to learn to focus on the root causes of issues, Morgan said. "That means doing more listening than talking [and] looking for the driving forces, the critical forces shaping the sea of data and opinions."

Other skills required to be a systems thinker include being better at anticipating issues, planning ahead and staying as close to the issues as possible. If you don't, "soon events will overtake you, and you'll be following and hurrying to play catch up."

Systems, paradoxically, contain opposing forces, which people must learn to cope with while still making progress. "At Applied Materials, although we have become large, our customers want us to act small, be accessible, responsive and focused on their individual needs," Morgan said. "By applying systems thinking we have been able to move our organization forward and yield the benefits of these opposing demands."

Following his talk, Morgan took questions from the audience including one from a former teacher of his, Alan McAdams, a professor at the Johnson Graduate School of Management. McAdams asked how, with almost no time spent abroad before he joined Allied Materials, Morgan had managed to succeed doing business in Japan. Morgan spoke of learning early on to trust people, no matter what their personalities or backgrounds, and playing fair. "Forget about what's legal and concentrate on what's right." He also said that his own rule of thumb "has been to get in the path of progress -- where its emerging."

Earlier in the day, Morgan was honored for setting up a dean's discretionary fund at the Johnson School in McAdams' name.

Morgan was introduced by Cornell President Jeffrey Lehman, who had invited him to be this year's Hatfield Fellow in Economic Education, the highest honor that the university bestows on outstanding individuals from the corporate sector.