[From Impact, newsletter of the Ayn Rand Institute, August 2004]

When Hutchinson Technology, Inc., was founded in 1965, its first product was a printed circuit board for Univac computers. The original headquarters for the modestly funded start-up was an abandoned chicken coop, rented for $75 a month, in Hutchinson, Minnesota. Since then, the company has become a global leader in the production of precision components used in hard-disk drives. Listed on the NASDAQ stock exchange, the company employs more than 4,000 people. The year 2003 was the most profitable in the company’s history, with a net income of $64.5 million.

In 2002 the company contacted the Ayn Rand Institute. The request: Can you help us create a training program, based on the philosophy of Objectivism, for our managers? ARI designed and launched such a program in the fall of 2002.

The prime mover behind the training program is Wayne Fortun, the CEO and president of the company. Mr. Fortun joined HTI in 1975 and has held various positions in engineering, marketing and operations. He was elected Director, President and Chief Operating Officer in 1983, and went on to become the CEO in 1996. Impact recently spoke with Mr. Fortun about the executive training program, the motivation behind it and about his interest in Ayn Rand’s ideas.

IMPACT

To set the context, could you tell me about Hutchinson Technology? What is its main focus?

Wayne Fortun

We’re a manufacturing company that creates a precision component for hard- disk drives. We start with rolled steel or sheets of copper-steel laminates, and through something like 200 process steps, turn that sheet material into a tiny little suspension spring. Our spring holds the head that reads and writes information on the disk itself; it enables the read-write head to “fly” over the disk at a very, very precise height above the surface. The spring is required to hold that head at the proper pitch, roll and yaw, so that that little “airplane” can fly at a height of 10 nanometers, plus or minus 10 percent. To give you an idea of what nanometers are: if you were to measure the height of a common finger print, that finger print would be 5,000 nanometers high.

IMPACT

Given the work required to create one of these tiny springs, how much does it sell for?

WF

On average they sell for 85 cents.

IMPACT

I understand that, in a really fast-paced and rapidly growing market, HTI has been doing pretty well.

WF

That’s correct. We’ve been serving the disk-drive industry as our primary industry since about 1982. Currently, I’d that say 98 percent of our product is exported to Asia. We make all of it here in the United States, and it has been a growing business. Back in ‘82, when we decided to focus on this, we had $12 million in sales. Today we have $500 million. And it’s intensely competitive; prices only fall—they never rise. The product, as high-tolerance and precise as it is, typically has a life-span of maybe 14 months. So, well over 80 percent of our revenue comes from product that’s less than two years old.

IMPACT

With that context in mind, I can see someone asking, “Why is it important to give HTI employees a training program on the application of philosophy to business? How could that be of value in creating wealth in such a technological industry?” How would you describe the motivation behind the executive training program?

WF

We have been on a path of continuous improvement—without chasing fads—in which we formally approach every activity we do with the view that it can be done better next time. From that perspective, there are a few practices that must be followed if you are truly going to make progress on that relentless pursuit of perfection. One of them is: every management decision has to be based on fact. Another: that, in fact, it is morally sound to want to improve your productiveness, to be proud of personal achievement, and that the only way to continue to have pride in personal achievement is to make that achievement better the next time.

With those thoughts in mind, it seemed to me that what we really needed to do was provide a foundation within the organization, so that, philosophically, everyone understood that this was not a corporation chasing a fad, but rather the pursuit of perfection. It was important that everyone in the company understand that this continuous improvement was very soundly based on philosophical principles, that these principles led to deliberate virtues which, after studying them, anyone should be able to embrace.

IMPACT

Who participates in the training seminars?

WF

Well, because the program has been in construction and pilot mode, at the outset the seminars were for the executive-level employees. That includes director, vice-president and through to the CEO level. That’s where we’re beginning, and we’re now evaluating how much further we take it on the next rounds.

IMPACT

So, do you see this as a way of providing a foundation for the core values that HTI stands by?

WF

Yes. Now, for about ten years, we’ve had a guiding corporate philosophy that has been pretty well developed from an Objectivist perspective. But it was my view that if we were really going to inculcate this into our corporate culture, we needed a philosophic foundation that further motivates and drives our culture. We had to have people not merely signing up for it and saying “I will abide by that guiding philosophy.” They have to truly understand what the philosophy means, so that they know what virtuous actions it implies and so that they’ll follow through in practice. After that level of knowledge and exposure, people are going to be far more committed.

IMPACT

Could you say a word or two about the kind of content you thought was necessary to cover in the program?

WF

Well, we started with the recognition that in most colleges philosophy has been given a bad name. We needed, therefore, to impress upon our people that businesspeople need a philosophy, or need to understand their own personal philosophy. So, we wanted to begin by convincing everyone that philosophy is an important element of one’s interaction with the world, and that it was worth their time and effort to invest in-to understand their own beliefs and draw their own conclusions.

From there, we wanted to explain some of the different philosophical perspectives that have been put forward, and then to lay out what is the Objectivist philosophy. Next, we thought it was important to cover the value of good, solid communication. If I have leaders that understand the philosophy, if they’re going to lead people to abide by this culture that we develop, then these leaders need to be able to communicate well and clearly and concisely. They need to communicate in ways that convey meaning, not just directives. Also, we wanted to make certain that we are using the best approaches for thinking clearly and objectively. Another issue to cover was: what are the appropriate actions to being virtuous, to abiding by this philosophy.

Just as philosophy has been given a bad name in the academia, in my opinion, so has economics. If it hasn’t been given a bad name, the wrong views of economics have been taught. So, there was a need to teach a clearer view of economics and to show how philosophy influences that field. Taking that into account, we wanted to cover economics from a perspective informed by individual rights, private ownership, the appropriate role of government, the appropriate role of business. The message we wanted to get across is that no one should ever apologize for making profits.

IMPACT

You’ve attended a few of the seminars yourself; could you describe how some of the participants have responded to the material?

WF

Well, as you might expect, there’s a very diverse group of people sitting in these seminars, bringing in very diverse perspectives. Some are willingly and openly embracing, yearning for something like an Objectivist philosophy. Others look at it fairly skeptically, because of comparisons to some of their existing philosophical beliefs, which they may never have carefully contemplated. Some of the participants definitely were brought up in very religious Lutheran and Catholic families.

It is not the case that after the very first day people come away saying, “this has been an eye- opening experience, and I can’t wait for the next class!” Instead, as the class has progressed-and I would say that by the time we got into addressing the virtues specifically-it was then that I saw the lights really come on.

I saw true excitement on the part of the various attendees. It was then that they began to see how it comes together, and what the philosophic ideas mean to their actions. They were saying, “oh, this is all making sense to me now—now I see why it’s so important—now I know what I want to do next.” So, it took a few classes for them to really start to say, “ah ha.”

IMPACT

So, all throughout the design and early deployment of the program, the point has been to get the ideas across and to provide hands-on application of those ideas. Is that a fair description?

WF

Yes. If you’re going to present fundamental ideas, you need to understand where these concepts and views come from in reality. You need to grasp why Ayn Rand concluded what she did, and how she builds up from facts in reality. Now businesspeople are people of action, who like to see an end-result in a reasonable feedback time, and we have strived to provide them with practical action items that help them see philosophy applied. These action items show them how philosophy makes a difference in their decisions at work, in their own jobs within the company, in their personal life, in the community, in society and the world at large.

IMPACT

You mentioned that the program has been in pilot mode. Where would you like it to be, say, five years from now?

WF

Let me explain what I mean when I say it’s in pilot mode. We’ve been running it for two groups, in a serial fashion. I’m in the first group, and we’re the ones who are working with the design. As we take part in the full-fledged class, we provide feedback on how it might be improved and what adjustments might be made. Then we run the class for the second group of participants. They get the full-fledged class, with whatever modifications have been implemented. So we’re a little bit further ahead than prototype, I guess you would say.

As I look to the future, I fully hope and expect that we’ll still be using this as our leadership development program here at HTI. I see us taking this deeper into the organization, as we bring in supervisors and managers, who will be thoroughly exposed to these concepts. By then, they will be seeing the ideas being used in the corporation, such that if they disagree, they wouldn’t want to work here—and if they agree, they couldn’t imagine a better workplace.

We have this training program not to be evangelists. We did it in order to improve our ability to compete in the world.

It would be nice to see other companies embrace these ideas as well. I think they will benefit by having their employees active and making decisions and communicating, by taking actions based on the right philosophical foundation and following the right virtues. It would make those companies more competitive, more innovative, more technologically advanced. Such companies would be morally self-governing, and there wouldn’t be any issue of government-enforced ethics. They would see the value in choosing to pursue the moral course of action by choice, not by mandate.

IMPACT

Could you tell me about your interest in Ayn Rand? When did you first encounter her writings?

WF

It was a very long time ago. I was out of school; I suppose it was probably some time in the late ’70s. I think I stumbled across Atlas Shrugged and read it, and from then on I’ve read just about everything that she’s ever published, fiction and non-fiction.

I went on to read Objectivism: The Philosophy of Ayn Rand [by Leonard Peikoff] and then to listen to the taped lecture course on that book. I studied the material as if I were going through the course in person. And then I read or listened to everything else on Objectivism that I could get my hands on.

IMPACT

And this led you to apply what you had learnt to business?

WF

Yes, having studying Objectivism, I began a pretty earnest pursuit of economics, to understand first-hand what is the right view.

After studying economics, I decided that having a corporate vision wasn’t sufficient. What we really ought to do is have a corporate philosophy. So, about ten years ago, I proceeded to write a corporate philosophy, which I ran by my management team a few times. In some cases, I had to sell them on it, because they weren’t familiar with my views; in some cases, I took their suggestions on how to present the ideas in business terms so that the corporate philosophy would be embraced.

IMPACT

I’m interested in your professional background. What was your background in school; were you an engineer?

WF

[Laughs] I’m non-degreed. I managed to get through one year of college, and when I joined the company in ‘75, I was just an hourly worker doing inspection of products coming out of the tool room. I went from there to engineering technician to engineer to head of engineering, head of marketing, head of operations, and in ‘83 I became president. So I don’t have a formal education, but you could probably say I have a technical background.

IMPACT

A question about the culture and the business world. From your perspective as CEO of this company, and someone who understands the influence of philosophy, what do you see as being the major issues in the economy today and in the broader cultural landscape?

WF

Well, it’s interesting you mention it. From a personal perspective of Hutchinson Technology, we are very concerned about antitrust issues. Due to our success, we now are concerned about—and are taking actions to avoid—being challenged by the Justice Department, simply because we’re good. And that’s a shame, particularly when you consider that all of my competitors that are remaining are in Asia.

IMPACT

There’s not a single company in the United States that competes with your company at all?

WF

No. So, I would say that antitrust is a concern. But I would list others. My number one concern is that there are not nearly enough businesspeople who have the right philosophical perspective or understand economics. Too many businesspeople, in fact, are out there supporting the wrong actions and ideas. They are, therefore, encouraging, enabling, or at least condoning actions that threaten all of business in a free market.

To give you examples: we just spoke of one, antitrust. Another is the lobbying for protectionist tariffs, such as the recent one for steel companies. Or: trade associations that take as their primary role to provide protection for those in the trade association, rather than helping them to be more competitive.

One issue that is a significant irritant to me right now is the environmentalists, particularly in Europe. They have now managed to write laws in Europe requiring that products that are going to be sold there meet certain “green” requirements. Hutchinson Technology only makes products that are shipped to the Far East, but our components are used in computer disk drives that are sold in Europe. Because of that, I am now having to make significant investment in testing-and potentially putting the company at risk-to meet Europe’s environmental requirements. Unless the components in the disk drive meet their requirements, the drive can’t be sold there. And these requirements are far beyond what is even remotely rational in terms of how it will actually help our environment. That type of thing is an irritation to me. Even someone who understands that it’s foolish is now compelled to take action, simply because if I want to stay in business, if I want to keep selling the product, I now have to abide by somebody else’s silly law.

IMPACT

It sounds as if a program such as the one at HTI would go along way toward providing businesspeople with the intellectual means of understanding the political situation, so that they stand up to laws and policies that threaten them.

WF

Going back to your earlier question about the students’ reactions to the training program: I can tell you that I have had people say to me that this has changed their lives, personally. They tell me that they now look at their home life, their life in the community, from a very different perspective—and that the course has done far more than improve their skills for functioning at HTI. It has improved their ability to deal with the world. That feels good.

Hopefully, when this interview is published in Impact it may cause somebody else to say, yeah, maybe we got to give that a thought. And so we can plant some seed.