From the sobering themes of Skytop 1973 we derived new resolve to meet the challenges and queries of our purpose in service to the Bell System and to the nation. We have discussed today the early stages of new actions to add to our strength in carrying on the future technology for telecommunications. We are especially mindful today, too, of the high traditions of leadership which this group and its predecessors have established under Jim Fisk's guidance and inspiration. Thus, it is not surprising that we have seen already the outlines of several courses of action which will enable as to apply in the Bell System the now knowledge and skills, which we are committed ceaselessly to produce.

Thus, it is a time when we want to understand both where we are going and how we got where we are. Our semi-centennial, next year, marks that we are one of the oldest corporate laboratories, sad indeed one of the oldest institutions, devoted to research, development, and engineering. But we have, according to the national survey of the Livermore Laboratory (Vanatta and Associates) of a couple of years ago, the youngest age of staff among any of the largo centers, including the best of Government- and university-based enterprises which started long after we did. So, our management has a heavy responsibility and a glorious opportunity. The responsibility is to see that these new generations of human talent have careers fulfilled in the worthy mission of our firm. The opportunity is that with unparalleled, unsurpassed capabilities and potentials, we can actually do the right things in the best way for our owners and the nation. Now we all know the malaise which has prompted these deep reassessments and doubts about all our institutions--Government, industry, society. We know about the political and economic stresses which assail the Bell System and enforce its management to seek now paths for survival. But those of us who work sometimes in Washington are more certain than ever that the vertical integration of the Bell System, with the Bell Laboratories as its technical branch, is the way to progress and economic vigor. The actions of our management in the AT&T Company, even since Skytop, have fortified our faith that we shall fight relentlessly the almost self -destructive spasms of parts of our political and economic system. For instance. as the energy shortage has tightened, those of us on the Energy Advisory Council in the White Houses and otherwise assigned to the organization of Project Independence, have seen confirmed in detail the weakness of fragmented power industries, whose tardy attempt in starting the Electric Power Research Institute has only dramatized the indispensable ways in which the Bell System has worked.

Just the same can be said of our service to national security. The divisive forces acting to break up the prime contract relationships that have produced the finest weapon systems anywhere will be opposed as carefully as are being the misguided actions of certain regulatory and political groups in telecommunications. We do not lack friends in 1600 Pennsylvania Avenue or the Pentagon, but our friends too need support and encouragement.

So much for the general operating themes, part of what Jim has called our “enduring themes,” as they apply to the present. Today's events, and specifically the morning sessions, further establish that we shall take now measures with respect to Operating Company relationships and thus, by principle, with respect to our AT&T connections. Concerning the Western Electric, our co-owner and largest supporter, the Tarrytown Conference was one In a series of current events that affirm that we have unexcelled relations with the Western Electric. Interactions we have there cause the highest satisfaction in the top Western management. We must assure the lively continuation of this, with no complacency and with constant current effort to extend our cooperation. This, of course, is at a time when Phase II of the FCC, the Hart Committee activities, the pressures for general trade product purchase, and unprecedented manufacturing cost inflation throughout the economy make the closest cooperation totally essential.

With respect to the Operating Companies and the AT&T, perhaps a social psychologist would diagnose our condition as a carious twist of the identity crisis, so often invoked to account for the disaffection of individuals. Namely, as our corporate age approaches the fabulous 50, we may have too much separate identity in the minds of the “now-generation” who operate the Bell System. These managers have had virtually no association with the time when President Jewett was a functioning Vice President of the A&T, and much of his counsel came either from that staff, and hence, telephone operations, or from the Western Electric, our former home. Over the years, the daring notion of a separate corporation for research and development has, of course, justified the vision of the founders. This is through both the independence of its initiative and the self-determination, that it could apply to its mode of work. Nevertheless, there was always the hazard of super-identity, of conceptual separation, and a delicate balance has been sought during all the memorable times of depression, wars, social upheaval, and public unrest about the size and quality of the telephone system itself.

Now we are undertaking to set up some now balances, mindful ever that through all the stresses the support of our firm has been generous and wise, with a growth in budget and personnel showing superb confidence in our leadership, as represented for a long time and In the largest measure by Jim Fisk. Thankfully, our own technology and science are favoring rapid progress in these new balances of our relations to operations. This is through the pervasive role of computers and associated automata. Our historic role in these matters, from Stibitsz, and from the associated community of artful switching engineers of the 1930s and 1940s , was coupled with the solid state capabilities of the 1950s and onward. Then the combination was recognized in the mid-1950s by several fateful decisions. One, which I believe cost as many years of lead time of what eventually became BISP, was rejection of the BSDP (the Bell System Data Processing) effort, in which our willingness was demonstrated by the construction of the Pittsburgh building. among other tangibles. Despite this decision, the values of Bell Laboratories autonomy were found in several concurrent decisions, such as a strong research and development effort on computer science and technology for Bell Laboratories own purposes. Also we put particular emphasis on software studies and their basic sciences. Indeed, after 1955 much of this was pursued at the expense of what come of our sincere and enthusiastic switching development leaders might have preferred to see as switching research. There was also in the next decade an exceedingly intimate mingling of computer science and engineering among systems engineering, military systems, and research efforts within Bell Laboratories. Anyway, these circumstances, aided very modestly by outside computer industry and technology, with which many of us kept exceedingly close ties through Government activities as well as through the scientific community, have led to a capability in the 1970s.

The size and quality of these are  indicated by the Felker Committee, including Bill Fleckenstein's sampling survey, of virtually restructuring the operations of telephony. We now have a situation where literally the doings of every Operating Company employee can be helped by a digital machine. We are at last well on our way, thanks especially to BIS, and increasingly the initiatives in other development areas besides the premier function of  switching that Bill Fleckenstein has reviewed, to assuring the best technology for this new era of operations. But our success will require human as well as machine skills of great scope. For we must patiently and wisely work with every phase of Bell System activity, not just Plant or Engineering, but all, to inject these capabilities for the service and economic benefit of our business. We are going to do it well, so that the signals and waves, and circuitry and components, and systems that we have mastered in the first half-century will be followed on by methods of using and managing these systems, to the highest social and economic benefit of the users.

And, for instance, we shall use the methods to find out and respond to what the users want and need, as Ian Ross and Ken McKay have implied, in our early assessments of the new market and competition elements of the Bell System.

Evidently all of these circumstances will result in certain organizational shifts and emphases In Bell Laboratories. These will be to augment and not to displace the structure we have. This structure has evolved to reflect the human ways of dealing with the technical innovation which is our major mission. People learn, usually in the business, but increasingly in academic curricula, how to propagate signals and waves and create transmission. They find out about acoustics, and transducers, and human engineering, and network properties, to generate new station apparatus. They master logic and memory schemes, interacting with combinatorics, for switching. To enable all these functions in the most rapid and efficient and reliable ways, experts in components and subsystems are essential. We have told ourselves that we use and have, indeed, historically provided systems engineering to keep these kinds of knowledge and human talents all working together for an Integrated product. But “working together,” we are finding with the present size of the Bell System, can have very different meanings, in different places, and at different levels. Bell Laboratories technology is now going to be able to contribute more widely than before, not only in our conventional role of what systems are introduced, but in the matter of how they are used.

Even as we go rapidly into developments of compelling urgency, such as the exchange plant improvements, starting at the main distributing frame, we are going to be seeking now balances. These require insights between what computer-based operations can do for existing, or easily expanded, plant, in comparison to what entirely new, and often expensive, designs may be able to offer economically.

But above all, in seeking this optimization, we must be sure that the ingenuity, the creativity, the originality, of the Bell Laboratories are not reduced. Computer application is a severe task master, since it says you’ve got to know what you want, and then if you work very hard and consistently, automata will probably give you what you want. But the question of what we want has also got to be dealt with, and we can't mix these two things too closely, nor keep them too far apart!

It adds up to an exciting and challenging prospect, in which experiments and trials of new telecommunications systems will Include more operational comparisons. They will include judgments on how such new systems will relate to what is now used, based on the daft that BIS and its correlates will be generating. And naturally, in certain areas, particularly such as customer products, the whole question of market assessments and competition will be superimposed on this new technological regime that we are molding.

We have not yet had a morphological look at what switching and transmission developments might have been, if early Philadelphia story findings were fed into it a decade ago. But we shall sometime in the future be able to say that the operating methods and experience of large regions of our Belt System will indeed be reflected explicitly in new technology for those regions.

Finally, quite beyond whatever organizational and structural effect these new modes of action may have on Bell Laboratories is something else. It is the compelling necessity, and even urgency, of properly assessing their meaning for our people -- for the well-being of our staff. This to the ultimate subtlety which high management in our kind of business most master. We know too little about how a technically creative, inventive community is motivated or de-motivated, under the beat of circumstances. We must assess carefully recent allegations that our technical community is less satisfied with, and even less proud of, the performance of Bell Laboratories than they used to be. We must assess with sensitive care whether the portions of our staff ranked in performance and salary below a median are given appropriate attention and understanding by supervision, so that their spirits are lifted and their talents appreciated in realistic ways.

I am uneasy about whether, in the onward rush of our growth and of our geographic dispersion, our supervisors have consistently and convincingly shown that technical performance to a prime base for an engineering or scientific career at Bell Laboratories. A supervisory or management role is distinctly secondary. The very best management and supervision we mast and shall have, but the careers of our creative staff, as individuals and co-workers generating the output of Bell Laboratories, come first.

In this regard, and with respect to the changing qualities of our big developments, as noted during the day and also in our preceding words, we must find out what is happening to the senses of satisfaction and career fulfillment of our staff that those changes bear on. What does it mean to the new generation& of highly trained and sophisticated, electrical, electronic, and solid state engineers, computer and communications experts, mechanical designers and the rest, when a lot of the new functions they are creating may not turn up in new hardware at all? Of courses this has always been true for important parts of our engineering and the whole culture of systems engineering in particular. But these “operations techniques” are now going to be increasingly mixed in with hardware achievements. So we need to be sure that people’s roles are recognized and their feeling of originality and creativity is properly accounted for.

We have said in earlier discussions of the patent output that it would go to a long-term low for 1973, and indeed this looks now as though it would add to no more than about 340 inventions. This is not a catastrophic reduction over the past decade, but sufficiently to be a source of continuing deep concern. Further, the numbers of disclosures received are rather more drastically reduced. This Is another sign that perhaps the ability to solve important technical problems by machine simulation, or even machine function, is displacing same of the hardware invention. Now this may be worrisome only in the sense of how the person's attitude toward his work may be affected. If, indeed, it is otherwise true that the function is as well done (and in many cases it Is as well or better done) as by a new circuit, an inventive equipment configuration, or whatever. But these things we must find out about.

And so we complete this formal part of the Cabinet meeting with high gratitude for the leadership Jim Fisk has given us for more than a decade and a half. I believe the theme he has stood for is what we are resolving anew to honor. It is that the person makes the place. Brains. character, integrity, energy, loyalty -- the things that make fine people -- make fine engineering and fine science for the Bell System. Those who support in our staff, in our financings in our, operations -- all these efforts toward excellence -- share equally in this principle that the quality of our people is the essence of our progress. Indeed, it is interesting that in all the analysis of our research and induced by the new era, of automation and machine aids, we come right back to the meanings for the individual. Correspondingly, leadership is treating human beings and not waves and signals and cables and components, even though the human beings have to know primarily about those things. So, let us end on this theme of personal excellence that Jim Fisk embodies.