MEMORIAMOn 1st October 1980 the untimely death of Patrick Haggerty, former chairman and chief executive officer of Texas Instruments, occurred. Patrick Haggerty was a founding member of the editorial board of this journal and in the formative years of the Texas Instruments Company made a major contribution to the practice of strategic management, in addition to shaping the destiny of a great and progressive corporation. As a mark of our respect and in memoriam the editors are proud to publish one of Mr Haggerty's last lectures given to NASA at Houston, Texas on 13th February 1980 in which he outlines briefly the history and philosophy which led to the development of many of the systems of ssr-:itegic management at Texas Instruments, which have shaped policy within this highly innovative organization.There is implicit in the title of this seminar, 'Organizing for Innovation' and particularly in this portion of the programme dealing with 'complex organizations', a recognition of both the need and the opportunity to modify the behaviour of an institution t o achieve a desired end, in this case, innovation.In her book O r p n i z i n g J o r Innooation, D r Mariann Jelinek discusses the objectives, strategies, tactics system developed by Texas Instruments as its approach to managing innovation as one example leading to organizational learning. I believe that D rJelinek's book is an important contribution t o the literature on management because of her perceptive observations on organizational learning and I look forward t o her comments on that subject later this afternoon.Organizational learning is imperative if managers are t o be successful in their efforts to lead the organizations for which they are responsible through deliberate revolutionary or evolutionary change. Certainly, the objectives, or OST system, we developed a t Texas Instruments for managing innovation was our effort to institutionalize the process we had followed when we were still a small organization to bring to commercial success such innovations a s the silicon transistor and the first pocket transistor radio. Yet, there is a certain inconsistency in the whole idea of managing innovation o r institutionalizing the process involved. By definition, innovation begins with a n idea and any significant innovation will require imaginative contributions from many individuals scattered throughout an organization. But organizations possess neither imagination nor generate ideas. It is the individual men and women who make up an organization who possess imaginations and generate ideas, and no system, however effective, can manage innovation unless first the necessary idea, or ideas. from which the innovation will flow are generated by individuals. Indeed,

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We in the United States are in transition to what some are calling the postindustrial society. One characteristic of the transition is a shift from the production of goods to the production of services. That shift is made possible only by the increasing effectiveness with which we have been able to produce goods. We now produce far more food with less than 5 percent of our work force than we did in 1890 with more than 40 percent. Further, the plenitude of industrial and consumer goods we now produce, plus all mining and construction, require about the same one-third of our work force as did the relatively much lower output of 1890. It therefore has been possible to increase the number of those working in the service sector from about 25 percent in 1890 to above 60 percent today. That shift has been made both because we could make it and because we wanted to do so. We wanted more health services and more people in education. We wanted to move to the cities, with all that implies in the way of government and governmental services.The ever-increasing pay scales generated in industry, possible only because of steadily increasing productivity, have spread to all other work areas in our society, whether productivity could increase or was increasing there at an acceptable rate. This development was a reasonable one so long as the productivity gains in agriculture, industry, and the public utilities were sufficiently large to justify increasing rates of pay. Now that the services sector employs far more than half of the work force, we no longer can expect the Tising productivity of agriculture, industry, and the public utilities to be sufficient to carry the burden for all of our society.This shift in effort from goods production to services production results in a constantly increasing proportion of our total work force being engaged where, in general, we simply have not learned how to be as effective as we are in goods production. As a consequence, each year we have relatively less total effort available to apply to seizing new opportunities or solving national problems. I suggest that this shift is related to a large portion of the increasing frustration about our apparent inability to improve our institutions at the rate we think we should.The work areas in which we have enjoyed high annual increases in productivity per person have been in the private sector, where the profit system automatically forces management to recognize increasing costs either by increasing prices or improving productivity, or both. In general, competition limits severely the ability to increase prices; consequently, a constant effort is exerted to improve productivity. The private sector has been reasonably successful in using innovation, capital, and management to improve effectiveness and reduce costs.