Spotlight: Pre-Whiz Kid Whiz


It is unlikely that your life has not been affected by Andrew F. Kay. Though he has recently come to the attention of the business and computer world as the president of Kaypro, Inc., a leading maker of portable personal computers, Kay's influence on our lives is much broader and significant.

Kay's education, an undergraduate degree from MIT and a nearly completed masters in mathematics from Case Institute of Technology, had been cut short by the onset of World War II. During the war, he worked in military-related scientific research and production of such items as automatic pilots. Then, in 1952, after an argument with his employer, a manufacturer of "war machines," Kay decided to move into other areas, and he formed his own company, Non-Linear Systems.

An early project at the new company was to build a "digital volt meter"—an instrument that would measure electrical voltage digitally rather than in analog form (the basis of the traditional needle meter)—which Kay started marketing in 1953. The digital readout device on your wristwatch and stereo—and on nearly every important scientific instrument in the world—springs from the mind of Andy Kay, as he is known. Electronic Design magazine has credited Kay for starting the digital revolution, and USA Today recently named Kay's invention as one of the 10 most important inventions that led to the computer age.

One of Kay's sons—both of whom are vice-presidents at Kaypro—describes his father as a Renaissance man. On the list of clichés, Renaissance man ranks near the top, but in this case the phrase fits; for Kay is noted for another aspect of his business career besides his technical contributions—his management theories have been discussed in textbooks for almost 30 years. Kay has long been a believer in the theory that freedom engenders efficiency and prosperity. He attributes that belief in part to a 10-year period he served on a school board, during which he saw the way tenure was awarded or denied by bureaucracy. He also had worked in factories where all decisions came down from the top, leading to what Kay describes as "the stultification of people's desire to excel."

During the '60s, Kay's company attracted international attention for its participatory management style. Business Week called the firm "a laboratory for the behavioral sciences…a proving ground for some of the newest concepts in 'permissive management.'" Vance Packard described Non-Linear Systems in a Reader's Digest article as "one of the most revolutionary companies in America." The famous MIT management professor Douglas MacGregor was an ardent fan of Kay's non-authoritarian technique, and psychologist Abraham Maslow researched his landmark book Eupsychian Management at Kay's plant. In effect, Kay invented an American form of what is now called "Japanese management." In fact, during the '60s dozens of Japanese managers spent time on-site studying Kay's management techniques.

It is odd that American technologies and theories have been better accepted in Japan than in the United States. Even though his company had always been successful, Kay found investors hard to come by when he decided to make a move into personal computers. The money he borrowed was expensive.

Last July, the company changed its name to Kaypro. Its computers had hit the market and made headlines in the computer trade, but because of Kaypro's unorthodox style, Kay's decision to go public with a stock offering met with skepticism from institutions and analysts.

Institutions, which usually buy 50 percent of similar stock offerings, only bought 12 percent of Kaypro's. Michelle Preston, a Wall Street Journal analyst, was, according to Kay, amazed to learn that Kaypro spent less than 10 percent of gross sales on marketing. The industry usually spends at least 20 percent. Similarly, Kaypro baffled the experts because its manufacturing-expense overhead was only about 100 percent while the usual ratio is three times that. "We have very little of what are called 'white-collar workers,' and our blue-collar work force is very high," Kay explains. "We don't follow the ratios at all, and the fact that I was 64 didn't help." The planned sale of 5 million shares was ultimately cut back to 4 million. Still, among companies that make computers costing more than $1,000, Kaypro is the fourth-largest in unit production.

Kay's anti-authoritarian philosophy does not only apply to business. "We have no drawings of the assembly process or formal plans," he says, "but we do have goals. When people who want to work are free to do what they want, the results are remarkable. But our government seems to work against those tendencies. Once we became visible this year, we were visited by seven or eight government agencies in the space of 90 days. One agency is making me get a permit that I was supposed to have 17 years ago."

"Computers are tools of autonomy," Kay says. "They enable people to hide from bureaucrats. They will create more individual liberty as people gain power over the details of life that now take so much energy." Kay says that he has used his own computer to help make his firm's product cheaper and more accessible to the consumer. One has to wonder what he would be doing if he had started out with those "tools of autonomy." Fortunately, we can take advantage of all that he has already done.

Patrick Cox is a frequent guest columnist for USA Today and public affairs director of the Pacific Institute for Public Policy Research.