In January 1986, John Rollwagen joined the board of directors of the
Federal Reserve Bank of Minneapolis. It was the beginning of a three-year
term as one of three "Class C" directors, meaning that he
would represent users of banking services as opposed to some board members
who are themselves professional bankers. As with all "Class C"
directors Rollwagen's membership on the board required an official appointment
by the Federal Reserve System's Board of Governors in Washington under
he condition that he not be an officer, director, or employee of any
bank, nor own stock in a bank.
Rollwagen represents a balancing point of view on the board of
directors. As a nonbanker, his direction, recommendations, and general
observations are those of a consumer.
It is the board's good fortune that Rollwagen also heads a corporation
that markets its products internationally. Regional economies operate
in a progressively more internationalized and difficult to understand
environment. From his vantage point, Rollwagen is in a good position
to see developing trends in the worldwide economy and report them
at the board's monthly meetings. He provides a greatly appreciated
dimension to the deliberations.
John Rollwagen, 47, is chairman and chief executive officer of
Cray Research, Inc., with headquarters in Minneapolis. He is responsible
for the corporation's ongoing development as the world's leading
supplier of supercomputers.
Rollwagen has been a key figure at Cray Research since 1975, when
he joined the company as vice president of finance. His initial
assignment sent him searching for the necessary financing to allow
the company to move into commercial production. These early efforts
culminated in a successful public stock offering and the negotiation
of a substantial bank credit line.
In 1976, Rollwagen became vice president of marketing and in 1977
president of the company and a member of the board of directors.
Several years later he was elected CEO and chairman of the board
after Seymour Cray, the company's founder, stepped down.
An MIT trained electrical engineer and a Harvard MBA, Rollwagen
unites intellectual skills not typically found together. Cray Research
boasts of a leader who is a top-flight businessman and a technical
expert pioneering an entirely new industry.
Rollwagen's personality manifests itself in what can be described
as the "Cray Style" (an excerpt):
We have a strong sense of qualityquality in our products
and services, of course; but also quality in our working environment,
in the people we work with, in the tools that we use to do our work,
and in the components we choose to make what we make.
Economy comes from high value, not from low cost. Aesthetics are
part of quality. The effort to create quality extends to the communities
in which we work and live as well.
The Cray approach is informal and nonbureaucratic. Verbal communication
is key, not memos. "Call, don't write" is the watchword.
So, to interview Rollwagen for this issue of Region,
Region: John, you sit on several boards of directors as well
as the Federal Reserve's board. How does the Fed compare? Is it similar
to other boards or does it have a unique character?
Rollwagen: It clearly has a unique character, sort of a
dual personality compared to other boards. I'm on two other kinds
of boards: boards of nonprofit or community service organizations.
The Fed in some ways combines both. The Federal Reserve Bank runs
a business providing services to banking institutions around the
region. At the same time it serves a public function helping or
participating in the regulation of the national, even the world,
economy. In that regard, it's not motivated by strict profit objective
or some normal business, but by concerns in a much broader view
of the world.
Region: The Federal Reserve goes to great lengths to have
a mix of private and public sector control. You personally represent
one of the key private sector board members who can influence the
course of "things" at the Fed. In your estimation, how important
is that private-public mix?
Rollwagen: It is very important for the reasons I just said
about the character of the board. It has a normal private business
motivation in terms of providing its services efficiently and effectively,
and it has very much of a public service aspect. Therefore, it needs
both approaches. The Federal Reserve Bank serves a private industry,
particularly in the form of the banking system, but also in the
form of business in general. So it needs a down-to-earth, practical
approach toward those responsibilities.
Region: Yours is primarily the world of supercomputers and
high technology. Yet as a board member, you deal mostly with issues
of banking and economics. How do you make the leap from the one
world to the other?
Rollwagen: Well, I guess I don't. I think they are totally
mixed together. The computers we make are used to create value,
if I can put it that way, in lots of different products and services
that are very down-to-earth, from the cars we drive to the buildings
we use. So it's not out in left field someplace or in the ivory
tower. Making supercomputers is a business and therefore is economics
personified. We are a business, and the things the Federal Reserve
is involved in or concerned about are exactly the same things that
I'm concerned about in the supercomputer business.
Region: Several other members of the board are professional
bankers. Do you find that your background and experience complements
Rollwagen: Well, we certainly can talk. We have a lot of
the same interests. Also, you have to remember that I was on two
different bank boards for a total of about eight or nine yearsNorwest
Bank in St. Paul and then Norwest Bank in Minneapolis. So I'm certainly
aware of issues that bankers deal with on a day-to-day basis. Also,
our company uses banks all the time; we're part of the same community.
Region: As conversations in board meetings drift to questions
of free trade vs. protectionism, I've noticed all members are not
of one mind on the subject. Where do you stand?
Rollwagen: I'm absolutely a free-trader because of my experience
at Cray Research. We're dealing with an international marketplace
that is not really dominated by any one country. Even though the
United States is the largest single market, we have important markets
all over the world. Secondly, our source of supply, parts and technology,
is not just in the United States. It's from other parts of the world,
particularly from Japan. It's inconceivable to me to think of operating
our business in anything but a world economy. Anything that restricts
that movement of goods and financial and intellectual resources
around in that marketplace works against Cray Research. So I guess
I'm very much a free-trader.
I would add one other thing, though. There are practical limits
and problems that do exist. For instance, there are security issues
having to do with technology and its ability to be applied to weapons
systems and intelligence, let's say, that make it necessary to restrict
the access to that technology outside the Western bloc. That's clearly
a barrier that exists and must exist in the system. Secondly, not
all countries seem to have the same commitment to free trade and
open markets; from time to time it's necessary to apply some pressure
to get those countries to support the system. In the process of
applying that pressure, restrictions can emerge which I would support,
although reluctantly and for the specific purpose of really opening
up the market.
Region: What flows back to you personally or professionally
from your involvement with the Fed?
Rollwagen: I think it's at two levels: one intellectual
and the other personal. On the intellectual level I get a good dose
of what is going on economically in other parts of the country and
other parts of the world. I see the trends, and that's important
in planning my own business. But more than that, I really appreciate
the contact with other directors and with the people in the Federal
Reserve Bank itself. They are great people. They have interesting
ideas. They all come from quite diverse backgrounds, much different
from my own, especially the directors from areas away from the Twin
Cities. I really like that; l enjoy it a lot.
Region: While the Federal Reserve can't do much directly
about the federal budget deficit, it nonetheless has been concerned
about the impact on the economy of these ever-increasing negative
numbers. Do you share that concern? (The question was asked after
a minor stock market disturbance, but before the October collapse.)
Rollwagen: Absolutely. think it's the number one economic
problem we face. Personally, I think the recent events in the stock
market are a reflection of that same concern, realizing that we
have been accumulating an enormous debt to finance essentially consumption
that we can't afford both at the federal and private levels. Sometime
we will have to pay it back, and I hope we can do so in a fairly
orderly way rather than with some dramatic collapse. l think we
came awfully close this week, and we probably are not out of the
Region: In press accounts of your management style, reporters
have connected you with Eastern, mystical style management approaches.
What is it about you that is Zenlike?
Rollwagen: Well, we're all connected to everything, right?
That is sort of an Eastern thought in itself. It's true, I don't
know if that direct connection with Eastern philosophy or with Zen
Buddhism is that significant. I'm not a practicing Buddhist, that's
for sure. But on the other hand, everything that I've read about
Eastern religion and philosophies I find very attractive and very
reinforcing in real life. People respond almost intuitively or automatically
to the concepts. In that sense, I'm a believer.
Region: What would be an example of your style where Zen
Rollwagen: I'm not sure exactly. It's hard for me to think
in those terms. I know my style, but I don't know if I can relate
it intellectually to Zen. Basically, the way you can characterize
my style is in the acceptance of people for who they are and what
they are. It's a real appreciation of them and a firm belief that
people have great unrealized talent and capabilities. People really
come through if given the chance to exercise that talent. When people
get in an environment that's demanding, where they are expected
to perform with no backup plan, and they are allowed to operate
on their own terms, then the adrenaline flows and they become very
successful. When they're successful, you can't turn them off. They
just want to get to the next project. In fact, the way it works
at Cray Research, we're very project-oriented, and the greatest
reward for completing a project successfully is another project
twice as hard.
Region: Could the Fed use Zen wisdom?
Rollwagen: (chuckle) Sure, to set monetary policy.
Region: Thank you, Mr. Rollwagen.