Heike Mayer

Planting High-Technology Seeds

Tektronix's Role in the Creation of Portland's Silicon Forest

Over the past six decades, Portland's economy has changed from one that depended on natural resources to one that values knowledge-creation and innovation. Today, some of the most important employers in Portland are firms that produce high-technology products such as silicon chips, test and measurement instruments, specialized computers, and software. These companies have a significant economic impact on the region, employing more than sixty-six thousand people and paying an average annual wage of $78,466.¹

The heart of the Silicon Forest — a name applied in the early 1980s to the concentration of high-technology firms around Portland (and a reference to the Silicon Valley in Santa Clara County, California) — is in Washington County, west of Portland, where firms such as Intel, Tektronix, Planar Systems, and InFocus cluster along the highways in Beaverton and Hillsboro.² High-tech firms are also located in downtown Portland, in Gresham, Oregon, east of Portland, and across the Columbia River in Camas and Vancouver, Washington. The seeds of that forest of high-tech activity were planted in 1946 with the founding of Tektronix, a company that would quickly become known as the world's leading manufacturer of a specialized electronic test and measurement instrument called the oscilloscope.

In the decades since Tektronix was founded, the Silicon Forest has matured and diversified. In the late 1970s, for example, Intel — a designer and manufacturer of microcomputer components — established its first branch plant outside Silicon Valley in the Portland suburb of Aloha. In the 1980s, foreign high-tech firms — primarily based in Japan — were attracted to the region and opened manufacturing facilities near Portland. At the same time, talented entrepreneurs who had worked for Tektronix started their own companies. In the 1990s, the high-tech industry expanded in the Silicon Forest, with significant investments by Portland-based semiconductor firms such as Intel, LSI Logic, Fujitsu, and Integrated Device Technology. Tektronix was the anchor for the cluster of firms in the Portland area, attracting talented employees and serving as an innovative and vibrant center for research and development. When the company downsized in the 1980s, it continued its influence by acting as the incubator for the entrepreneurs who established the startup firms that kept the Silicon Forest healthy.

Tektronix manufactured many parts of its products in-house, including transformers, cathode ray tubes, and resistors, which the women on the right assembled at the Sunset plant in Beaverton.

Unless otherwise noted, all photos reprinted with permission from Tektronix, Inc.,

Silicon Forest History

The history of the Silicon Forest can be divided into two phases. The first, which lasted from the late 1940s to the 1970s, was dominated by Tektronix. A handful of other high-tech firms — such as Electro Scientific Industries (originally Brown Engineering) — had moved their offices to Portland, but Tektronix was by far the largest high-technology employer in the region. During the second phase of the Silicon Forest's development, from the 1980s to the present, Tektronix underwent significant restructuring, divesting its business units, closing its centralized research and development (R&D) laboratory, and downsizing its labor force. In the early 1980s, the company employed more than fifteen thousand people locally; today, it employs only about forty-five hundred people worldwide.

The changes at Tektronix reverberated throughout the Silicon Forest, as the company's divested business units continued to operate as successful independent companies and former employees founded new companies. The knowledge that had been created at Tektronix's R&D laboratory was translated into new business opportunities for startup companies such as Planar Systems and TriQuint Semiconductors, which contributed to the region's competitive advantage in electronics research and manufacturing. Today, these companies are leaders in their markets and constitute the region's distinctive specialization in semiconductor production, test and measurement instruments, display technology, and electronic design automation. It is in this second phase that the diversity and strengths of the Silicon Forest were nurtured.

In the early years, there were two prominent centers of high-tech industry in the nation — the Silicon Valley and Boston. Both places gathered much of their promise and talent from nearby universities, such as Stanford in San Jose, California, and the Massachusetts Institute of Technology in Cambridge. Academic institutions have often been considered the catalysts of high-technology growth, providing the intellectual talent and innovative research necessary to attract corporate leaders and support industrial growth. The Silicon Forest was different. As much as anything else, it evolved as a result of a corporate crisis at Tektronix and the company's efforts to attract and educate its workers. Further, because there was no university in the region comparable to Stanford or mit, Tektronix functioned as a "surrogate university," seeding Silicon Forest companies with talented, innovative, and ambitious people.³

In 1947, Tektronix issued the 511 oscilloscope. It was much smaller than its predecessor, the 501, and Tektronix described it as the first portable oscilloscope.

In 1946, when Tektronix was established, it was common for corporate organizations — such as General Electric, AT&T, and General Motors — to have multiple functions (called vertical integration) and large-scale production (known as Fordism) was the norm. Using that model and its organizational mechanisms, the electronics industry centralized research and development laboratories within large vertically integrated, multi-unit firms.⁴ This allowed these companies to have an internal organizational source of innovation and new product development. AT&T, for example, formed Bell Laboratories and Xerox created the Palo Alto Research Center (PARC) as industrial laboratories. Tektronix followed their example and formed Tek Labs. These laboratories, however, were organizationally separate from other corporate functions, such as manufacturing, and the activities within the laboratory were often segregated by their research fields. Another hallmark of the vertical-integration model was the diversification of firms into a variety of market areas. It was not unusual for electronics firms to diversify heavily into areas that did not directly relate to their core functions in order to gain market shares and diversify revenue streams.

During the 1970s and 1980s, however, many corporations changed their corporate strategies, primarily as a response to macro-economic conditions.⁵ International competition increased, — primarily from Japanese companies — industrial productivity in the United States declined, and unemployment was on the rise. In response, corporations restructured to become more flexible and responsive to quickly changing markets. The change to a more flexible organizational paradigm, industrial sociologists Michael Piore and Charles Sabel conclude, constituted the "second industrial divide." It was as significant as the introduction of mass production techniques — the first industrial divide — in the nineteenth century.⁶ High-technology firms were particularly receptive to these changes because of their dependence on innovation and the rapid adoption of new knowledge.⁷ In both Silicon Valley and the Silicon Forest, the rigidity of vertically integrated and hierarchical organizations gave way to more flexible forms of production, such as outsourcing and subcontracting, production teams with flat hierarchies, the integration of research and development with manufacturing, and new types of employee-management relationships.⁸ One of the hallmarks of the new regime was the establishment of external supplier networks that substituted internal production capabilities.⁹ Firms downsized, subcontracted and outsourced labor, and focused on their core activities.

These organizational changes influenced how high-technology industries were organized. Several business historians, urban planning scholars, and industrial sociologists have focused on these aspects of regional development.¹⁰ They found that corporate changes such as vertical disintegration have been responsible for the formation of high-technology regions such as the Silicon Forest and that large firms such as Tektronix can function as incubators for startup companies. Christopher Lécuyer, for example, describes the influence of the Silicon Valley's Fairchild Semiconductor on the rise of a local venture-capital industry and as an incubator for spinoff companies. Fairchild offered numerous business and technical opportunities that were exploited by two waves of spinoffs, and Fairchild itself was a result of an entrepreneurial effort by a group of eight former employees of Shockley Semiconductor Laboratory. Lécuyer shows how both Shockley and Fairchild influenced the growth of Silicon Valley's semiconductor industry, primarily through entrepreneurial talent and support. Tektronix served somewhat the same function in the Silicon Forest, acting as a both an anchor and an entrepreneurial seedbed for many companies. In the Portland case, however, Tektronix played these roles not as a deliberate strategy but because of a corporate crisis.

Phase One, 1945–1970s

In the years before and during World War II, a few individuals, firms, and research and development laboratories — most notably the Forest Service Radio Lab, which had been established in Tacoma, Washington, in 1931 to develop portable radios that could be used in the rugged forest terrains of the Pacific Northwest — were doing innovative work in radio and electronics.¹¹ Among those individuals were the founders of Tektronix.

In 1946, Jack Murdock and Howard Vollum, together with Miles Tippery and Glenn McDowell, put to work the experience in radio and electronics they had gained during their military service and formed Tekrad, the company that would become Tektronix.¹² Vollum had graduated with a physics degree from Reed College in Portland in 1936 and had worked briefly for two electronics companies, Radio Specialty and Sears Roebuck. Then he met Jack Murdock, who a year earlier had opened Murdock Radio and Appliance instead of going to college. Vollum set up his own radio repair shop in the back of Murdock's store. In 1940, he was drafted into the army and joined the Signal Corps. Assigned to the Corps's Electronics Training Group, he was posted with the British radio laboratory and Evans Signal Lab in Blemar, New Jersey, where he worked on the latest radar technologies. Murdock stayed in the Pacific Northwest and served in the Coast Guard, where he maintained and repaired radio equipment. During his service, from 1942 to 1945, he met many talented engineers, some of whom would later work at Tektronix. Among them was Miles Tippery, who Murdock met in the Coast Guard in 1942. Their friendship blossomed, and Tippery became Tektronix's first service engineer. Glenn McDowell, also an old friend, had experience in bookkeeping and became Tektronix's first secretary-treasurer.

When Vollum returned to Portland in 1945, he, Murdock, Tippery, and McDowell began planning a new company that would manufacture electronic products and instruments, particularly the oscilloscope. While Vollum had been in the Signal Corps, he had improved the oscilloscope and contributed to major technological advances of the device. He and the others were intrigued by the possibilities of improving the oscilloscope as a test and measurement instrument. They also wanted to build a small company where everybody would know everybody else and that would provide at least moderate financial support for their families. None of the founders, Tektronix historian Marshall Lee writes, "envisioned much of a demand for oscilloscopes."¹³

To support the initial costs of the business, the four men set up an electronics servicing and retail branch, which they named Hawthorne Electronics.¹⁴ They started the manufacturing company with surplus electronics parts from the war, which allowed them to produce their first oscilloscope at very low costs. With the surplus parts at hand, Vollum began to work on the oscilloscope in his parents' basement.

Tektronix's first oscilloscope, the 511, went into production in 1947 and captured nearly all of the market.¹⁵ Demand for the instrument exceeded expectations, and the company soon had a backlog of orders. Vollum would leverage his wartime experience to design and build an oscilloscope that incorporated a triggered sweep circuit, an innovation that allowed customers to pick up and display high-speed electronic events. With this new circuit, along with a calibrated amplifier and time base, the oscilloscope was able to pick up and display high-speed electronic pulses. The instruments available until then could only measure repetitive electronic signals; they were also very slow and did not meet the demands of advanced physics research and the emerging television and computer industries. "Although the triggered sweep was not new," Lee writes, "no commercial scope had it."¹⁶ By incorporating an innovative solution, Tektronix was able to offer a new instrument to a growing commercial market. It was the breakthrough the young company had hoped for.

Throughout the 1950s, Tektronix set new standards for test and measurement instruments. The company became known as the world's leading manufacturer of oscilloscopes and was recognized for its innovations by research institutions, government laboratories, and high-tech companies such as Hewlett-Packard. The value that other companies and r&d laboratories placed on Tektronix products was evident in the company's sales records and its growth as a corporation. The demand for Tektronix scopes surged, and net sales rose from $1.2 million in 1950 to more than $31 million in 1959. To keep up with demand, Tektronix quickly expanded its workforce, from 16 employees in 1947, to 109 by 1950, to 3,515 in 1960.¹⁷ During the 1960s and 1970s, the company increased its international presence by establishing manufacturing and sales facilities in Europe and Japan. Increased competition by the mid-1960s — primarily from Hewlett-Packard — pushed the company to accelerate product innovation.¹⁸ Consequently, by the early 1970s, Tektronix had evolved from a company focused on one product — the oscilloscope — to one where engineers worked on a wide range of products, including graphic display terminals, computer-aided workstations, and color printers.

Tektronix had been a vertically integrated company from its earliest years, when its founders decided to manufacture critical components of the oscilloscope, such as transformers and cathode-ray tubes, in-house. Tektronix was not the only postwar electronics firms to follow the logic of strong vertical integration. According to Richard Langlois, both ibm and dec "became highly integrated vertically and not only assembled equipment, but [DEC] also manufactured many of its own inputs, from semiconductors to equipment cases, and handled its own sales."¹⁹ The company also attracted a great deal of talent. As the world's preeminent oscilloscope maker, Tektronix valued education and learning and put a heavy emphasis on research, knowledge-creation, and skilled labor.

Jack Murdock opened a radio repair shop, Murdock Radio and Appliance Company, in Southeast Portland in 1935. He met Howard Vollum in 1936.

OHS, Lot 691, Box 1, folder 6

In the beginning, vertical integration was rooted in the company's commitment to high-quality products, but it was also the result of Tektronix's distance from other high-technology companies. "We were isolated up here," a former vice president noted.²⁰ From the 1930s to the 1960s, the Silicon Forest hosted only a handful of high-technology firms — Tektronix, of course, and firms such as Electro Scientific Industries (Brown Engineering), OECO, Radio Specialities, and Field Emission Corporation. None of these companies had extensive contractual relationships with local companies such as Tektronix or similar corporate success.

Howard Vollum was awarded the Legion of Merit for his service work on coast artillery fire control radar in Malvern and Christ Church, England, during World War II. An oak leaf cluster was later added to this award because of his work on radar use by ground forces.

Things began to change during the 1960s, when Portland's high-tech industry gained more visibility and was recognized in state government reports and newsletters such as Grow with Oregon (published by the state's Planning and Development Department and later by the Economic Development Division). In 1962, Pacific Power & Light reported that five high-tech firms had operated in the Portland metropolitan area in 1950, "employing about 300 persons and with sales of about $4,000,000." Twelve years later, there were twenty-two such companies, "with more than 5,000 employees and sales estimated to be in excess of $60,000,000."²¹ During the 1970s, employment in high technology grew from 17,378 employees in 1976 to 29,836 in 1979. During the same period, Tektronix worldwide employment grew from 12,907 to 21,291.²² Even with the growth in the industry in Portland, however, there was not a rich enough agglomeration of high-technology firms in the region for Tektronix to benefit from. The company coped with its isolation through vertical integration.

Textronix's strong commitment to integrating corporate functions under one roof began when the company decided to manufacture its own transformer in 1949.²³ Initially, the company bought transformers from outside sources; but the first oscilloscope — the 511 — was compromised by bad transformers, and Vollum decided to assemble the transformers in an in-house department. This decision set the stage for subsequent steps toward deepening vertical integration. One telling example is the company's venture into the production of cathode-ray tubes, a critical component of oscilloscopes. Tektronix bought the tubes from rca and Dumont, companies that produced oscilloscopes and that were, therefore, competitors. This created two problems. First, Tektronix could not ask either company to manufacture more advanced cathode-ray tubes for fear of giving away its plans for future oscilloscopes. Second, Tektronix could not control the quality of tubes manufactured by other companies. In early 1950, for example, company employees discovered that Dumont had shipped tubes that did not meet Tektronix standards. Tektronix decided to manufacture its own tubes by early 1950, and cathode-ray tube production grew into an increasingly large component of the company.²⁴

The quality of employees at the company made this and other changes possible. From the beginning, Tektronix had a policy of developing talent and attracting bright, creative people. A rigorous recruiting and selection process was used to retain and develop a high-quality, competitive workforce, an effort that was pivotal in creating a specialized high-technology labor pool in the region. This policy was especially important during the early years of high-tech growth in the Portland metropolitan area. It built a critical mass of highly skilled employees that would be essential to the evolution of the Silicon Forest.

Tektronix's national reputation for being a leading-edge company attracted people from all over the world. One former Tektronix employee, for example, later remembered that "Tektronix had a reputation for hiring and creating really really good people. Engineers, business people, all kinds."²⁵ A former engineer for the company emphasized that Tektronix served as a magnet for talented people:

most of the people that came to Tektronix in the early days were highly motivated to learn the latest technology. And we attracted some of the very best and brightest people from around the world in the early days because they wanted to be at the center of technology development. So, people came here because they were already very good and because they wanted to learn.²⁶

Senior-level positions were generally filled through an internal job-posting system.

The implication of this policy, one human resource person recalled, was that most of the jobs that were open to outside candidates were entry-level positions, which tended to be filled by recent college graduates, most of them from colleges and universities in the West. For entry-level employees, Tektronix was a "great finishing school." Engineers were able to rotate into management positions and be exposed to the business side, not just the technical aspects of the work. This was enhanced by the company's integration of corporate functions. Because of these opportunities, those Tektronix employees who later left the company to start their own businesses took with them critical business and management skills. As the founder of one Tektronix spinoff company recalled, "There are Tektronix people all over the place around the Silicon Forest."²⁷

Tektronix contributed to the Silicon Forest in another way as well when it assumed an influential role as a provider of corporate education. Former Tektronix president Bill Walker remembered that one of the reasons Tektronix built an extensive in-house education and training program was the lack of higher education offerings locally.²⁸ The company took the first steps in this direction in the late 1950s when it started the Tektronix Education Program (TEP), which was conceived as a separate department and followed in the tradition of establishing multiple units within the vertically integrated company.

Between 1965 and 1972, an average of six thousand Tektronix employees participated in TEP each year. "During profitable times," one Tektronix human resource manager recalled, "the in-house Tek Education and Training Program [TEP] offerings grew and rivaled most local community colleges."²⁹ By the end of the 1960s, the program offered more than 180 classes, with a catalogue that contained more courses and was thicker than the catalogue of any local community college. In 1974, Tektronix's employee newsletter, Tekweek, reported:

The Tek student body totals 2,200 (give or take a few), almost equal to the combined enrollment of Reed College and Pacific University.... And here's the clincher: Tek classes are held four days a week in 42 rooms or work areas, plus available space in four cafeterias. Classrooms are scattered throughout 17 buildings including Sunset and Westgate. Jim Sayer (e&t manager) said the 99 classes constitute the greatest number of job-related courses of instruction ever offered at Tek.³⁰

Tektronix actively promoted and lobbied for more engineering education at Portland-area schools. By the early 1970s, these efforts bore fruit as educational institutions started to expand to meet the demand for high-tech workers.³¹ The Oregon Graduate Institute, established in 1963, granted its first degrees in 1973, and Portland Community College's Rock Creek campus opened in Beaverton three years later. Consequently, Tektronix decreased its in-house educational offerings, especially in General Education Development (GED) classes. Jim Sayer, former Tektronix education manager, noted in a 1972 Tekweek that fewer courses were being offered at the company because of the "rise in offerings by other local schools — a rise we encouraged."³²

Tektronix's first advertisement — in Electronics in 1948 — emphasized the 511 osciliscope's advantages, such as size and the ability to trigger electronic signals.

Making continuing education available to all workers was at the core of Tektronix's human-resource policy. TEP classes were offered in electricity and electronics, physical sciences, materials and processes, computer technology, and professional development, with technical classes added as demand and need emerged. Course instructors were required to have advanced degrees, and most of them were recruited from the Tektronix workforce. As the Tektronix Education Program expanded, it also included classes such as piano and organ lessons, winemaking, and cross-country skiing.

Tuition reimbursement programs were put in place for employees pursuing degree programs at area schools. An on-campus MBA program was offered through the University of Portland; and in 1973, Tektronix made an agreement with Oregon State University in Corvallis to offer electrical engineering master's program classes on the corporate campus in Beaverton. In these degree programs, most classes were offered in the evening, with Tektronix employees as instructors.

By making training and degree programs available to all of its employees during the early days of the region's high-tech growth, Tektronix played an important role in the development of the Silicon Forest. It was able to play that role because it had held a leadership position in the oscilloscope market for long enough that it could invest its slack resources in professional development programs. TEP and other company programs helped keep Tektronix employees on the cutting edge.

Another component of Tektronix's success was the company's open, informal, and egalitarian culture, which was pivotal in promoting the transfer of knowledge among the company's groups and divisions. In that sense, Tektronix was like other West Coast high-technology companies such as Hewlett-Packard, where employees saw the benefits of sharing knowledge and helping each other.³³ A retired Tektronix engineer recalled that

there were ongoing informal seminars that occurred on a regular basis. Sometimes someone would have special knowledge and there would be two or three people that would be very interested in that topic, so they asked that person to make a presentation. Or sometimes it would just be one on one or so, but that was as important as the formal classes that were taught.³⁴

Tektronix's culture of teamwork and cooperation extended into research projects. Research and development work was done in teams, and engineers did not hesitate to exchange memos and ask for help from colleagues in other divisions. Former employees remember that they were able to go to anybody in the company and ask for information. Sometimes colleagues from other groups would informally help solve research problems. As one engineer remembered:

I had a friend ... who was a process development engineer and he would come around and talk to me, and I told him what I was doing, so, we would just exchange ideas and he just sort of independently went off and developed the basis of a new semiconductor process that enabled us to do this project that I was working on with no formal proposal or anything.³⁵

This informal sharing of knowledge, however, did not overcome the structural problems associated with having a multi-unit firm. While Tektronix's corporate culture encouraged personal contact among employees, Tek Labs was operated separately from other departments and units — a structure that inhibited technology transfer between the company's centralized r&d unit and other functions, such as manufacturing.

The company's emphasis on research and development and its focus on leading-edge technology resembled in many ways the culture of a university. In fact, many current and former Tektronix employees refer to the company as the "University of Tektronix." The company's commercial success and market leadership made it possible for Tektronix to emphasize innovation, research, and development. Until the 1980s, the r&d efforts benefited heavily from the company's success, allowing for new research and development projects and the development of an r&d laboratory. It became easy to obtain funding for research activities. Tektronix historian Marshall Lee notes that

the company had become profitable enough to fund a variety of experimental research projects. There was never a question of resources and funds, virtually every interesting idea was encouraged.... High profits spurred a liberal policy with respect to project funding, and that was all the encouragement that most engineers needed to push new projects.³⁶

Informal procedures to decide what kinds of projects were to be funded allowed for the pursuit of new ideas. A former Tektronix engineer recalled that a conversation with company executives over a cup of coffee was often sufficient to gain their approval for a new project. The result of this liberal policy toward funding research was the development of a diverse range of research competencies. Early on, oscilloscope innovations encompassed pioneering work on cathode-ray tubes, which later led to the development of a line of display technologies such as the T4002 Graphics Computer Terminals. Over time, electronic circuitry became more complex and by the early 1980s, Tektronix was deeply involved in semiconductor research and development. The desire to capture the display of electronic currents on paper in addition to the oscilloscope screen led to research and development efforts in printing.

Jack Murdock (left) and Howard Vollum stand with the 511 oscilloscope.

Industrial research laboratories in large corporate enterprises have a long history. At the end of the eighteenth century, firms in the German chemical industry were among the first in the world to institutionalize innovation and knowledge-creation within corporate r&d laboratories.³⁷ America's pioneer industrial research laboratories — such as Edison, General Electric, Bell, DuPont, and Eastman Kodak — emerged in the late nineteenth and early twentieth centuries.³⁸ High-tech firms such as Xerox and Tektronix followed suit.³⁹ It was in these research laboratories that the fundamentals of electronics innovation were laid during the late 1940s. In 1948, for example, two engineers at Bell Laboratories — one of them a University of Oregon graduate — invented the transistor under the leadership of William Shockley. In 1955, Shockley started Shockley Semiconductor Laboratory in Palo Alto. Just a year later, Robert Noyce, co-founder of Intel, joined Shockley in California.⁴⁰ These laboratories had several things in common: they were set up separately from other corporate units (namely, manufacturing and marketing), their research activities usually were separated by distinct scientific fields, and the culture of work resembled that of academic institutions.⁴¹ Tektronix's Tek Labs had all of these characteristics.

In August 1972, Tek Labs was established to conduct innovative research, especially in the areas of integrated circuits, solid-state devices, and cathode-ray tubes. The Labs was also charged with propelling Tektronix into new business arenas by conducting and commercializing promising research. But the Labs faced serious challenges in accomplishing these goals. As in Xerox parc and other high-tech labs, Tek Labs was far removed from the product divisions. The result was a failure to commercialize research, which became a reason why management decided to close the Labs in the mid-1990s. It was a dilemma that many corporate r&d laboratories faced at the time, when functional specialization and the increased separation of r&d from production processes made it increasingly difficult to transfer knowledge created in those units dedicated to research into the manufacturing process.⁴²

Functional specialization characterized Tek Labs, and its research groups were set up to focus on specific areas. Two main groups, Applied Research and Component Research, housed nine sub-groups: Systems and Cybernetics Research, Computer Research, Display Research, Data Acquisition, Signal Processing, Semiconductor Design, Semiconductors, Cathode Ray Tubes, and Hybrid Circuits.⁴³ Breakthrough research was conducted within those groups. One project, for example, involved work on a new software programming language called Smalltalk. In the early 1980s, Tektronix was one of only four high-tech companies that received a license to work with Smalltalk, a programming language invented at Xerox parc that had the promise of being the first to use a visual interface.⁴⁴ Early on, one Tek Labs group began work on a new type of semiconductor, gallium arsenide, as an alternative to silicon. This technology would later build the foundation for TriQuint Semiconductors, one of the Silicon Forest companies that would spin off from Tektronix. Researchers in the Labs also laid the foundation for color projectors (later commercialized by former Tek Labs employees in the Silicon Forest startup Planar Systems) and color printers (which formed the basis for Tektronix's printer division, which was later sold to Xerox).

With no top-ranked research university nearby, Tek Labs made strong connections to the nation's top academic institutions. Senior-level researchers were hired from academia, and the majority of the lab managers had advanced degrees from well-known U.S. universities such as Purdue, Rensselaer Polytechnic Institute, and mit. A former employee of the Labs recalled that many hires — especially in the computer science field — were faculty members at universities before they joined Tektronix.⁴⁵

During the 1980s, Tek Labs was the most important research institution in the Portland metropolitan area. A former Labs researcher boasted:

I always tell people that we had the best computer science department in the State of Oregon ... if you only count those of us that had already been in academia. We had the best computer science department south of Seattle, north of Palo Alto or Berkeley and west of Madison, Wisconsin.⁴⁶

In fact, the Labs incorporated many characteristics of an academic environment. Compared to Tektronix's product units, work in the Labs was less time pressured and structured. Researchers were able to travel to and take part in academic conferences, and management allowed them to use time at work to write books and to prepare their research results for publication in academic journals. Tek Labs even housed a couple of Ph.D. students whose laboratory work became part of their dissertation research. These activities "were just part of our work," one researcher recalled. "We wanted to let people know what we are doing."⁴⁷

In sum, Tek Labs' culture attracted researchers who were devoted more to advancing research and creating innovation than to serving the firm's markets. The company's management allowed this kind of work because Tektronix's success in the market had created enough financial resources to support it. In this atmosphere, research in the Labs became an end in itself.

In its heyday years, Tek Labs employed more than four hundred researchers and occupied three floors in Building 50 on the Tektronix campus in Beaverton. The work there was very innovative, and patenting activity peaked in the mid to late 1980s (see Figure 1). But the Labs suffered the same problems as Xerox parc had in Palo Alto: researchers were unsuccessful in turning innovation into products. As one R&D manager recalled:

FIGURE 1: Tektronix Patent Activity, 1969–1999

Tektronix's top five patent classes from 1975 to 1999: Electricity, Measuring and Testing; Television; Computer Graphics Processing, Operator Interface Processing, and Selective Visual Display Systems; Miscellaneous Active Electrical Nonlinear Devices, Circuits, and Systems; and Incremental Printing of Symbolic Information (Source: U.S. Department of Commerce, Patent and Trademark Office)

At about 1995, the decision was made that our laboratories were too far removed from our product development. Good technology was being developed there but we were not getting it into products ... we basically abandoned Tek Labs. And the people were moved into the businesses they were most closely aligned to.⁴⁸

The limits of an academic culture within a high-technology corporation became obvious once the competitive environment changed. Tektronix was forced to adopt a different organizational approach to r&d, and the company began to incorporate advanced research and development work within its product and business lines.⁴⁹

Phase Two, 1980s-present

Despite its earlier success, Tektronix increasingly experienced the pressures of competition and the financial burdens of its growing organization. In 1986, the company's visionary founder, Howard Vollum, died in a plane accident, leaving Tektronix off-balance and struggling to regain its market share. Just as the company's employment peaked in the early 1980s at 24,028 (with about 15,000 employees in the Portland area), Tektronix quickly adopted policies aimed at shrinking the workforce (including offering voluntary retirement and compensation packages) to address its loss of market share and increasing competition for its instruments. Between 1985 and 1995, Tektronix shed more than half its workforce (16,025 jobs), until by 2003 it employed only 4,200 people, 2,478 of them in Portland (see Figure 2). By the early 1990s, other electronics companies had chiseled away at the company's market share in oscilloscopes, until by 1992 Tektronix recorded its lowest annual sales in nine years.⁵⁰ In 1991, ceo Jerry Meyer instituted new corporate goals that included sales growth and productivity targets, a focus on core products, and increased returns to shareholders. He decided to restructure Tektronix.

FIGURE 2: Tektronix Employment, 1946–2001

(Sources: Marshall Lee, Winning with People: the First 40 Years of Tektronix (1986); and Portland Business Journal Book of Lists, 1984–2000)

Layoffs were not the only new corporate restructuring policy. To increase operating efficiency and to meet market challenges from other companies — notably Hewlett-Packard and Japanese competitors — Tektronix management decided by the mid-1990s to refocus on its core products and to divest business units that were not profitable or did not have the potential of being market leaders.⁵¹ The sale of excess buildings and real estate during the 1990s trimmed the company's costs even more.

Until the 1970s, Tektronix focused on the oscilloscope market. Product diversification in the 1970s and 1980s put the company into many new market areas; and, by the 1990s, Tektronix's diverse portfolio included test and measurement instruments, color printers, and video and networking equipment. The company's core product — the oscilloscope — fared best in this portfolio, contributing a majority of total company sales, and revenues generated from the test and measurement products were reinvested in the two other units. During the 1990s, Tektronix sold some of its business units — most notably the video and networking and the printer division — and refocused on its core products.

The restructuring at Tektronix influenced the region's high-technology industry in profound ways. Most notable were the number of spinoff companies that seeded the Silicon Forest and contributed to the region's vitality, even as Tektronix downsized (see Tables 1 and 2). In addition, Tektronix divested business units that still exist in the region independently still such as Dupont Photomasks, Merix, and Maxim Integrated Products. In sum, Tektronix unleashed entrepreneurial dynamics that led to the evolution of a number of areas of high-tech specialization, which in turn contributed to the competitive advantage enjoyed by regional companies.

From its earliest years, Tektronix functioned as an incubator for Silicon Forest startups. To assess the extent to which Tektronix functioned as an incubator, I collected genealogical data on Silicon Forest startup companies during the fall of 2001. Tektronix spinoff activity was determined when the founder of a company indicated that his or her previous employment was with Tektronix. Subsequent spinoffs are companies that have second, third, or fourth-generation connections. That is, companies that were founded by employees working for the first-generation spinoffs. During Tektronix's vertical integration phase, from the mid-1940s to the late 1970s, Tektronix employees founded a dozen companies, such as Floating Point Systems, Chemtrix, Rogers Organs, Exact Eletronics, and Analog Devices. All of the second-generation spinoffs that emerged in this first phase were concentrated on one company, Floating Point Systems. Floating Point Systems spawned about a dozen more spinoff companies that can be characterized as Tektronix grandchildren. These included firms like Aptec Computer Systems, Quantitative Technology, Star Technology, Axian, and developNet. After 1980, things changed dramatically as Tektronix became a wellspring of more entrepreneurial activity. Forty-eight companies spun off from Tektronix between 1980 and 2000. These companies functioned as incubators themselves, as twenty-three additional companies (Tektronix grandchildren) were formed.

TABLE 1: Phase One
Tektronix Spinoffs and
Subsequent Spinoffs

1948	Hawthorne Electronics
1960	Rogers Organ
1964	Exact Electronics
1966	Chemtrix
1966	Wilbanks
1967	Kentrox
1970	Floating Point Systems
	Subsequent Spin-offs
	Aptec Computer Systems (1980)
	Quantiative Technology (1981)
	Star Technology (1981)
	Scientific Computer Systems (1983)
	Support Technologies (1984)
	Synergy DataWorks (1984)
	Performance Computing (1990)
	Thrustmaster (1990)
	Axian (1991)
	Endeavor Intertech (1997)
	CenterSpan Communications (1999)
	developNet (2000)
1973	Frye Electronics
1977	Periphicon
1979	Analog Devices
1979	Cablebus
1979	Photon Kinetics
Source: Heike Mayer, Silicon Forest genealogy survey

Three dynamics encouraged this entrepreneurial activity: (1) the formation of the Tektronix Development Corporation; (2) the sale and spinoff of some of the company's business units; and (3) employee frustration. The Tektronix Development Corporation (TDC) was created in 1984 as an internal venture-capital arm of the company. Management recognized the need to commercialize the technology that was being created inside Tektronix. More than half the company's innovations did not get to the market, which represented an enormous loss of opportunities. TDC was charged with commercializing Tektronix's innovations in new business ventures. Management also believed that investments in spinoff companies would give Tektronix the opportunity to gain insight into new technology areas not developed and commercialized within its own organization. The company also wanted to prevent the exodus of valuable employees who had great ideas but were frustrated with the company's unwillingness to pursue them. By financially supporting these employees, the hope was to maintain ties with them.⁵² Some of the Silicon Forest companies that benefited from TDC's financial support include Planar Systems, ATEQ Corporation, Anthro, and TriQuint Semiconductors.

TABLE 2: Phase Two
First Generation Tektronix Spinoffs and Subsequent
Spinoff Companies Tracing Roots to Initial Tektronix Spinoff
and Year (in parenthesis)

1980	Northwest Instrument Systems	1986	Cache Scientific
	(now Microcase)	1988	Anthro Corporation
1981	Mentor Graphics	1988	Home Row
	OVP Venture Partners (1983)	1988	Instantiations
	MedicaLogic (1985)		Wirfs-Brock Associates (1997)
	Interconnectix (1992)	1988	Trisys
	Ignis Systems (1994)		Eclipse Technologies (1991)
	Genedax (1997)	1989	Saltire Software
	Archinetix (1999)	1989	Zeelan Technology
	Indogram (2000)		RaiNet (1994)
1982	Graphic Software Systems	1990	Conkling Fiskum & McCormick
1983	Integrated Measurement Systems	1990	Mitron Corporation
	Teseda (2001)	1991	Cunningham & Cunningham
1983	KVO Public Relations	1991	Ornelas Enterprises
	McClenahan Bruer (1993)	1991	Purchasing Solutions
	Nonbox (1999)	1992	Northwest EMC
	Paris France (2001)	1992	Qualis Design Corporation
1983	Planar Systems	1992	Tview
	InFocus (1986)	1994	Maxim Integrated Products
	Motif (1992)	1994	Merix
	Sarif (1994)		Smart Forest Ventures (1999)
	Clarity Visual Systems (1995)	1994	Preamble Instruments
	Lightware (1995)	1995	A-Laser
	Pixelworks (1997)	1995	Digimarc
1983	Polytron	1995	InControl Solutions
	Intersolv (1991)	1995	Sun-Up Software
1983	TriQuint Semiconductors	1997	Cenquest
1984	Audio Precision	1997	Maxtek Components
1984	Cadic	Corporation
1984	Cascade Microtech	1998	Network Elements
1984	Kamerman Labs	1998	WebCriteria
1984	Logic Automation	1999	Videotele.com
1985	Metheus	1999	Sabrix, Inc.
1985	Relcom	2000	Upright Systems
1985	Servio Logic (now GemStone)	2000	Visual Management
	Timlick & Associates (1986)	2000	Xerox Office Printing Business
1985	Solution Logic
Source: Heike Mayer, Silicon Forest genealogy survey

The early 1990s was a time of corporate change in America and intensified international and inter-industry competition, and it was not unusual for firms to restructure and sell off some of their lines of business.⁵³ In 1992, Tektronix recorded its lowest annual sales in nine years ($2.3 billion), and it became clear that the company had failed to exploit the commercial potential of the research being conducted in Tek Labs.⁵⁴ To gain back its competitive advantage, Tektronix abandoned its tradition of doing everything in-house and began to sell business units or subsidiaries to new owners. The company's corporate crisis began to fuel regional high-tech growth. Most of the divisions that were sold or spunoff retained their Portland presence and the majority of the workforce. Some of these new companies enjoyed rapid growth as independent units and became successful Silicon Forest companies (see Table 3).

Employee frustration and dissatisfaction also provided the incentive to begin Silicon Forest startups. Engineers were frustrated with the company's inability and unwillingness to exploit the research created in its laboratories and the various divisions and groups, and projects were often cancelled at the last minute. Tektronix struggled with these problems for years. Company historian Marshall Lee notes that "over the years, engineers throughout the company have lamented the fact that on the whole Tektronix has been unreceptive to ideas outside the electronics-oscilloscope world."⁵⁵ Tekweek reported similar resentment in 1979 and quoted a Tektronix engineer:

These technological advances (many of which are new to Tek, not to the industry at large), have been, for the most part, ignored or delayed until critical by such production groups as ICM, Electrochem and Mechanical Products. New buildings, more equipment, additional employees are only excuses and will not solve what is widely considered an organization and management attitude problem in these manufacturing service areas. This situation affects the company, as a whole, by adding time-to-market to every new instrument put into production. It is all too easy for many production service managers to push new technology aside because it does not fit exactly into their normal process flow or facilities. What is really distressing is when such areas refuse technical assistance from competent personnel that report through another management structure. It seems to me that this problem affects company morale, objectives and profits.⁵⁶

As a consequence, many engineers were frustrated enough to quit and start their own businesses. In some cases, Tektronix retained good relationships with these companies, and some entrepreneurs remember that Tektronix allowed them to use the company's resources, such as the machine shop. When Mentor Graphics was started by former Tektronix employees, the company offered the founders their old jobs back if their venture failed.⁵⁷ Norm Winningstad, a former Tektronix engineer and the founder of Floating Point Systems, called Tektronix "the Big Daddy" for its support to the companies that were created around it.⁵⁸

TABLE 3: Tektronix Divestitures in the 1990s
Tektronix Division/Subsidiary (Employment at time of acq.)	Acquired by	Year

Cache Scientific (40)	Sold to SONY/Tektronix Corp.	1994
Integrated Circuit Operation (220)	Sold to Maxim Integrated Products	1994
Avionics Division (70)	Sold to Planar Systems Corp.	1994
Printed Circuit Board Group (700)	Spun off as Merix Corp.	1994
Video Department (135)	Sold to Network Computing Devices	1998
Videotele.Com (60)	Spun off as independent company	1998
Video Division (100)	Sold to Grass Valley Group	1999
Printer Division (2,400)	Sold to Xerox Office Printing Business	2000

Source: Heike Mayer, Silicon Forest genealogy survey

The Silicon Forest is a result of both Tektronix's growth and its subsequent corporate decline. As the company was restructured and changed over the years, however, Tektronix management did not strategically direct or even foresee the regional implications of their efforts. The Silicon Forest, with its diverse companies, should be seen as a result of corporate mistakes, problems, and crisis. Understanding the role Tektronix played in the growth of the Silicon Forest reminds us just how important the company was in the creation of Portland's high-technology economy. The company's unusual culture and the values it placed on knowledge-creation and innovation attracted very talented employees to Portland, and the company's emphasis on cutting-edge research gave the region a competitive edge. Tektronix was both an anchor and a seedbed for many Silicon Forest firms — the "surrogate university" that planted many of the seeds from which the Silicon Forest grew.

Notes

The author thanks Carl Abbott, Paul Ceruzzi, the Oregon Historical Quarterly editors, and the anonymous referees for their insightful comments and suggestions that significantly improved this manuscript.

^1. Portland Development Commission, http.//www.pdc.us/bus_serv/target_industries/hi_tech.asp (Accessed November 9, 2005).

^2. Mike Francis, "Who Owns 'Silicon Forest'?" Portland Oregonian, December 3, 1995.

^3. Heike Mayer, "Taking Root in the Silicon Forest: The Role of High Technology Firms as Surrogate Universities in Portland, Oregon," Journal of the American Planning Association 71: 3 (2005): 318–33.

^4. See Richard Florida and Martin Kenney, Beyond Mass Production: The Japanese System and its Transfer to the U.S. (Oxford: Oxford University Press, 1993).

^5. David Harvey, The Condition of Postmoderinty (Cambridge, England: Blackwell, 1990).

^6. Michael Piore and Charles Sabel, The Second Industrial Divide: Possibilites for Prosperity (New York: Basic Books, 1984), 6.

^7. Christophe Lécuyer, "High-Tech Corporatism: Management-Employee Relations in U.S. Electronics Firms, 1920s–1960s," Enterprise & Society 4:3 (2003): 502–20.

^8. A.J. Scott, "Flexible Production Systems and Regional Development: The Rise of the New Industrial Spaces in North America and Western Europe," Department of Geography, University of California at Los Angeles, 1988.

^9. Paul Hirst and Jonathan Zeitlin, "Flexible Specialization Versus Post-Fordism: Theory, Evidence and Policy Implications," Economy and Society 20: 1 (1991): 1–56.

^10. See, for example, AnnaLee Saxenian, "The Genesis of Silicon Valley," in Silicon Landscapes, ed. Peter Hall and Ann Markusen (Boston: Allen & Unwin, 1985), 20–34; Saxenian, "Lessons from Silicon Valley," in Technology Review (July 1994), 43; Saxenian, "Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge, Mass.: Harvard University Press, 1994); Saxenian, "Regional Systems of Innovation and the Blurred Firm," in Local and Regional Systems of Innovation, ed. John de la Mothe and Gilles Paquet (Boston: Kluwer Academic Publishers, 1998), 29–43; and Christophe Lécuyer, "Fairchild Semiconductor and its influence," in C.M. Lee, W. Miller, M.G. Hancock, and H. Rowen eds., The Silicon Valley Edge: A Habitat for Innovation and Entrepreneurship (Stanford: Stanford University Press, 2000). For a detailed examination of the competitive pressures in the U.S. electronics industry, see James Gover, "Review of the Competitive Status of the United States Electronics Industry," in Technological Competitiveness: Contemporary and Historical Perspectives on the Electrical, Electronics, and Computer Industries, ed. William Aspray (New York: IEEE Press, 1993). A.J. Scott, New Industrial Spaces: Flexible Production and Regional Development in North America and Western Europe (London: Pion, 1988).

OHS neg., OrHi 76876

^11. The Forest Service Radio Lab (FSRL) had moved from Tacoma to Vancouver, Washington, and then to southeast Portland. FSRL employed half a dozen engineers and contracted with one of Portland's first electronics companies, Radio Specialty. Howard Vollum worked for Radio Speciality after he graduated from Reed College in 1936. FSRL engineers also formed the nucleus of the local chapter of the Institute of Radio Engineers (IRE) of which Howard Vollum was a member. See Gary Craven Gray, Radio for the Fireline: A History of Electronic Communication in the Forest Service 1905–1975 (Washington D.C.: U.S. Department of Agriculture, Forest Service, 1982).

^12. Marshall Lee, Winning with People: The First 40 Years of Tektronix (Portland: Tektronix, Inc., 1986). Tektronix was founded in Portland in 1946. For about a month, the new company was known as Tekrad; but the name was changed only weeks after its incorporation because of possible confusion with a California company called Technical Radio Company.

^13. Ibid., 38.

^14. Hawthorne Electronics was divested from Tektronix in September 1946. See Lee, Winning with People, 39.

^15. Roy Wheeler, "Test and Measurement: Personal Reflections on 40 Years," Electronic Design, November 25, 1992, 101–112.

^16. Lee, Winning with People, 31

^17. Lee, Winning with People, 72, 123, 224.

^18. In 1987, Hewlett-Packard introduced a lower-cost oscilloscope to compete with Tektronix's scopes. By the late 1990s, HP also presented an increasingly competitive force in logic analyzers, which are measurement instruments that capture digital data, with a market share of from 70 to 75 percent. See Elisa Williams, "A Bigger Slice of Pie," The Oregonian, February 4 1997, B16.

^19. Richard Langlois, "Esternal Economies and Economic Progress: The Case of the Microcomputer Industry," Business History Review 66: 1 (1992): 7.

^20. Bill Walker, interview with author, August 15, 2001.

^21. Hubert Soher, "Oregon Today and Tomorrow. An Economic Study of the Quality State for Pacific Power & Light Company," (Portland: Pacific Power & Light Company, 1962), 32–33.

^22. See Lee, Winning with People, 304–05.

^23. Ibid., 50–52.

^24. Ibid.

^25. Mike Taylor, interview with the author, July 27, 2001.

^26. Thor Hallen, interview with the author, August 21, 2001.

^27. Taylor interview

^28. Walker interview.

^29. Pat Kunkle, e-mail conversation with the author, November 29, 2001.

^30. "Fall Term Student Body Stands at 2,200," Tekweek, October 4, 1974.

^31. See Gordon Dodds and Craig Wollner, The Silicon Forest: High Tech in the Portland Area (Portland: The Oregon Historical Society, 1990), 99, 124.

^32. "Area Representative Employee Report," Tekweek, April 7, 1974, 3.

^33. See David Packard, The HP Way (New York: HarperCollins, 1995). Christopher Lécuyer argued that high technology firms on the West Coast have adopted more progressive organizational and managerial changes as early as the 1930s. See his "High-Tech Corporatism."

^34. Hallen interview.

^35. Ibid.

^36. Lee, Winning with People, 220.

^37. Chris Freeman and Luc Soete, The Economics of Industrial Innovation (Cambridge, Mass.: The MIT Press, 1990).

^38. David Noble, America by Design: Science, Technology, and the Rise of Corporate Capitalism (Oxford: Oxford University Press, 1977).

^39. See Paul Ceruzzi, A History of Modern Computing. (Cambridge, MA: The MIT Press, 2000); Richard Florida and Martin Kenney. The Breakthrough Illusion: Corporate America's Failure to Move from Innovation to Mass Production. (New York: BasicBooks, 1990); Douglas Smith and Robert Alexander, Fumbling the Future: How Xerox Invented, Then Ignored the First Personal Computer. (New York: William Morrow, 1988).

^40. Tom Wolfe, "The Tinkering of Robert Noyce. How the Sun Rose on the Silicon Valley," Esquire, December 1983.

^41. Florida and Kenney, The Breakthrough Illusion.

^42. Ibid.

^43. Robert Chew, interview with the author, August 20, 2001.

^44. Mike Taylor, interview with the author, July 27, 2001. In addition to Tektronix, only Hewlett-Packard, Apple, and Digital Equipment had a license to work with Smalltalk.

^45. Ralph London, interview with the author, August 20, 2001.

^46. Ibid.

^47. Hallen Interview

^48. Jack Hurt, interview with the author, July 18, 2001.

^49. Hurt interview; Paul TenZeldam, interview with the author, November 20, 2001.

^50. Richard Colby, "Tek: Looking for a Turnaround." The Oregonian, July 19, 1992.

^51. Ibid. Richard Colby, "Tektronix Plans to Become Even More Trim," The Oregonian, June 25, 1993.

^52. Walker interview

^53. Alfred Chandler, Scale and Scope (Cambridge, Mass.: The Belknap Press, 1990); Richard Mpoyi, "Changing Corporate Strategies: Restoring Competitive Advantage through Vertical Disintegration," Advances in Competitiveness Research 8: 1 (2000), 71–80.

^54. Colby "Tek."

^55. Lee, Winning with People, 287.

^56. "Earl Wantland Answers Questions on State of Tek," Tekweek, February 16 1979, 3.

^57. Dodds and Wollner, The Silicon Forest.

^58. Norm Winningstad, interview with the author, September 25, 2001.

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