10/1/01-#4

- With HAK edits -

# Merkle Lecture

It is a great honor to be asked to deliver a speech in memory of one of the most remarkable men I have known. It is a daunting task as well. For those in this room who knew Hans Merkle, nothing I can say will be able to reflect his complexity and inspirational quality. For those who did not have the opportunity to encounter his extraordinary combination of dedication and authority, any description of him will, in this age of standardized norms, seem out of scale.

Hans Merkle was a man of seeming paradoxes. He was my friend, yet he rarely spoke a personal word to me. One knew

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one could always rely on him, yet he would have considered statements to that effect as an elaboration of the self-evident or a derogation from the nature of friendship. Merkle was an inspiring leader who moved people by his aura without having to insist on the prerogatives of hierarchy. Even while achieving enormous success in business (it is no exaggeration to describe him as the most influential German businessman for two decades), he spent much of his free time reading and developing an astonishing erudition in philosophy, history, even poetry - all without a university degree. He displayed this staggering knowledge only rarely in conversations; Hans Merkle would have considered that as so much unworthy ostentation. "One must never say all one knows," he noted in his speech, "Service and Leadership" (Dienen und Führen).

3

The range of Merkle's interests is reflected in the titles of his speeches and essays: "The Art of Prediction;" "Man, Machines, and Technology;" "Rights and Duties in the Republic;" "Service and Leadership;" "Elites and How to Encourage Them;" "Profession as Experience;" "A Critique of Technology;" "Virtue and Trust," among many others. How many modern managers would have thought of writing an essay on the meaning of Caesar going to the Capitol on the day he was assassinated even though he had received many warnings? Did it reflect the virtue of trust in republican institutions or the sin of arrogant self-confidence challenging republican norms?

Merkle's essentially philosophical essays did not deal with the issues directly related to his company. But they do

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explain its extraordinary success under his leadership,
growing from sales of DM 2 billion in 1964 when he took over
the reins, to DM 21.2 billion in 1985, and to DM 60 billion in
the year 2000. And the smoothness of the transition after he
[stepped down as chairman] shows that Merkle achieved his
highest aim of raising management beyond the personal and
imparting to his successors the standard of meticulous
attention to detail, insistence on a striving for perfection
and, above all, on an ethic of decency and a selection based
on character, which I consider the hallmark of Bosch.

I met Hans Merkle 24 years ago at a dinner of Chase
Manhattan Bank's International Advisory Board, which took
place in a New York museum. Sigmund Warburg had urged Merkle
to introduce himself to me. That, however, proved easier said

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than done. Merkle did not want to impose himself, while I waited for him to approach me. Finally I introduced myself. And Merkle's first words to me were: "You should know that I worked in a responsible position in a military ministry in Berlin. I did not like the Nazis, but I served my country during the war. If that bothers you, you should have nothing to do with me."

That night at the museum laid the basis for permanent respect. For it was clear that Merkle wanted nothing less than to obscure the past. He once said that people who deny their history also reject their future. But the appropriate lessons had to evolve in the realm of conscience of the individual and of his society and not in comments to foreigners. Merkle took many actions to make clear where he

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stood, including the activities of the Bosch Foundation in
Israel. But, true to his signature style, he never publicized
them.

Hans Merkle was infinitely solicitous of his friends but
became embarrassed when one acknowledged his concern as if
that would destroy its moral significance as an act of grace.
On the occasion of my being made honorary citizen of Fürth,
the town in which I was born, Merkle appeared, having driven
over two hours to get there. Only later did I learn that it
had been the first day of radiation treatment for the illness
that ultimately claimed his life and that he had come straight
from this exhausting procedure to a formal ceremony and a
boisterous lunch.

[y]

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So when one writes or speaks about Hans Merkle, one deals with the incarnation of intangibles. To him, the central quality of a society or of any organization was trust (Zuversicht). Confidence results less from deliberate policy than from the intuitive acceptance of personalities who inspire by example rather than articulateness. He quoted with approval a line from Alfred Tennyson: "And trust me not at all or all in all." The ultimate requirement of leadership was, as Merkle would quote Peter Drucker, to earn trust: "Trust is the conviction that the leader means what he says."

Merkle always meant what he said. In his view, leadership was service; it avoids self-satisfaction during periods of success and provides inner strength to persist in times of adversity. It consists in equal parts of delegating

8

credit for achievement while assuming responsibility for
failure. The chief executive must not only outline a
direction but inspire its execution. And he must never rest
on what has been achieved. Thus Merkle ended his speech at
Bosch's centenary celebration summing up the achievements of
the past 100 years with a warning against complacency: "We at
Bosch know our worth. But this consciousness does not entitle
us to lean back in our chairs in self-satisfaction. We see
our challenge not in reaping what we have sown but in sowing
what will be reaped tomorrow."

In his style of leadership, Merkle confronted the root
dilemma of modern society: how, in a period of rapid change,
to bridge the gap between a society's experience and its
possibilities, between the preservation of what is valuable

[Y]

and the space needed for the emergence of the new? Societies
grow attached to the familiar, but leaders must point toward
what does not yet exist. Even if ideas or concepts originate
with one or a few individuals, they must be internalized by
those who execute them and become, as it were, their own
convictions. The role of leadership is, in a sense, lonely,
but the execution cannot be solitary; it must reflect a
consensus. Democracy is therefore a mandate of modernity.
The vitality of a society depends crucially on the interplay
between the inspiration of the individual and the translation
of it into the commonplace of the society or of the
enterprise.

A democracy whose leaders rely only on exploiting the
mood of the moment will soon drift without direction and end

10

in dictatorship. But, equally, leadership conceived as the expression of the arbitrary of an individual will turn power into a demonic enterprise. For that reason, a well-conceived concept of national interest is less an assertion of power than a limitation of it.

Hans Merkle feared an unprecedented form of tyranny as potentially inherent in the modern technological world.

Permit me to quote from his essay, "The Demonism of Power:"

> "It is conceivable - and perhaps we have an obligation to face it - that the demonism of power in the future cannot be related to the individual any longer. Power becomes increasingly anonymous but no less dangerous for the free evolution of humanity. Falsification of concepts is the first step toward the development of concentrations of power of a

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new kind - impersonal, intangible, almost ghostly; one is reminded of Kafka. And because society so emasculated will not be able to deal with social processes without some mechanism, social tasks will be assigned to organs of a new kind. The despotism of tyrants will be replaced by the despotism of the apparatus."

Therefore, the individual's fulfillment must not be subordinated to the demands of politics, and politics must not be defined as the sole, or even the principal, purpose of social life. The ultimate goal of political life should not be imposition of a ubiquitous, interchangeable norm but to promote independence in enterprises and for individuals. Wherever it is forgotten that political duties are, in the

[y]

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end, based on political rights and that these rights must be revitalized in each period, politics turns into manipulation.

Real conservatives - among whom Merkle counted himself - are not opposed to progress; on the contrary, they create the condition for progress by preserving the foundations on which to build and by warning of those steps urged in the name of progress that lead into an abyss.

The executive is tested above all when adversity strikes.

A prescient quote from Merkle from 1975 may be appropriate:

> "Too extended periods of unrestrained growth spoil both managers and workers, distort a sense of proportion, erase distinctions, and weaken the sense for the essential, for the necessary, for the possible. They obscure the peril that threatens every society and every economy which prevails too

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easily without having to prove itself. If the wind changes
and storms threaten, the hour of ultimate testing has come;
then we will learn who can read the weather map and who is
able to navigate against the wind."

This is why for Merkle - as already for Robert Bosch -
the fostering of talent was a primary preoccupation. The
founder of the company had laid down in the guidelines of the
Bosch Foundation, to which he had refused to give his name in
keeping with the Bosch tradition of anonymity (it was [so]
named only after his death by Merkle), that one of its
principal goals was to prepare society for the adaptation of
thought processes and procedures to the changes subtly latent
in all societies. Foremost among these was the free and
unhindered development of the human personality.

14

These fragmentary summaries of the thoughts of a remarkable man explain what I would describe as the "Bosch style:" total reliability, an unflagging sense of service, a dedication always to function at the frontiers of knowledge, a notion of profit based on energetic enterprise and insistent competitiveness with the proceeds always available to the common good. "To belong to the elite," wrote Merkle, "brings with it duties rather than rights. To be sure, the performance demanded of leaders should not and does not remain unrewarded. But the goal of the effort must never be material reward. Elites should not define themselves by ruling but by serving - or better, they rule best by serving. Those who belong to the real elite do not insist on being called elites. Those who do insist on it do not belong."

[y]

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This explains the seemingly anonymous, almost impersonal,
and yet, in its ultimate sense, deeply individual style of
Hans Merkle. For his work to be meaningful, it could not be
the expression of a personal preference; this would undermine
its moral significance. It had to be a reflection of a higher
obligation which evoked the sense of duty. Merkle would quote
from Max Planck: "The ultimate good of which no power in the
world can deprive us is a pure way of thinking (reine
Gesinnung) which finds its expression in a conscientious
carrying out of one's duties." To which Merkle added: "No
more can be expected of us but also no less."

In this spirit, I want to say a few words about the
contribution that Hans Merkle and some members of his
generation - at least one of whom is here tonight - have made

to the rebirth of Germany and its relationship to the
international community in the aftermath of the Second World
War.

Biographers make much of my German birth. And it is, of
course, true that one's environment shapes one's attitudes
even in difficult times (which is why I still take an active
weekly interest in the four Bavarian football clubs in the
Bundesliga - although Fürth is regrettably in the second
Bundesliga). But my real connection with Germany stems from
the end of the war. I arrived here with the army of
occupation in 1945 after a seven-year absence. Few of you
present will remember the devastation, desolation, and
spiritual despair of those months; it belongs to the formative
experiences of your fathers and grandfathers. There is no

time now, and this is not the occasion, to review the
political evolution of more than half a century - though it
seems like only yesterday to me.

I want to pay tribute to those who had the moral courage
to start again, to rebuild their country, and to bring it back
to the community of nations by the very qualities I have
called the Bosch attributes: reliability, steadiness,
enterprise, and an abiding commitment to democratic values.

Governments of both major parties established a steady policy
tied to the democratic West. In the process, America and
Germany together went through two Berlin crises, the building
of the Wall, and finally reunification. Occasional
disagreements in tactics have never undermined the underlying
unity of purpose.

[y]

And just when, on both sides of the Atlantic, the end of
the Cold War had evoked a seemingly endless debate about the
continuing validity of the democratic partnership, the
terrorist attack on New York and Washington has returned the
democracies to fundamentals. Too many of us had been seduced
by the siren song of the end of history, of the reduction of
politics to psychiatry and social work, and of the
predominance of narrow national concerns. We have learned
that there are incompatible values rampant in the world around
us and that there are those so eager to destroy our
civilization that they will sacrifice their lives to do so and
will not recoil before the murder of innocent civilians. It
has obliged the West to relearn what it had nearly forgotten:
that in its unity and solidarity resides its ultimate

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strength. So I want to take this opportunity to thank our
German friends here for the many expressions of support and
compassion that reached us from all over Germany and for the
highly appreciated demonstrations of solidarity from the
German government.

None of this would have surprised Hans Merkle. He was
born in what was then Baden, now Baden-Württemberg, but he
incarnated some of the best values of the Prussian ethos. One
of these is, "Always be more than you seem to be" (mehr sein
als scheinen). Applied to Merkle and adapting it to one of
the quotes I mentioned earlier, I would rephrase his own basic
maxim this way: "Always say less than you know and always do
more than you say."

[y]

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For all I have said, Merkle's posture of aloofness did not reflect a lack of deep feeling. On the contrary, it was wrested from a deeply passionate nature. He obscured this aspect of his personality because he did not wish to impose his sentiments even on his friends. Like one of the heroes of classical drama, Merkle took on himself the battles to which he thought destiny had called him. Those of us whom he honored with his friendship therefore felt as if we had been admitted into a chivalrous order.

The emotions from which Merkle's aristocratic conduct had been wrung can be seen in a letter he wrote in November 1944, when his hometown of Pforzheim had been destroyed in the war: "Fate would not pass this town by. But for me this place is not of brick and mortar; it is founded on quite a different

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kind of building block that cannot be reduced to rubble so
long as the heart does not allow it. And the heart will not
acquiesce. It clings to old scenes, to hills and trees, and
to the memory of many days which were gifts of God and of
youthful dreams. For, in the end, ideas are stronger than men
and more long-lasting."

A few months after his death, Merkle's daughter Monika
and Dr. Scholl did me the honor of accompanying me to Hans
Merkle's grave on a still, verdant hillside, shaded by trees
overlooking the city of Pforzheim which had risen from the
ashes, rebuilt by men and women whose dreams overcame their
reality.

After that occasion, Monika graciously let me see the
letter I have just read to you. I thought then how lonely a

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life this caring man imposed on himself, how much of the
travail of others he took on himself, and I wondered whether
some of us might have broken through this solitude by an act
of grace.

But then I reflected that Hans Merkle lived just as he
wanted. Duty was his companion, honor his imperative. He
expressed this best in his essay, "Virtue and Trust:"

"Confidence in the future - that virtue of the soul, as the
French put it - must be fought for every day. It involves
permanent exertion, a coming-and-going; yet, to console us as
we travel a path so strewn with stones, God occasionally

grants us a smile."

[Y]

Oct 01 01 02:14p

KAI

212-759-0153

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grants us a smile."

10/1/01-#4

Merkle Lecture

2

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explain its extraordinary success under his leadership,
growing from sales of DM 2 billion in 1964 when he took over
the reins, to DM 21.2 billion in 1985, and to DM 60 billion in
the year 2000. And the smoothness of the transition after he
**[stepped down as chairman]** shows that Merkle achieved his
highest aim of raising management beyond the personal and
imparting to his successors the standard of meticulous
attention to detail, insistence on a striving for perfection
and, above all, on an ethic of decency and a selection based
on character, which I consider the hallmark of Bosch.

5

9

[Y]

> "It is conceivable - and perhaps we have an obligation to face
> it - that the demonism of power in the future cannot be
> related to the individual any longer. Power becomes
> increasingly anonymous but no less dangerous for the free
> evolution of humanity. Falsification of concepts is the first
> step toward the development of concentrations of power of a

11

CYJ

[Y]

[Y]

15

[Y]

16

[Y]

I want to pay tribute to those who had the moral courage
to start again, to rebuild their country, and to bring it back
to the community of nations by the very qualities I have
called the Bosch attributes: reliability, steadiness,
erprise, and an abiding commitment to democratic values.

19

[Y]

[Y]

> "Fate would not pass this town by. But for me this place is
> not of brick and mortar; it is founded on quite a different

21

22

[Y]

TO: 09-30-01 22:28

FROM:703 941 4072

P61

9/30/01-#3

Merkle Lecture

SEP-30-01 SUN 11:24 PM J WILLIAMS

703 941 4072

P.01

one could always rely on him, yet he would have considered
statements to that effect as an elaboration of the self-
evident or a derogation from the nature of friendship. Merkle
was an inspiring leader who moved people by his aura without
having to insist on the prerogatives of hierarchy. Even while
achieving enormous success in business (it is no exaggeration
to describe him as the most influential German businessman for
two decades), he spent much of his free time reading and
developing an astonishing erudition in philosophy, history,
even poetry -- all without a university degree. He displayed
this staggering knowledge only rarely in conversations; Hans
Merkle would have considered that as so much unworthy
ostentation. "One must never say all one knows," he noted in
his speech, "Service and Leadership" (Dienen und Führen).

09-30-01 22:28 TO:

FROM:703 941 4072

P02

703 941 4072

P.02

The range of Merkle's interests is reflected in the titles of his speeches and essays: "The Art of Prediction;" "Man, Machines, and Technology;" "Rights and Duties in the Republic;" "Service and Leadership;" "Elites and How to Encourage Them;" "Profession as Experience;" "A Critique of Technology;" "Virtue and Trust," among many others. How many modern managers would have been able to write an essay reflecting on the meaning of Caesar going to the capital on the day he was assassinated even though he had received many warnings? Did it reflect the virtue of trust in republican institutions or the sin of arrogant self-confidence challenging republican norms?

09-30-01 22:29 TO:

FROM:703 941 4072

P03

3

CJ

SEP-30-01 SUN 11:25 PM J WILLIAMS

703 941 4072

P.03

explain its extraordinary success under his leadership,
growing from sales of DM 2 billion in 1964 when he took over
the reins, to DM 21.2 billion in 1985, and to DM 60 billion in
the year 2000. And the smoothness of the transition shows
that Merkle achieved his highest aim of raising management
beyond the personal and imparting to his successors the
standard of meticulous attention to detail, insistence on a
striving for perfection and, above all, on an ethic of decency
and a selection based on character, which I consider the
hallmark of Bosch.

TO: 09-30-01 22:29

FROM:703 941 4072

P04

4

Stock

EKJ

703 941 4072

P.04

That night at the museum laid the basis for permanent
respect. For it was clear that Merkle wanted nothing less
than to obscure the past. He often said that people who deny
their history also reject their future. But the appropriate
lessons had to evolve in the realm of conscience of the
individual and his society and not in comments to foreigners.
Merkle took many actions to make clear where he stood,

09-30-01 22:30 TO:

FROM:703 941 4072

P05

SEP-30-01 SUN 11:26 PM J WILLIAMS

703 941 4072

P.05

quality of a society or of any organization was trust
(Zuversicht). Confidence as the essential precondition of
human coexistence implied less (the conscious goal of
deliberate policy than the intuitive acceptance of those
personalities who inspire by example rather than verbal
declaration. He quoted with approval a line from Alfred
Tennyson: "And trust me not at all or all in all". The
ultimate requirement of leadership was, as Merkle would quote
Peter Drucker, to earn trust: "Trust is the conviction that
the leader means what he says."

Merkle always meant what he said because, to him,
leadership was an expression of service. In his view,
was service; it is something awards
leadership requires an attitude that avoids self-satisfaction
during periods of success and provides inner strength to

09-30-01 22:31 TO:

FROM:703 941 4072

P.07

7

SEP-30-01 SUN 11:27 PM J WILLIAMS

703 941 4072

P.07

persist in times of adversity. It consists in equal parts of
delegating credit for achievement while assuming
responsibility for failure. The chief executive must not only
outline a direction but inspire its execution. And he must
never rest on what has been achieved. Thus Merkle ended his
speech at Bosch's centenary celebration summing up the
achievements of the past 100 years with a warning against
complacency: "We at Bosch know our worth. But this
consciousness does not entitle us to lean back in our chairs
in self-satisfaction. We see our challenge not in reaping
what we have sown but in sowing what will be reaped tomorrow."

09-30-01 22:31 TO:

FROM:703 941 4072

P08

703 941 4072

P.08

possibilities, between the preservation of what is valuable
and the space needed for the emergence of the new? Societies
grow attached to the familiar, but leaders must point toward
what does not yet exist. Leadership, in Merkle's view, is
based on permitting others to participate in working for
common goals. Even if these originated with one or a few
individuals, they must be internalized by those who execute
them and become, as it were, their own convictions. The role
of leadership is, in a sense, lonely, but the execution cannot
be solitary; it must reflect a consensus. Democracy is
therefore a mandate of modernity. The vitality of a society
depends crucially on the interplay between the inspiration of
the individual and the translation of it into the commonplace
of the society or of the enterprise.

09-30-01 22:32 TO:

FROM:703 941 4072

P09

SEP-30-01 SUN 11:28 PM J WILLIAMS

703 941 4072

P.09

A democracy whose leaders rely only on exploiting the mood of the moment will soon drift without direction and end in dictatorship. But, equally, leadership conceived as the expression of the arbitrary of an individual will turn power into a demonic enterprise. For that reason, a well-conceived concept of national interest is less an assertion of power than a limitation of it.

09-30-01 22:57 TO:

FROM:703 941 4072

P01

10

SEP-30-01 SUN 11:53 PM J WILLIAMS

703 941 4072

P.01

09-30-01 22:57 TO:

FROM:703 941 4072

P.02

11

evolution of humanity. Falsification of concepts turns into
step towards the herald for the development of concentrations of power of a
new kind - impersonal, intangible, almost ghostly; one is
reminded of Kafka. And because society so emasculated will
not be able to deal with social processes without some
mechanism, social tasks will be assigned to organs of a new
kind. The despotism of tyrants will be replaced by the
despotism of the apparatus."

Therefore, the individual's fulfillment must not be
subordinated to the demands of politics, and politics must not
be defined as the sole, or even the principal, purpose of
social life. The ultimate goal of political life should not
be imposition of a ubiquitous, interchangeable norm but to
promote independence in enterprises and individuals' identity in

+

P.02

703 941 4072

09-30-01 22:58 TO:

FROM:703 941 4072

P03

12

the personality. Wherever it is forgotten that political
duties are, in the end, based on political rights and that
these rights must be revitalized in each period, politics
turns into manipulation.

Real conservatives - among whom Merkle counted himself -
were not opposed to progress; on the contrary, they create the
condition for progress by preserving the foundations on which
to build and by warning of those steps urged in the name of
progress that lead into an abyss.

SEP-30-01 SUN 11:54 PM J WILLIAMS

703 941 4072

P.03

TO: 09-30-01 22:59

FROM:703 941 4072

P.05

14

occurring subtly in all societies. Foremost among these was
the free and unhindered development of the human personality.

These fragmentary summaries of the thoughts of a
remarkable man explain what I would describe as the "Bosch
style:" total reliability, an unflagging sense of service, a
dedication always to function at the frontiers of knowledge, a
notion of profit based on energetic enterprise and insistent
competitiveness made always available to the common good. "To
belong to the elite," wrote Merkle, "brings with it duties
rather than rights. To be sure, the performance demanded of
leaders should not and does not remain unrewarded. But the
goal of the effort must never be material reward. Elites
should not define themselves by ruling but by serving - or
better, they rule best by serving. Those who belong to the

SEP-30-01 SUN 11:55 PM J WILLIAMS

703 941 4072

P.05

This explains the seemingly anonymous, almost impersonal,
individual
and yet, in its ultimate sense, deeply personal style of Hans
Merkle. For his work to be meaningful, it could not be the
expression of a personal preference; this would undermine its
moral significance. It had to be a reflection of a higher
obligation which evoked the sense of duty. Merkle would quote
from Max Planck: "The ultimate good of which no power in the
(Eine Erscheinung)
world can deprive us is a pure way of thinking which finds its
expression in a conscientious carrying out of one's duties."
To which Merkle added: "No more can be expected of us but
also no less."

TO: 09-30-01 23:00

FROM:703 941 4072

P07

present will remember the devastation, desolation, and
spiritual despair of those months; it belongs to the formative
experiences of your fathers and grandfathers. There is no
time now, and this is not the occasion, to review the
political evolution of more than half a century -- though it
seems like only yesterday to me.

But I want to pay tribute to those who had the moral
courage to start again, to rebuild their country, and to bring
it back to the community of nations by the very qualities I
have called the Bosch attributes: reliability, steadiness,
enterprise, and an abiding commitment to democratic values.
Governments of both major parties established a steady policy
tied to the democratic West. In the process, America and
Germany together went through two Berlin crises, the building