Guess Who’s Coming to Dinner, Part 2

October 11, 2009

Being “technology driven” is often not the best path to real innovation.  Part 1 of this post was distilled from a conversation with George H. Heilmeier, former director of DARPA, CEO of Bellcore, inventor of the liquid crystal display and winner of the 2005 Kyoto prize. It was based in part on the “Heilmeier Catechism”, an approach to technology strategy that begins, not with the technology but with the business problem to be solved.  It was shared widely with the many younger managers who came under George’s influence over the years, and I have heard from a fair number of them in recent weeks.  All had their own stories to tell about why the approach of “selling to investment bankers” was exactly the right way to think about positioning R&D in a larger organization.  In all of our discussions, George has always been insistent about two things: the negative power of vested interests and the failure of  technology transfer by “throwing technology over the transom”.  Out of this came his notion of an “interdisciplinary team” with representation from R&D, product engineering and manufacturing, where leadership and balance shift as time goes on. This is the dinner table.   As important as these ideas are for day-to-day management of R&D, they are critical when it comes to initiating projects that are transformative, where commitment to change comes from handshakes at the top of the organization.

Shortly after the Regional Bell Operating Companies began divesting themselves of Bellcore, but before George stepped down as CEO, the appetite for applied research began to change.  To some extent, this was part of a natural evolution of the company from a captive R&D Lab to a stand-alone corporation whose owners – eventually the employee-owned defense systems integrator, Science Applications International or SAIC — demanded not only profitability but also growth in a market that was already growing at 15% per year.   The “30/30 Frontier” (30% revenue growth with 30% operating margins) was a wake-up call for all R&D managers in the company and it was a personal lesson for me in how to engage corporate management with initiatives that were tied to  bet-your-job objectives.

I was in charge of computing research at the time,  and three things were important to me.  First, was Heilmeier’s  commitment to funding forward-looking work at the corporate level, which meant that annual spending goals had to be set by reaching a consensus among product, research,  sales, and marketing teams.   Second was the freedom that Bob Lucky  — Bellcore’s senior VP of Research —  gave to his senior leaders to push the boundaries of the business. Third, was the collaborative but demanding relationship that I had with Chief Operating Officer Sanjiv Ajuha, who was himself a veteran software development manager.

Sanjiv was in turn looking for three business advantages that at first blush seem to be mutually contradictory.  The first two were obvious: near-term competitive advantage for the company’s large software systems and  game-changing inventions that would shake up the marketplace in the long run.  The third was revenue against which corporate R&D investments could be scored.  Near-term objectives were rolled up into product R&D costs while long-term objectives were used in 3-5 year investment planning.  Scoring R&D spending against revenue hardly seems like a competitive advantage but in my view it was the critical piece of the puzzle because it forced us to run a business.  It forced us to operate a business unit with profit and loss goals, not just another corporate cost center (which tend to develop unhealthy  entitlement cultures).   It also forced us to be very hard-nosed about tracking research contributions that led to revenue in existing product lines.  I would like to think this is a classical WWC strategy because it made us  focus externally on business objectives that affected the entire company.

I’ll have a lot more to say in later posts about some of the tools we used to do this, but the example that Heilmeier kept in front of us – because it took some convincing to make sure the lessons stuck – is for me the most compelling part of this story and the one I returned to time and again as I found myself inventing new frameworks in other organizations.

As DARPA Director, George reported to Nixon’s Secretary of Defense James Schlesinger.  Schlesinger himself had impressive academic and technology credentials.  He had served as head of the Atomic Energy Commission and Director Central Intelligence. Schlesinger’s DARPA operated like a technology incubator full of “technology entrepreneurs” as Heilmeier called his staff.  Under Heilmeier, DARPA settled on six over-arching themes, all of them aimed at somehow changing the nation’s military posture in ways that would be understandable not only to the Secretary but also to the staff and line officers who were frequently unhappy with DARPA’s “help”:

  • Create an “invisible aircraft”.
  • Make the oceans “transparent”.
  • Create an agile, lightweight tank armed with a tank killer “machine gun”.
  • Develop new space based surveillance and warning systems based on infrared focal plane arrays.
  • Create command and control systems that adapted to the commander instead of forcing the commander to adapt to them.
  • Increase the reliability of our vehicles by creating onboard diagnostics and prognostics.

Each of these “silver bullets” was so directly tied to a military objective that it took only a single meeting with Schlesinger to get his buy-in on the entire agenda.  In my next post I will describe how these technology challenges were turned into military capabilities and why it’s an important lesson for today’s climate where innovation and execution often seem to be at odds.


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