Pumping Up The Baby Bells' R&D Arm

No one knows better than George H. Heilmeier that an earthquake is shaking Bellcore, the R&D arm of the seven phone holding companies known as the Baby Bells. When Bellcore's board lured Heilmeier from the top technology job at Texas Instruments Inc., it asked for "a culture change." Confronted with the computerization of phone networks and beset by new rivals, the owners of the nation's largest R&D consortium wanted faster product development and more progress in information technologies. After 13 years running a crackerjack R&D effort, Heilmeier seemed equipped to deliver.

Five months later, Bellcore's new president is doing just that. In nearly 170 hours of meetings with employees, Heilmeier has delivered a clear message: no more business as usual. The Baby Bells must "change to accommodate fast-moving technologies and a competitive environment," he says. "Bellcore will do the same."

LESS ACADEMIC. Heilmeier already has merged two budget operations into one. He promises to step up research in such information technologies as object-oriented computing, data bases, and multimedia, even if it means less work in the physical sciences, a tradition at Bellcore. Enhancing quality in product development and speeding up decision-making are also priorities (table). And there's one more: He wants Bellcore, with its $1.1 billion budget, to set the agenda for future phone system technology.

The practical effect of Heilmeier's plan will be to junk the more academic approach to R&D set up in 1984, when Bellcore was created during the breakup of American Telephone & Telegraph Co. The Bell companies didn't want an R&D branch that dictated products and technology to them, as Bell Labs had done. So Bellcore was initially weighted down with 144 councils, committees, panels, and customer groups--and every decision had to be unanimous. Rather than recommend actions, the staff mediated differentproposals for technology and products.The lab churned out a raft of inventions--everything from lasers and batteries to sensors and chip manufacturing techniques. But too often, "it was research for research's sake," says Steven Starliper, a project manager for Pacific Bell. Or, oodles of features might be added to a product to satisfy all seven Bell owners. Projects became mired in debate, and costs and timetables took a backseat. For instance, maintenance software called OSS, for operations support system, was supposed to take two years to develop. When it arrives this summer, it will have taken three. And it will contain some 6,000 features.

The 55-year-old Heilmeier, who earned a PhD in materials and electronics from Princeton University, is well equipped to tackle such problems. As a young engineer at RCA Corp., he made discoveries that led to the first liquid-crystal displays. During the 1970s, as an assistant director of research and engineering in the Defense Dept., he redirected or cut 270 projects totaling $100 million, raising R&D efficiency. As director of the Defense Advanced Research Projects Agency (DARPA), he was instrumental in starting R&D on stealth aircraft, infrared technology, and space-based lasers. Former colleagues credit him with making TI's R&D world-class. He instituted what is known as "Heilmeier's catechism," questions by which all projects are measured. The idea was to focus projects to fit TI's markets and objectives.

NO EXCUSES. Heilmeier is renowned for managing by verbal contract--and holding people accountable. "George has little patience for excuses," recalls one TI researcher. Projects are cut when promises aren't kept. An effort to produce a luminescent display out of plastic instead of glass was one such victim at TI: Heilmeier deep-sixed the effort when its progress didn't meet the timetables set by its leaders.

Still, "it's George's ability to inspire people and influence what they do that sets him apart," says Floyd H. Hollister, vice-president for corporate staff at TI. He also keeps "current across a wide spectrum of technologies"--unusual for a high-level technology executive, says Hollister. That breadth of knowledge, say some, is behind Heilmeier's knack for making the right calls on technology.

These abilities will come in handy as Heilmeier tries to transform Bellcore into a technology leader. He took a first step in June, when he got Bellcore's board to identify seven priority programs. It also agreed to streamline decision-making by no longer insisting on unanimous decisions. And now, Bellcore's staff will recommend actions, not just follow directives. That "will cut decision-making time," says Heilmeier.

For three years, for instance, the Bell companies have been unable to choose among approaches to an Advanced Intelligent Network, which would let them offer new services without having to modify central phone switches. In July, Bellcore proposed a design direction that was accepted almost without change.

Heilmeier is also pushing to improve quality and to develop closer ties with phone company marketers. Changes are already rippling through Bellcore's software and systems group. At Heilmeier's insistence, the group is moving faster than planned to integrate object-oriented programming, which helps produce better software faster. "His experience with the technology brought us insight into its payoff that we hadn't had," says Robert L. Martin, vice-president of the group. Martin's group is also testing software more extensively before shipping it to customers.

MEDIA HIGHWAY. But the biggest challenge lies in making Bellcore the leader in creating a national communications infrastructure. Over the next decade or two, the telecommunications industry will construct a network for data, voice, video, and text designed to carry information services into homes and businesses. Japan and Europe already have government-driven plans for such networks. In the U. S., the Commerce Dept. is cheerleading the effort. But Heilmeier argues that no group is better suited to coordinate the project than Bellcore.

The lack of coordination so far has cost the Baby Bells plenty. A new report on Bellcore by McGraw-Hill Inc.'s Northern Business Information research firm says that logjams over standards have prevented any significant new national telecommunications services from emerging since the breakup of AT&T. It wasn't until this year, for instance, after five years of debate, that all the players, including the phone companies and makers of computer equipment, agreed on the technical standards for the Integrated Services Digital Network, which is supposed to carry voice, data, and video signals over a single phone line.

So far, Heilmeier is getting high marks. "He's bringing fresh perspectives," says Joel Engel, an assistant vice-president at Ameritech Services, a unit of Ameritech Corp. Still, Heilmeier must perform a balancing act. The Bells want Bellcore to be a more effective leader. Yet they also intend to develop their own products. Says Matthew J. Stover, Nynex Corp.'s top spokesman: "Bellcore is always going to be the least common denominator, and in technology, that's a dangerous place to be." Heilmeier's challenge is to push ahead without setting off too many tremors.

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