R&D, With A Reality Check

Not long after George H. Heilmeier landed in Arlington, Va., in 1975 as head of the Defense Advanced Research Projects Agency (DARPA), he gave one of his managers an ultimatum: Go to "charm school" and learn to deal less brusquely with people, or look for another job. Craig I. Fields took the advice and spent weeks acquiring more social polish. It made a difference, Fields's friends say--but evidently not enough.

After Heilmeier moved on, ultimately to run Bell Communications Research Inc., Fields became DARPA's director. He clearly favored a more activist role for the government in bolstering U.S. competitiveness. So the Bush Administration's hostility toward any hint of industrial policy was commonly blamed for Fields's demotion and transfer to another arm of the Pentagon in 1990. Washington insiders say, however, that the real cause was a personality clash between Fields and his bosses, including Donald J. Atwood Jr., then a Deputy Defense Secretary.

Fields's sporadically abrasive style is still causing eruptions--these days at Microelectronics & Computer Technology Corp. (MCC), the 103-member electronics-industry research group he took over in July, 1990. Brought in to revitalize the stagnating Austin (Tex.) consortium, Fields has infused its almost academic culture with liberal doses of no-nonsense management. At the behest of the companies that own MCC, he has given the consortium's research programs a timetable, complete with interim goals and regular reviews. He has also put a higher priority on market-oriented projects. And he has created MCC Ventures Inc., a subsidiary that helps spin off MCC discoveries into startup companies. What he has to show for all this isn't much so far: Though the consortium's membership is increasing, some big companies such as Boeing, Lockheed, and NCR are pulling back. As a result, MCC's funding has dropped 27% since Fields' tenure began, to about $40 million. And plenty of people are angry.

"RAW DEAL." Part of the problem is that old bugaboo, people skills. Laszlo A. Belady, a former MCC program director who now heads Mitsubishi Electric Research Laboratories Inc., says he resigned 10 months after Fields arrived because he "had zero touch for people or how to motivate them." Combine that with a 22% cut in staff, to 350 employees, and "morale is subterranean," says one former manager who was asked to leave. Elaine A. Rich, who headed a $1.1 million software-development effort until she quit last June, complains that current research is hobbled by a "tax"--up to 20% of projects budgets--that funds work on future programs. Companies whose dues underwrite research are "getting a raw deal," Rich asserts.

Fields sympathizes with the current and former researchers who are bitter about MCC's transformation. "Culture change is always very, very hard," he says. But he's sticking with his new priorities. Most of the tax on traditional projects, for instance, goes into what Fields calls a renewal fund that pays for keeping tabs on technology trends and organizing research projects that will win backing from at least five member companies. Currently being considered are programs to develop new

optoelectronics systems and "smart" software for detecting financial fraud. "When I came, we weren't spending enough on the future," says Fields.

That was odd, considering the atmosphere in which MCC was founded by a dozen computer and electronics companies in 1982. A response to Japan's then vaunted Fifth-Generation Computer Project, the consortium was to be the place where U.S. high-tech companies would collaborate on long-term research that would head off the Japanese. For many scientists, it was a dream come true: Some referred to it as "the celestial sandbox of computer science."

That description unintentionally pointed up MCC's big weakness: It didn't produce much that its members used. Funding peaked at $67 million three years before Fields was brought in with a mandate to shorten to two years programs that were scheduled to last up to 10. Even Fields thought that was drastic. But he adds: "Someone has to worry about reality." Things could have been worse, in fact, had MCC not gotten 30% of its revenues from government sources last year--up from zero in 1987. Two years hence, Fields says, government money could represent half of revenues. But he doesn't want it to exceed that politically sensitive level.

To avoid that, Fields has won his board's approval for a plan he hopes will create a new MCC, bolster the competitiveness of the U.S. electronics industry, and serve as a model for future research organizations. Part of this strategy calls for focusing research more on customer needs. That way, MCC should deliver technology that members can rapidly introduce in their markets. Another key element is developing the electronic infrastructure for virtual integration--a telecommunications system that lets MCC members and their suppliers and customers form so-called virtual corporations that span all levels of industry, from manufacturing to retailing. It's called the Electronic Integration Network. EINet is already being field-tested and could be spun off this year.

The latest tool for getting MCC technology to market is MCC Ventures. Its startup companies are staffed by MCC researchers who would rather try to make their work the basis of a successful company than see it languish on the shelf. One example, Tamarack Storage Devices Inc., was spun out with MCC backing in late 1992 to pioneer a system for storing computer data in holographic crystals. The technology promises digital storage systems with prodigious capacities and the ability to transfer data at rates up to 1,000 times as fast as today's storage systems. "If there's anything that MCC will do that will change the world, it will be holographic storage," says a former MCC executive.

Fields argues that MCC Ventures will get technology to market faster, generate royalties for MCC, and keep good research from going to waste. That happens often, he says, because "it costs 10 to 100 times more to get business success from technology than it does to get the technology." Fields also contends that MCC should be graded not only on the research it delivers but also on what the research contributes to U.S. competitiveness. So if MCC members don't exploit its research, then MCC Ventures should try. "That gives our members more options--at no extra cost," he adds. "Previously, they got research. Now, they also get preferential access to new products and services"--either exclusivity for a time or price discounts.

While these initiatives have produced little so far, they still have broad support. "Craig has done an outstanding job at holding the place together," says Heilmeier of Bellcore, an MCC shareholder. Deborah Wince Smith, a senior fellow at the industry-funded Council on Competitiveness in Washington, is especially keen on MCC Ventures. "Craig has a commitment from the members to be customers for the startup firms," she says. "That's important, because you reduce the risk tremendously."

The main criticism even friends level is of Fields's tendency to be a fanatic about his visions--which is evident in his private life. Now a trim, fast-talking 47, he recalls being "incredibly overweight" during his student days at Bronx High School of Science. "Being spherical," he recalls, "tends to affect your social outlook." It caused him to focus on bookish pursuits and may have contributed to what associates say is his sometimes intimidating disdain for intellectual laxity. He determined to slim down before going off to Massachusetts Institute of Technology, where he earned his undergraduate degree in physics in three years. After getting a PhD from Rockefeller University in 1970, he taught computer programming at Harvard University before joining DARPA in 1974.

DIFFERENT APPROACH. Supporters such as Arati Prabhakar, the new director of the National Institute of Standards & Technology and a Fields prot g when they were both at DARPA, hope that Fields will surmount the current controversies within MCC so that other research organizations will see the value of its approach. "Virtually everything Craig does derives from a conviction that it's important to try to make a difference," she says. To Fields, that means restoring American preeminence in electronics.

There's one sign that he is moving in the right direction--personality conflicts notwithstanding. Each year, MCC sends a customer-satisfaction survey to its members. The results drifted steadily downward in the late 1980s. But things have been looking up since Fields took over, and the survey covering 1993 produced the highest rating ever, he says--a score of 3.9 on a scale of 5 from the companies he's paid to please.



He has shifted research to concentrate more on market-driven technologies needed by member companies and their customers. Each program now has a timetable, with interim goals and regular reviews. MCC will even customize technology for members.


Customers and suppliers of MCC members are being courted. The Limited is the first to join. Fields has also signed up Andersen Consulting, which is helping channel MCC-developed technologies to its clients and recruiting new members.


Fields conceived MCC Ventures Inc., a venture-capital subsidiary. So far four companies have been spun off from MCC. MCC Ventures has also brought in two more--handling their administrative chores so they can concentrate primarily on development work.


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