Corrections or additions?
This article by Kathleen McGinn Spring was prepared for the October 23, 2002 edition of U.S. 1 Newspaper. All rights reserved.
What’s Up for Sarnoff? Questions for a New CEO
d>Satyam Cherukuri took the reins at the Sarnoff
Corporation less than five months ago, at a time when the harsh economy
just kept getting worse. In addition to operating in a time of uncertainty
and austerity, Cherukuri inherited a contentious dispute over his
organization’s plan for a major expansion.
So, how is he coping? And where is Sarnoff, which has had to downsize
its staff, heading? Which projects are underway? Which are waiting
in the queue for funding? How are the tech innovator’s spin-offs doing?
Cherukuri talks about Sarnoff’s future on Monday, October 28, at 5
p.m. at “The Edison Innovators: An Evening at Sarnoff” sponsored
by the New Jersey Technology Council at Sarnoff. Cost: $100, including
dinner. Call 856-787-9700.
On Monday, October 21, just ahead of Cherukuri’s talk, Sarnoff announced
progress on two initiatives — both defense-related — which
indicate a timely niche for the company. In the first, Sarnoff joins
United Defense Industries in demonstrating its See-Through Turret
Visualization (STTV) system. SSTV is a palm-sized vision system that
provides soldiers with a 360-degree view of the battlefield under
closed hatches. The device consists of eight cameras fixed on the
exterior of the vehicle. Video images from the cameras are blended
by an on-board computer to create a seamless panoramic view of the
surrounding area.
In the second initiative, Rosettex Technology & Ventures Group —
a joint venture of SRI International and Sarnoff Corporation —
has been awarded a five-year contract from the U.S. Army Communications-Electronics
Comman at Fort Monmouth to develop and prototype advanced technologies
and systems in military communications, command and control, intelligence,
surveillance, and reconnaisance applications. The agreement has a
potential value of $24 million.
Initial development projects include satellite-on-the-move communications,
mobile ad hoc wireless networking, and visualization technology.
The country’s increased emphasis on internal security, along with
the possibility of war — and maybe more than one war — plays
to Sarnoff’s strength in developing surveillance, communication, and
identification technologies. With venture capitalists clutching
their purses with a determination reminiscent of a Depression mentality,
technologies of the sort that government and the military look for
could help lift Sarnoff fortunes, which dipped along with the tech
bust.
It is up to Cherukuri to lead the proud innovator — involved in
tech since before anyone thought to call it that — into its future,
whatever that may be. In an interview with U.S. 1’s Barbara Fox last
spring, Cherukuri, who succeeded James Carnes, talked about his
life, his family, and his vision for Sarnoff. Here are excerpts from
that interview.
“What Jim Carnes accomplished was to take a bunch of researchers,in many respects arrogant and self-absorbed, coming from a captiveresearch lab where they didn’t have to worry about the money of clients,and transformed that organization into one that worried about themoney of clients and one that worked in a context created by somebodyelse.”Cherukuri has taken these lessons to heart. “Where the contextwas created by our clients, we have succeeded,” he says. “Wherethe context was created by ourselves, we have not succeeded. If weare chasing 100 different business activities, 15 will be based oncontext created by our clients, and 85 will be based on what we thinkis the right thing for them to do. Those 85 will fail, but they willhelp us understand the context a little better next time. By understandingwhere we succeeded, we want to move that balance to 50-50.”Cherukuri also says that Sarnoff has tried to be thrifty with itsfunds: “Fail early, fail cheap,” has been a useful mantra.And “most of our learning came from mistakes, from not succeeding,”he points out. “We have done a good job where we have failed earlyand cheaply.”Early successes lured Cherukuri into thinking he did not need to heedthat “fail early” dictum, and he admits to an expensive mistake.At one point he and his team spent two years and a quantity of resourceson a project they were passionate about. “We were not creatingin the context of a client’s vested interest — we conjured upthe context ourselves. We were absorbed with the idea that, someday,someone would come to their senses and see the real value in our work.””The first client, a Fortune 100 company, turned it down. We thought,the client doesn’t get it. The second client turned it down. Theystill didn’t get it,” says Cherukuri. “Then the third clientrejected it. And we had to make a decision to hang it up. It was painful,and we felt terrible. It was a very harsh lesson.”That a couple of researchers refused to admit defeat and tried tocontinue work surreptitiously was another bitter lesson in “whento hold and when to fold.” Cherukuri attributes such misplacedpersistence to standard business folklore about individuals who keepon going and, despite all odds, achieve spectacular success. “Ina business context we use those anecdotes to misguide us,” hesays. “There is so much of this `conventional wisdom’ that itis hard to break through it.”Fifteen years ago Sarnoff was launched with almost no cash, and nowSarnoff has little cash. But Cherukuri, undaunted, looks forward tocontinuing “innovation.” “We learned many things, andwe are going to build on what we learned. It has been a tremendoussuccess in many respects. We have products that changed the qualityof our lives and will continue to do so.””What we did for the last 15 years and what we will continue todo for the next 15 years is to keep getting better at the processof innovation,” says Cherukuri.Innovation is not the same as R&D. R&D is subjective, he says, andinnovation is not. “Inventing something does not mean we have`innovated’ or proven its usefulness. The market and the client tellsus whether we have been innovative. The result of innovation is theintroduction of a new product or service into the market.”Introducing a new product requires many steps: conceptualizing whatwill make an impact in the marketplace, making it in small quantities,taking it to third-party manufacturing, distributing it, and marketingit. Sarnoff can work on most of these steps: feasibility studies,R&D, engineering, tech transfer, and manufacturing. “We can helpwith any or all stages of it,” says Cherukuri. “There arenot that many companies that can do that.”A good example is Songbird Hearing, the hearing aidspinoff. Cherukuri tells how Sarnoff’s clients, venture capitalists,had identified the hearing aid market as likely to boom with agingof the baby boomers, but Siemens already had a big share of the marketfor traditional hearing aids. “The question was, how do you positionthem? Should we compete with Siemens to make a better $2,000 hearingaid?”The solution that Sarnoff came up with was not what the VCs had imagined:Sarnoff was able to tap its own patent portfolio to invent a disposablehearing aid. “The positioning answer is not obvious if you arelooking only at market forces. You have to look at technology forces,”says Cherukuri. “If you bring us the market information, we addour element that isn’t obvious to others. We consider the dynamicsthat come from invention.”The potential market for innovation, he claims, is $300 billion ayear, the amount that Sarnoff’s competitors and its potential clientsinvest to come up with new products. This client/competitor pool includesinhouse departments of corporations, the federal government, and academe.”It is a huge market, larger than pharmaceuticals, a $300 billionmarket where there are no clear winners, no companies that have amarket share.” Someone will be the world leader, says Cherukuri,and he plans for it to be Sarnoff. “Innovation is a horizontalmarket, much like financial services and management consulting. Andit is our core competency.”Early in life, Cherukuri learned to propel himself over amazinglydifficult obstacles. He grew up in Andhra, a small village in SouthIndia where the Telugu language is spoken. He was the youngest oftwo brothers, and his parents were farmers; his father and grandfatherwere literate, and they provided his early schooling, because thevillage had no school.But if, as experts now say, effective learning depends on emotionalintelligence, the village gave him a excellent start. In an environmentwhere children are highly valued and everyone is related to everyoneelse, the phrase “it takes a village” takes on renewed meaning.”Growing up in a village is an amazing thing,” says Cherukuri.”We were materially really poor by any standard, but I never feltthat. It was a very warm atmosphere. And my father and my grandparentshad an appreciation for education and learning.”Cherukuri had to learn quickly. At age eight he started school ina nearby village — at the sixth grade level, because that is wherethat village’s school began. Then, by doing well on a national examination,he was admitted to Banaras Hindu University, where he earned a bachelor’sdegree in ceramic engineering in 1978. Why that subject? “I thoughtit sounded cool.”When he came to the United States for graduate study, the obviouschoice was Alfred University, the college in upstate New York thatreceives much of its funding from Corning and is a hotbed for ceramicsand glass research. He earned a doctorate in glass science, then didpost-doctoral work at Siemens in Cherry Hill and Germany. (Two yearsago he and his wife moved from Cranbury to Hopewell, where theylive with their eight-year-old daughter and their newborn son.)”My first real job was at Olin, where I developed expertise inelectronic packaging and silicon devices,” he says. “But afterfive years I was bored. In 1989 Sarnoff was looking for an individualto help start its packaging thrust. It intrigued me to check it out.”He taught himself the basics,and became managing director of the LifeSciences and Biotechnology business unit at Sarnoff. His study andenergy paid off, most notably with four spinoffs. A bioinformaticscompany, Locus Discovery, was successfully sold and has moved to Philadelphia.Delsys Pharmaceutical, with electrostatic deposition technology formaking and delivering drugs, was sold to Elan and is operating atPrinceton Corporate Plaza. Orchid BioComputer has gone public andis operating at Route 1 North and Forrestal Drive. Songbird Hearing,at Cedar Brook Corporate Center, is manufacturing and shipping inexpensive,replaceable hearing aids.Because he is only too ready to speak out, Cherukuri has been, ashe describes himself, a difficult employee. “I joined here asa staff member and have always aggravated my supervisor about thetone and direction of where we have to go,” he says. “It helpsif you turn out to be right.”Carmen Catanese, his boss most of the time, was an early mentor. “Ilearned some things from him that were not obvious to me — howto create value for the client. Earlier than others, he learned theart of listening to a client, to piece together the `ecosystem’ ofthe client.” The ecosystem, he explains, is how the client workswith the dynamic of the market, including its competition, and howthe client responds to the environment that shapes individual decisions.”What we have been doing in the last 15 years,” says Cherukuri,”and especially in the last seven years with our spinoffs, hasgiven me the conviction that we are one of few companies in the worldthat can claim innovation as core competency and take that to thenext level of sophistication. As as I look at my own experience andthat of my peers, that is the most compelling lesson: If we are creatingin the context of the client we are 85 percent successful. Otherwise,success is almost nonexistent.”At the time of the U.S. 1 interview last spring, Cherukuri predictedthat Sarnoff would be a “billion dollar company in eight years,and we will achieve that growth by homing in on the practice of innovation.We will still use the genius of individuals, but in the context ofthe client. For most companies, client context is still an abstractnotion. If there is one leverage point for us to go the next level,it is that leverage point. The genius is always there.”Whether or not the past six months of continued hard times has changedthat timetable is another matter — and perhaps a question to beasked at the October 28 dinner.Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
