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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
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
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
in many respects arrogant and self-absorbed, coming from a captive
research lab where they didn’t have to worry about the money of clients,
and transformed that organization into one that worried about the
money of clients and one that worked in a context created by somebody
Cherukuri has taken these lessons to heart. "Where the context
was created by our clients, we have succeeded," he says. "Where
the context was created by ourselves, we have not succeeded. If we
are chasing 100 different business activities, 15 will be based on
context created by our clients, and 85 will be based on what we think
is the right thing for them to do. Those 85 will fail, but they will
help us understand the context a little better next time. By understanding
where we succeeded, we want to move that balance to 50-50."
Cherukuri also says that Sarnoff has tried to be thrifty with its
funds: "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 early
Early successes lured Cherukuri into thinking he did not need to heed
that "fail early" dictum, and he admits to an expensive mistake.
At one point he and his team spent two years and a quantity of resources
on a project they were passionate about. "We were not creating
in the context of a client’s vested interest — we conjured up
the 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. They
still didn’t get it," says Cherukuri. "Then the third client
rejected 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 to
continue work surreptitiously was another bitter lesson in "when
to hold and when to fold." Cherukuri attributes such misplaced
persistence to standard business folklore about individuals who keep
on going and, despite all odds, achieve spectacular success. "In
a business context we use those anecdotes to misguide us," he
says. "There is so much of this `conventional wisdom’ that it
is hard to break through it."
Fifteen years ago Sarnoff was launched with almost no cash, and now
Sarnoff has little cash. But Cherukuri, undaunted, looks forward to
continuing "innovation." "We learned many things, and
we are going to build on what we learned. It has been a tremendous
success in many respects. We have products that changed the quality
of our lives and will continue to do so."
"What we did for the last 15 years and what we will continue to
do for the next 15 years is to keep getting better at the process
of innovation," says Cherukuri.
Innovation is not the same as R&D. R&D is subjective, he says, and
innovation is not. "Inventing something does not mean we have
`innovated’ or proven its usefulness. The market and the client tells
us whether we have been innovative. The result of innovation is the
introduction of a new product or service into the market."
Introducing a new product requires many steps: conceptualizing what
will make an impact in the marketplace, making it in small quantities,
taking it to third-party manufacturing, distributing it, and marketing
it. Sarnoff can work on most of these steps: feasibility studies,
R&D, engineering, tech transfer, and manufacturing. "We can help
with any or all stages of it," says Cherukuri. "There are
not that many companies that can do that."
A good example is Songbird Hearing, the hearing aid
spinoff. Cherukuri tells how Sarnoff’s clients, venture capitalists,
had identified the hearing aid market as likely to boom with aging
of the baby boomers, but Siemens already had a big share of the market
for traditional hearing aids. "The question was, how do you position
them? Should we compete with Siemens to make a better $2,000 hearing
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 disposable
hearing aid. "The positioning answer is not obvious if you are
looking only at market forces. You have to look at technology forces,"
says Cherukuri. "If you bring us the market information, we add
our element that isn’t obvious to others. We consider the dynamics
that come from invention."
The potential market for innovation, he claims, is $300 billion a
year, the amount that Sarnoff’s competitors and its potential clients
invest to come up with new products. This client/competitor pool includes
inhouse departments of corporations, the federal government, and academe.
"It is a huge market, larger than pharmaceuticals, a $300 billion
market where there are no clear winners, no companies that have a
market share." Someone will be the world leader, says Cherukuri,
and he plans for it to be Sarnoff. "Innovation is a horizontal
market, much like financial services and management consulting. And
it is our core competency."
Early in life, Cherukuri learned to propel himself over amazingly
difficult obstacles. He grew up in Andhra, a small village in South
India where the Telugu language is spoken. He was the youngest of
two brothers, and his parents were farmers; his father and grandfather
were literate, and they provided his early schooling, because the
village had no school.
But if, as experts now say, effective learning depends on emotional
intelligence, the village gave him a excellent start. In an environment
where children are highly valued and everyone is related to everyone
else, 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 felt
that. It was a very warm atmosphere. And my father and my grandparents
had an appreciation for education and learning."
Cherukuri had to learn quickly. At age eight he started school in
a nearby village — at the sixth grade level, because that is where
that village’s school began. Then, by doing well on a national examination,
he was admitted to Banaras Hindu University, where he earned a bachelor’s
degree in ceramic engineering in 1978. Why that subject? "I thought
it sounded cool."
When he came to the United States for graduate study, the obvious
choice was Alfred University, the college in upstate New York that
receives much of its funding from Corning and is a hotbed for ceramics
and glass research. He earned a doctorate in glass science, then did
post-doctoral work at Siemens in Cherry Hill and Germany. (Two years
ago he and his wife moved from Cranbury to Hopewell, where they
live with their eight-year-old daughter and their newborn son.)
"My first real job was at Olin, where I developed expertise in
electronic packaging and silicon devices," he says. "But after
five years I was bored. In 1989 Sarnoff was looking for an individual
to help start its packaging thrust. It intrigued me to check it out."
He taught himself the basics,and became managing director of the Life
Sciences and Biotechnology business unit at Sarnoff. His study and
energy paid off, most notably with four spinoffs. A bioinformatics
company, Locus Discovery, was successfully sold and has moved to Philadelphia.
Delsys Pharmaceutical, with electrostatic deposition technology for
making and delivering drugs, was sold to Elan and is operating at
Princeton Corporate Plaza. Orchid BioComputer has gone public and
is 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, as
he describes himself, a difficult employee. "I joined here as
a staff member and have always aggravated my supervisor about the
tone and direction of where we have to go," he says. "It helps
if you turn out to be right."
Carmen Catanese, his boss most of the time, was an early mentor. "I
learned some things from him that were not obvious to me — how
to create value for the client. Earlier than others, he learned the
art of listening to a client, to piece together the `ecosystem’ of
the client." The ecosystem, he explains, is how the client works
with the dynamic of the market, including its competition, and how
the 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, has
given me the conviction that we are one of few companies in the world
that can claim innovation as core competency and take that to the
next level of sophistication. As as I look at my own experience and
that of my peers, that is the most compelling lesson: If we are creating
in 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 predicted
that 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 of
the client. For most companies, client context is still an abstract
notion. 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 changed
that timetable is another matter — and perhaps a question to be
asked at the October 28 dinner.
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