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Research Reborn

Sitting in his expansive office, casually clad in a black mock turtleneck that accentuates the gray in his salt-and-pepper beard, research director Paul Horn is looking happy to have been saved.

And why not? His division is delivering big time on Gerstner’s faith, establishing itself alongside a similarly rejuvenated Bell Labs as one of the world’s premier industrial research organizations. After 25 years of hard labor, the Watson lab’s trailblazing speech recognition efforts are taking off commercially. Two semiconductor projects are also paying dividends. One is Bernie Meyerson’s. The other, announced in September 1997, involves replacing the aluminum used in microprocessors with copper, a superior conductor that makes for smaller and faster chips.

Last fall Almaden lab researchers, whose earlier advances in magnetoresistive data-recording technology (see past issue “The Big, Bad Bit Stuffers of IBM,” TR July/August 1998) enabled IBM to capture 40 percent of the laptop storage market, announced their Microdrive, a one-inch-square storage device bound for digital cameras and handheld computers. Then there’s Deep Blue. Even beyond the free publicity associated with demoralizing chess champion Garry Kasparov, the SP line of Deep-Blue-like supercomputers has emerged as a market leader.

These technologies and others are already generating as much as $25 billion annually for IBM-by one Horn estimate, anyway-and poised to do more. That amounts to nearly a third of IBM’s 1998 revenues. John B. Jones Jr., an analyst with Salomon Smith Barney, says success stems from the high quality of IBM’s research-and its ability to shed once-weighty bureaucracies and speed research advances into production. In semiconductors, for example, Jones says IBM is “bringing their technology to market faster than the competition-faster than Intel, faster than Motorola, faster than Texas Instruments, faster than Fujitsu.” What goes for chips, he adds, goes for storage and other areas.

A few key factors account for this rejuvenation. One lies in the improved focus that comes from having survived hard times and being embraced by Gerstner and the business divisions. Pay raises, bonuses and other incentives-inside Research and company-wide-have been broadened to reflect a team-oriented approach to innovation.

But researchers and managers insist the biggest change is cultural. In the past, says Bernie Meyerson, “we never had the ability to do things in a timely manner around here.” That was because people worried too much about protecting their own turf, he adds, putting up roadblocks to anything that threatened existing products. But that changed under Gerstner, he says. “Lou’s emphasis is, Get the job done, I really don’t care where you sit.’”

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