Tales Of Optimism Inside Olivetti's Brave New Labs

IVREA. ITALY—In a cluttered laboratory on the first floor of a new building in the northern Italy town of Ivrea, three Olivetti employees huddle together at a bench. One scribbles with a pencil on a small electronic slate connected to a computer, while the others peer intently at the screen, where the image entered on the slate appears. Their goal to shoehorn a telephone, a scanner (for entering documents into the computer), a printer, and the electronic “paper” into a box little more than the size of a small book. If Olivetti has its way, this little box will be the hub of the office of the future— and the key to turning around the company’s declining fortunes. Two of those in the group at the bench are staff scientists. But the third is 40-year-old Hermann Hauser, Ing.C. Olivetti & C. SpA’s chief scientific officer, who often slips into one of the company’s labs for half a day’s practical work with one of his development teams. Although Hauser was hired two years ago to manage the company’s mounting research efforts, he strongly believes he and his lab chiefs should also keep a hand in by work- ing regularly at the bench. Thus, he won’t hesitate to put his own time where his mouth is. Hauser also believes that industrial science will be much more productive if carried out in an international network of small, almost entrepreneurial, labs—in contrast to the massive, hierarchical research divisions of most large corporations. And he feels that good scientists—even those working in a competitive industry— need to be relatively open in communicating with other researchers in their field. Unorthodox though Hauser’s beliefs might be, they are the reason Olivetti has hired him: to catalyze the company’s research efforts and, in so doing, to offer new promise for Olivetti’s future. Since his arrival at Olivetti two years ago, Hauser has translated his beliefs into action, dramatically reshaping Olivetti’s science. Both the staff and budget of the basic research division have doubled—to 270 and $24 million, respectively. Eleven new laboratories have been—or are soon to be—established across three continents. And Olivetti scientists have been given an unprecedented level of freedom to share ideas and interact with university scientists. To judge how Hauser’s innovations have affected researchers, just listen to computer scientist Stefano Piccardi, who has worked in Olivetti’s Milan lab since it was created two years ago. Piccardi says be finds working for such a forward-looking company both exciting and challenging. “I particularly like the way in which we are closely linked to the scientific community,” he says. “We have regular contacts with academic computer scientists, we enjoy considerable freedom in our approach to our projects, and we can also count on having the most up-to-date tools and technology.” The sweeping changes in R&D come at a crucial time for Olivetti. The Italian office automation giant is currently tied for second in net revenues in the European information technology industry (see table), but its home-field advantage is slipping away. Increasingly, Olivetti is finding itself squeezed by Asian competition in its traditional office equipment market and faced with fierce rivalry from US. companies in the computer sector. The stiff competition is keeping prices down, and rising costs of specialized electronic components are encroaching even further into shrinking profit margins. Olivetti’s revenue for 1987 stalled—after witnessing dramatic increases as high as 34% in the four previous years— and in the same year net income plummeted by 30%. Separate Units In a bold business strategy designed to boost the sagging numbers, earlier this fall Olivetti chairman Carlo De Benedetti split Olivetti into three separate units office equipment (calculators, typewriters and printers); systems and networks (personal and minicom. puters, local-area networks, terminals, and mainframes) and information services. But even before that decision, De Benedetti realized that business moves alone could not save his company; instead, success depends on revolutionary new products, like the box-sized high-tech combination of telephone, printer, and other office necessities (dubbed EPOC, for Experimental Personal Office Com- puter) that the Ivrea team is working on so intently. And that’s why, in 1986, De Benedetti hired Hauser to revamp Olivetti’s entire R&D effort. “I suppose I was chosen because of my combination of experience,” says Hauser. Although he earned his PhD. in physics just nine years before joining Olivetti, Hauser had already worked on methods of computer analysis for modelling chemical reactions at the Cavendish Laboratory of Cambridge University in England, cofounded Acorn Computers Ltd, a Cambridge-based computer startup, and started a subeidiary for Acorn in Palo Alto, Calif. “Through my close connections with both computer laboratories and academic centers, I have accumulated excellent contacts with lots of gifted and talented people,” he says. “Through [these people] I can keep abreast of literally everything that happens in the world of computers.” However cocky his claims may sound, Olivetti was willing to pay for Hauser’s talents and his network of contacts—and to give him free rein. The company agreed to underwrite his plan to establish his international network of laboratories and also pledged to double its financial commitment to R&D. Two years later, Hauser is well on his way to realizing his vision of corporate science. His office has established 10 laboratories (seven in Italy; one in Cambridge, England, one in Nuremberg, West Germany; and one in Palo Alto in the US.) and hired 135 additional scientists. The labe are now working on a number of potential products for the “office of the future”—of which EPOC is the centerpiece. There’s even more to come; Hauser will open another lab in Tokyo in 1989. Hauser has insisted that all of the labs be placed in centers of excellence, close to an outstanding university, like Milan or Pisa in Italy, or to a center of high-technology business.” And to head each laboratory, Hauser tries to find “a brilliant individual, well-known in the field where we plan to be active;” who will “not lose the innovative spirit.” Locating the laboratories in computer “hot spots” across several continents makes it easier, Hauser notes, to find and recruit such scientists. It seems to work; certainly Olivetti has been able to attract top scientists—and keep them happy. Heading the Cambridge lab, for example, is Andrew Hopper, one of Cambridge University’s leading experts in the high-speed trafficking of information within computer networks. Working for Olivetti while still keeping his Cambridge professorship, Hopper leads a group working on a project for integrating a video into a workstation, and claims that the arrangement offers the best of both academic and industrial worlds. “What I appreciate most about my position here is the flexibility on both sides that has allowed me to become full-time managing director of Olivetti Research while also remaining a full-time faculty member in the university. I have a manager to look after the administrative tasks that would normally be a managing director’s responsibility, leaving me free to concentrate on science." Moreover, he adds, “we are constantly needing a large group of users on whom to try out new prototypes. Who better [to usel than my group of Ph.D. students 200 yards away in the university, many of whom work on Olivetti projects anyway.” But Hauser has brought more than new labs and top scientists to his division; he has also imbued it with a pragmatic philosophy—and an urgency—new to Olivetti The change is particularly noticeable to scientists like physicist Francesco Tisano of the Polytechnique of Milan, who has been collaborating with Olivetti for 10 years on operating systems. At the moment, he is studying EPOC system software architecture for Hauser’s new lab in the city. ‘These new young groups [of Olivetti scientists] know exactly what they want from the academics,” Tisano says. ‘They want advanced technology to be transferred in two or three years of experimentation into a prototype product Previously, what they asked for was much closer to the traditional themes of academic study. There was far less commitment to product development.” Most of the fruits of Hauser’s vision are still far from the marketplace, but the new breed of Olivetti scientists is bullish on the coming new products. Witness the 20 researchers working on voice recognition and synthesis in the company’s Turin lab.”We believe we are among the most advanced laboratories in this field in the world, at least from our visible results,” boasts the Turin lab’s director, Vittone Vittorelli. “We are working simultaneously on speech synthesis, where a device to read both Italian and English and transform it into speech is already on the market; and on speech recognition, where our work based on the Italian language is complemented by research in our Nuremberg lab on German and work at the Madrid lab on Spanish.” Will Hauser’s multinational network of labs be able to reverse Olivetti’s declining fortunes? The most crucial test will come in three years, when the company’s biggest gamble, EPOC, is due to hit the market. But regardless of sales, the reorganization has already won the approval of Olivetti’s scientists. Angola Bono is editor of Biotech journal in Milan, Italy.

Tales Of Optimism Inside Olivetti's Brave New Labs

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