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U.S. Technology : As a Giant Dozes, Ideas Tiptoe Away

TECHNOLOGY RACE: The Competition Spanning the Pacific. A special report on technology development in the United States, Japan and the newly industrialized Pacific economies. First in a Series.

February 21, 1988|JIM SCHACHTER | Times Staff Writer

When Bruce R. Scott, a professor at the Harvard Business School, tells visiting American executives about automated Japanese factories that operate virtually problem-free without a worker in sight, he draws blank stares. None of the Americans has a comparable plant, Scott says, and none has plans to build one.

"They say to themselves: 'We've all heard about the problem, but we didn't appreciate how big a gap had been opened up,' " Scott explained.

"It's a little like you've been running the mile for a long time, it takes you 4 1/2 minutes and that's terrific," he said. "But nobody ever put you in a race with a guy who ran it 3.8."

Yet when F. Stan Settles, president of the Institute of Industrial Engineers, visited East Asia a few weeks ago, a Taiwanese executive told him that America's technological competitors were starting to grow nervous about stirrings they detected in the world's biggest economic power.

'Sleeping Giant'

"We see again the awakening of the sleeping giant," the Taiwanese said.

America, indeed, remains the world's technological giant. According to 282 business executives in the United States, Japan and six other Pacific economies surveyed by The Times and the Booz-Allen & Hamilton management consulting firm, American companies continue to rank as the dominant forces in most of the critical spheres of technological innovation--from artificial intelligence to high-performance materials, supercomputers to superconductivity.

Seen as Lumbering Giant

But the United States is a lumbering giant. The nation has lost world leadership to Japan in other important fields, including robotics and microelectronics. Perhaps more important, the survey says, muscle-bound American companies seem to lack a wholehearted commitment to developing improved technology and an adeptness at exploiting innovation--qualities they may increasingly need to maintain leadership in an era of unprecedented worldwide competition in ideas and their commercialization.

Fixated on quick research payoffs, blind to the ability of technology to open new markets, inattentive to the contributions scientists and engineers can make to corporate success, many American managers--especially in the big companies that were the survey's focus--have lost touch with the innovative power that drove their firms to technological leadership.

In the name of avoiding risk, the survey results suggest, U.S. firms run the danger of losing command of the high-technology marketplace to more aggressive competitors.

"We're a muscular player with good technology, with the biggest market in the world that other people want to enter, with the ability to behave like leaders, and we're sort of trapped in our own short-term mentality and the view that we'll lose if we try to compete," said William P. Sommers, senior vice president of Booz-Allen.

Routine corporate procedures help trap U.S. executives in short-term, risk-dodging practices.

According to the survey, American executives--despite years of warnings from business gurus about the need to adopt the longer perspective of Japanese corporate decision-makers--remain stubbornly short-term in their perspective.

The performance of 59% of U.S. chief executives is measured once a year or more often, compared to just 2% of Japan's top managers, the survey found. Moreover, 45% of American managers said they ought to be evaluated that frequently. None of the Japanese executives thought so.

Familiar American firms--IBM, Cray Research, Xerox, Microsoft, Hewlett-Packard, AT&T, Du Pont and others--won the surveyed executives' plaudits as technological trend setters. But overall, the American executives--their responses colored, perhaps, by the painful corporate retrenchments of the last eight years--emerge from the survey as a group painfully uneasy about taking risks:

--Developing new technology does not rank as a business priority for American executives or their East Asian counterparts. But it is the Japanese managers' second-highest goal, behind increased profitability.

--The American firms' leading objective in innovation is the development of new products for their existing markets. The Japanese are more ambitious, aiming to create new products for new markets.

--Four out of 10 U.S. companies extract their profits from investments in technology within three years. The non-Japanese Asians, whose whole game plan is to grab others' technology and turn it into commercial gain, move even faster to profit from innovation. But the Japanese are giving projects more time--four, five, six years and more--to become profitable.

The numbers suggest that U.S. companies, to only a slightly lesser extent than those in Hong Kong and the newly industrialized Asian states, are pursuing less risky technological objectives, even as the Japanese gear up for an assault on America's innovative supremacy.

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