January 30, 1996

Prepared by: Silber & Associates
Dr. Bohne Silber
13067 Twelve Hills Road
Clarksville, MD 21029-1144

IMPROVED COMPETITIVE STANDING

About 72% of ATP participants say their competitive standing has improved since the time they won the award. As illustrated in Figure 7,

Typically, competitive growth is facilitated by technological advances and new business opportunities made possible by the award. "We've

A JV participant described how his company has parlayed the ATP experience into new business with old customers. "The ATP project allowed us to work with several customers," he said, "and exposed us in a different light to them. It's allowed us to be seen as a technological innovator throughout the industry."

For one-fourth of the sample, the ATP award has not greatly influenced their business success. Some of these companies are conglomerates with billion dollar budgets, of which the ATP award is a relatively minor piece. "The company as a whole has not experienced any changes in competitive standing [because of the ATP award], but our group and product area has," commented a scientist. Another company offered a similar comment: "Our business unit has become more competitive--we've increased profit and volume and moved into the OEM market. This really has to do with cost cutting and other things. The ATP is in there, but its single effect is small."

Other participants have not yet harvested the rewards of their ATP-related work. "Our R & D is not yet mature," explained one. "It will be approximately two years before we experience a commercial benefit. We have high hopes the technology will increase competitive standing--potentially the ATP award will have a significant impact."

INCREASED EMPLOYMENT

Fifty-six percent of the participants reported creating an average of six new positions--at this early R & D stage, mostly for scientists and engineers--as a direct result of the ATP award. Twenty-eight percent said the award enabled them to retain an average of three employees--again, predominantly

A number of participants described how the ATP has spurred growth within their companies. "We started with eight employees," said a researcher, "and grew to 45. Our company was started as a direct result of ATP; it enabled us. ATP is a very powerful program..." Similar stories were relayed by others. "We were only five people at the time of the award," a participant said. "It gave us credibility, which brought us more business and the ability to hire good people. It caused major growth in our company--it was a major event. Frankly, we wouldn't be where we are

without it." And from others: . "We couldn't have done any of the work without ATP. We're going gang-busters. It has increased our staff size by 15-20% and broadened our technology base." . "[Because of the ATP award,] we've attracted venture capital funding. There were two people in the company at the time of the proposal. It increased to four FTEs, and now we have 14 employees. At the end of our project, we'll probably have 18."

New jobs mean more than an increase in manpower--they also mean new blood. "The impact of the ATP has been tremendous. It has meant new life," said a scientist. "We haven't hired new people for a long time, and we were able to get 6-7 new Ph.D.s. We had started to get stale. The addition of new personnel has been critical."

Not only has the ATP led to new jobs within the participating companies, but also in the participants' vendor base. According to a researcher whose technology is already being commercialized, "Within our organization, we've created, as a direct result of the ATP, 40 manufacturing jobs. We buy all our components and assemblies from local and domestic manufacturers, and this has led to creation of probably 60 jobs in our vendor base. In other words, 100 new manufacturing jobs4 have resulted from the $1.3 million from ATP, and this is just so far. It will be a lot more than that."

Recent participants--that is, the 1992 group--are the most likely to report the ATP led to new jobs within the company but also the least likely to say it prevented elimination of jobs. Conversely, the 1990 group is most likely to report that the ATP prevented job elimination but least likely to say it resulted in new positions. Table 5 below illustrates this finding.

OTHER IMPORTANT IMPACTS

CREATING NEW TECHNOLOGIES WITH MULTIPLE APPLICATIONS

Sixty-one percent of the commercializers said they've uncovered an

CHANGING THE WAY OF DOING BUSINESS

As a result of the award, some companies have experienced a significant and perhaps lasting change in corporate philosophy, one which has led them to rethink their traditional ways of doing business, particularly with regard to collaboration, information sharing, and investment in advanced research.

"It's not in the American psyche to work with competitors cooperatively," explained a participant, "but now [after the ATP] we see a huge acceleration of [collaborative] projects and programs. We've learned how to work in the joint venture environment." Another researcher commented similarly, "The award stimulated us internally and externally. It was widespread. We never did anything like cooperative research before."

Prior to the ATP, many companies, skeptical of working alongside competitors, deliberately avoided collaborative efforts. The ATP has had a positive impact on changing those long-standing attitudes. "There was some cynicism that the collaboration wouldn't work, but now we've gotten tremendous positive feedback. The industry really feels that the collaborative approach is the way to go."

In particular, the award has led many companies to shed their tradition of secrecy and embrace information sharing. "We've changed because of the ATP experience," said a participant. "We used to be very secretive but we've learned the benefits of information exchange." Another person echoed those words, saying, "We had never been involved in a joint venture or other cooperative program because our entire culture was based on secrecy. Our culture has radically changed because of the ATP. Now we have pursued other consortia." And from another: "We've become involved in alliances with industry partners, and we have more openness. The project is good for all of us."

The ATP experience, according to numerous accounts, has also opened the eyes of management to new business approaches. "Companies are realizing they have to change the way they do things," offered a participant. "The program through ATP has helped raise awareness and made it possible for interfaces and collaborations which wouldn't have happened." Another participant commented on the effect the ATP experience has had within his organization: "The award has caused some internal questions. Some people within our company don't believe quality costs less, and there's been a total reexamination of priorities. This has had both a direct and subtle impact on the company."

The change in mentality typically has extended beyond the group directly involved in the ATP project, spreading to other parts of the organization. "Other divisions in our company are now getting involved. It has an effect locally but also throughout the company." And an individual from one of the nation's largest companies simply stated, "Within our company, the ATP project has really changed how we do research."

The mind set of U.S. industry, according to a number of participants, is to emphasize short-term profits, a mentality one person called a "fatal flaw in American industry." The ATP, participants say, is necessary to encourage and allow companies to focus on long-range technological development. "We need exactly what ATP does--the emphasis on technological development, not product development, to take the worldwide lead," insisted a participant.

"The way our company has gone is to take a shorter and shorter focus," explained another participant, "which adversely affects long-term research. It's very difficult to support long-term research unless it's intimately associated with products, and then, by definition, it's not long-term research.

CREATING NEW BUSINESS OPPORTUNITIES

The ATP has stimulated business growth well beyond the development of the funded technology. Indeed, some participants maintain that their existence is due to the ATP award, and that without it, companies which are now flourishing would have been forced to shut their doors. "Without ATP," said a joint venture participant, "we wouldn't have been able to exist--neither my company nor the project."

Many companies described new business opportunities, a by-product of their ATP experience, which have stemmed from new applications of the technology and the relationships they've cultivated through the project. A typical comment, for instance, is that the "ATP gave us an opportunity to work with [company] and has spawned more opportunities with them. It has allowed us to partner with them, and there's a lot of potential to be realized."

Another participant elaborated, "It has solidified our relationship with [partner], coupling two technologies and capabilities together. We were able to focus our efforts on specific products we might not have been able to pursue. This resulted in potential new products which have a dramatic effect for system users and capabilities."

For a number of participants, the ATP experience has galvanized them as a company, expanded their capabilities, given them new direction and revitalized their work. As one participant described, "It allowed us to diversify, to begin a business in another area. It gives us security about the future...the results have been rapid, compared to other paths we've taken." And from another: "The technology we were using was 25 years old. ATP allowed two years of work with 5 or so people working on the project full-time. It has made all the difference in the world to be able to have intensive research." And another: "Because of the ATP project, we developed expertise in [specific technology], which was new territory for us. We expanded our expertise and capabilities which will be very important to us. This wouldn't have happened without the award."

One researcher explained, "The award brought the ability and desire to do R & D in the company. We'd probably be business as usual without it. Now we're planning for the future, expanding business. It's not so much an investment but a futures option." The ATP award was the major reason one company persisted with a particular technology, and ultimately the pay-off was big. "Without ATP," the participant reported, "we wouldn't be a world leader in that technology. We are the only U.S. company to have an international competitive position as well as the only U.S. corporation to invest large amounts of its own dollars."

A participant, a defense contractor, described how the ATP experience has enhanced his company's capabilities. "[Our ability to follow only] military specifications has limited us," he explained. "Through ATP we've been able to expand the specifications we can build to--we can now build to commercial specs, and we couldn't have been prepared for this without ATP."

IMPROVING QUALITY AND PERFORMANCE

Over 86% of participants believe the ATP award will enable them to make a better product, in terms of quality and performance. "There was the whole issue of having the end-user right there when we developed the software," said a JV partner. "It has put tremendous pressure on us to maintain world class quality."

At the very heart of some projects is development of technology for better process control. One example is the "2mm Project," a multi-company effort to reduce variation in the manufacturing of automotive bodies.

As a consequence of their ATP-related work, 55 companies spanning a variety of industries reported that they've adopted internal, permanent process improvements. Prior to the ATP project, according to a researcher, "We couldn't have made two of the same item. We had no process control. Now we can quote things to specification." Most participants declined to estimate the dollar amount they stand to save from long-term improvements.

SHARING NON- PROPRIETARY INFORMATION

About 95% of the companies plan to disseminate non-proprietary information related to their ATP project. Table 6 shows some of their plans for communicating important findings. Most participants view information sharing as an essential component of technological progress and already engage in it extensively.

Dissemination of results is "absolutely essential for our efforts to succeed," said an ATP participant. "We're a whole-hearted believer in collaboration and sharing. It's necessary for success." Another commented, "We believe in disseminating widely so people have an awareness of what we are doing. We have followed a patent and publish pattern."

Others expressed similar views. "We're very proactive. It's important to communicate with universities and other high-tech companies," explained a participant. "We need to give in order to receive." A researcher discussed the value of receiving feedback from others in the program. "Sharing is a key component which the award has encouraged. We can measure each other's stuff and share the results. We can get different views. We share things that are far out, futuristic, and get a preview of what the future has in store."

A joint venture participant described how a professional association evolved out of interest in his company's ATP project. "Our business plan is to transfer technology to all U.S. manufacturers. We helped start [professional association] which began as a group of people interested in our ATP work. The association has a quarterly newspaper and a mailing distribution of 500 people outside of our company. This never would have happened without the ATP program."

Those who are reluctant to share details of their project explained their reticence. "Most of the players in this project don't want the details known. We want to be very careful. We don't want the Japanese to know the nature of the technology under study. Only small pieces of the project can be shared, not the general overview."

EXPOSURE TO TECHNOLOGY

The opportunity to adopt technology developed by joint venture partners is a valuable aspect of the program. "There's been a significant educational process working with [partner company]," said a participant. A researcher from a small company described how the ATP has afforded him the unique

The chance to learn about the developing technology is so important, say the participants, that some companies are participating without government funding. "We are not receiving funding," said a JV member, "but to be a part of a consortium like this is very positive from a scientific and team building perspective."

1. This figure should not be interpreted as highly accurate. The question required conjecture, and participants did not use uniform methods for determining an amount. Some included capital investments; others did not. Most, but not all, included their matching obligation.

2This figure is the median. Amounts ranged from $75,000 to $11,000,000.

3Median figures.

4This figure was not included in the computation of the average number of new jobs spurred by the ATP award. The participant relayed the information anecdotally, not in response to a specific question about the effect of the award on employment.