RCA

RCA and the Advancement of the OR/MS Community in the 1960s and 1970s

 

                From the early 1950s through the mid-1980s, the RCA Corporation was a significant player in the development and practice of operations research and management science methodologies. The company fostered a culture of collaborative research in OR/MS and advocated for the advancement of the discipline beyond its own projects. RCA’s innovative technologies and established reputation gave their staffers a platform from which to achieve lofty goals.

                RCA was first and foremost a dominant manufacturer of communications technologies and a leader in broadcast advancements. Founded in 1919 as a subsidiary of General Electric, the “Radio Corporation of America” was forcibly split from its parent organization following a federal antitrust suit in 1932.  RCA’s research laboratory in Princeton, New Jersey was founded in 1942 and officially named after the company’s leader, David Sarnoff, in 1956. The David Sarnoff Research Center became a hot spot of invention and innovation and a natural location for the company’s operations research group, one of the nation’s first. Though RCA built its reputation on key developments in radio and television, executive leadership saw the importance of getting involved in the emerging computing scene by the mid-20th century. In 1965, they introduced the Spectra 70 line of electronic data processing units, a direct competitor to the widely integrated IBM System/360s. An advertised element was that one could “replace an existing system with Spectra 70 and gain the benefits of its exceptional cost/performance,” making it easy to use and able to produce cutting edge results (RCA 1965). By building a computer that reasonably compared with the other leading systems of the era, RCA provided its researchers first access to a pioneering technology with which to develop OR/MS solutions and strategies. 

Because of this benefit, OR practitioners at RCA had the tools to become early leaders in computer science for OR/MS and were able to codesign their systems with the on-site hardware team. Franz Edelman, the original Director of Operations Research at RCA, took the lead in bringing together management systems with this new technology.  In 1975, he recognized, “two fairly recent technical developments – data base management concepts with high level, end user oriented inquiry languages and shared, interactive computing – [that] have combined to deliver dramatic increases in the combined potential of the information and management sciences, especially in the context of providing operationally useful decision support” (Edelman 1977). RCA under Edelman took the charge in merging management systems, management science, and computer science under a single practice.

                In the early 1970s, Edelman pushed for a broader OR/MS implementation within RCA. One aspect was to open up areas of application and implementation beyond just production, such as marketing and financial analyses. The other aspect was to open up applications in different types of operations. The group started working with senior staff in TV production, frozen foods, rental cars, broadcast communications, records, etc. Of course, it helped that RCA was a diversified conglomerate and had sizable subsidiaries in these businesses. All this led to an expanded outlook, approach and influence of the OR/MS group – not only in RCA, but elsewhere.  The size of the group typically varied between 12 and 15 members.

Some examples of successful project work include:

  • Development and use of sales forecasting models for color TV.  This work was documented and published in the paper “Developing and Using Forecasting Models of Consumer Durables – The Case of Color Television” by Bayus, Hong and Labe in the Journal of Product Innovation Management, March 1989.
  • Financial models used by the Corporate Finance team to evaluate the impact of strategic decisions and their impact on future profits, cashflow and the balance sheet.  “What if” scenarios were analyzed related to potential mergers and acquisitions, stock issuances and buybacks, dividend policies, etc.
  • Compact disc forecasting models based on new product diffusion models, used to support the production and rollout of CDs in their early years.
  • Pricing models for the American Communications (Americom) satellite division to help set prices for home consumer direct-to-dish broadcast services.

Beyond implementing OR/MS solutions, RCA researchers were focused on advancing the widespread adoption and appreciation of their field. The company was therefore an active member of regional TIMS (The Institute of Management Sciences) chapters, hosting meetings and dialogues in the 1960s and 70s. Edelman’s constant presence within TIMS and the general practice community was key. For instance, in 1966, he gave the closing talk at the Milwaukee Chapter’s annual “Management Night” (“Chapter News” 1966). As the field grew and more localized organizations were established, RCA became a major force in the supporting the newer Delaware Valley Chapter. They hosted a group meeting in 1973 where Edelman led a panel discussion on “factors for implementing management science” (Jugenheimer 1973), bringing his philosophy to many other institutions.  Furthermore, a handful of RCA persons took positions with professional organizations and journals, showing a willingness to cooperate and share in a way that many non-academic institutions chose not to. Edelman served as Finance Vice President of TIMS from 1975 through 1978 and RCA’s Avadhesh (Raj) Nigam was the Practice Column Editor of Interfaces through 1980. H. Newton Garber, Edelman’s eventual successor as OR Director at RCA, was the Secretary and primary contact of the College on the Practice of Management Sciences (CPMS) in 1973. That same year, the CPMS summer workshop was co-organized by RCA’s William Hartzel (Jugenheimer 1973) and IEEE’s conference “on the Future of Scientific and Technical Journals” was chaired by RCA’s John Philips (“Bulletin Board” 1973). In subsequent years, Newt Garber served as Chair of the College on the Practice of Management Sciences (CPMS) and was President of TIMS in 1983-84.  Their presence permeated through multiple levels of the professional MS community, hence influencing at multiple points.

                During this period, management science faced an identity crisis. Practitioners debated whether their field was on the verge of a significant breakout or sitting at the cusp of irrelevance. The interdisciplinary nature of MS made it difficult to keep all practitioners, methodologies, use-cases, and applications under a single classification. Conferences through the mid-1970s featured panels that questioned whether MS was indeed “the wave of the future” or “a wave which had never crested and never will as originally anticipated by the guiding authors” (Program of Sessions 1971). Edelman, who by 1977 was RCA’s Staff Vice President for Business Systems and Analytics, was a strong proponent of the first belief.  He and others thought the inclusivity of young and enthused OR/MS practitioners was key to the field’s survival and growth. RCA set a noteworthy example in this area, running an internship program that brought together academics and nonacademic professionals. “RCA personnel [would] often sit on dissertation committees under this program” and gave permanent positions to 60% of their interns (Hall & Hess 1978). By not only welcoming these relationships but supporting them through multiple waves of graduating classes, the company became a focal point in unifying the community and pushing forward a continued interest.  

                By the early 1980s, RCA products were losing significant market share to their competitors. David Sarnoff’s retirement in 1970 and subsequent death in 1971 had begun a degenerative process for the company. The leadership vacancy was never quite filled with the same gravitas. In computing, IBM was reestablishing control and the newest Spectra computers, while fast and reliable, were released too late to make a significant dent. General Electric took advantage of the situation and reacquired its former subsidiary in 1986. GE almost immediately began to divide and sell the company’s divisions and assets. Sarnoff Research Center was placed on a strict budgetary schedule and handed a reduced workload. Just about all (if not all) of the men and women in OR/MS left at this time. During 1986, the RCA OR group made multiple attempts to find a home within the GE corporate organization but ultimately did not succeed.  Citing overlap with other existing analytic teams, GE officially disbanded the RCA OR group in December 1986.  The remaining Sarnoff Research Center skeleton was sold to SRI International (https://www.informs.org/Explore/History-of-O.R.-Excellence/Non-Academic-Institutions/Stanford-Research-Institute) in 1988, officially marking the end of an era that spanned over four decades.

                Though RCA has since been split and has faded away across multiple spaces, the impact of its people is still felt and recognized today. Shortly after Edelman’s death in 1982, TIMS renamed their practice prize the Franz Edelman Award for Achievement in Advanced Analytics, Operations Research, and Management Science, which is still given by INFORMS.  Seven members of the RCA OR team, including Newt Garber, Raj Nigam, and Russel Labe, formed the core of a new team at Merrill Lynch in November 1986, establishing the first centralized Management Science group on Wall Street.  This group reported to DuWayne Peterson, the Chief Technology Officer at Merrill Lynch, who himself had an OR background and was interested in expanding the use of analytics and modeling at the brokerage house.  The RCA influence at Merrill Lynch was felt well into the 2010s as Garber (1986 – 1991), Nigam (1991 – 2004), and Labe (2004-2015), succeeded one another as directors of the Analytics and Modelling group. Quite fittingly, under Nigam’s leadership, the team received the 2001 Franz Edelman Award (Altschuler, et. al, 2002), a poetic contribution to the full circle of RCA’s legacy.  

Compiled by: Reed Devany

Author’s Note: The author would like to give special thanks to Russ Labe and Raj Nigam for their contributions to this piece.

Links and References

Altschuler, S., Batavia, D., Bennet, J., Labe, R., Liao B., Nigam, R., & J. Oh (2002) “Pricing Analysis for Merrill Lunch Integrated Choice.” Interfaces, 32(1),  5-19.

(1974) “Back Matter”. Interfaces, 4(2), 93.

(1975) “Back Matter”. Interfaces¸5(2)

(1978) “Back Matter”. Interfaces, 8(4)

Bayus, B. L, Hong, S., & R. P. Labe, Jr. (1989) “Developing and using forecasting models of consumer durables: The case of color television”. Journal of Product Innovation Management, 6(1), 5-19.

(1973) “Bulletin Board”. Interfaces, 3(2), 74.

(1966) “Chapter News”. Management Science, 13(2), C-30.

Edelman, F. (1977) “They Went Thataway”. Interfaces, 7(3), 39-44.

(1980) “Front Matter”. Interfaces, 10(1).

Hall Jr., J. R. & S. W. Hess (1978) “OR/MS: Dead or Dying”. Interfaces, 8(3), 44.

Holmer, F. (1968) “Management Research in State and Local Governments”. Operations Research, 16(6), 1096.

Jugenheimer R. (1973) “College and Chapter News”. Interfaces, 3(3), 99-100.

Program of Sessions (1971) “12th American Meeting: Detroit, Sept. 29 – Oct. 2, 1971”. Interfaces, 1(5), 18.

RCA (1965) RCA Spectra 70. RCA: Princeton, New Jersey. 2

Associated Historic Individuals

Edelman, Franz
Garber, H. Newton
Hertz, David B.
Lemke, Carlton E.