Beyster, J. Robert 1925–

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J. Robert Beyster
1925–

Former chairman and chief executive officer, Science Applications International Corporation

Nationality: American.

Born: 1925.

Education: University of Michigan, BSE, MS, PhD (dates unknown).

Family: Married Betty (maiden name unknown); children: three.

Career: Westinghouse, early 1950s, senior scientist; Los Alamos National Scientific Laboratory, mid-1950s, research scientist; General Atomic Company, 1957–1969, chairman of the Accelerator Physics Department; Science Applications International Corporation, 1969–2004, chairman and CEO.

Awards: Lifetime Achievement Award, CONNECT Program in Technology and Entrepreneurship of the University of California, 1994; Engineering Manager of the Year, American Society of Engineering Management, 2000; Next Millennium Award for Excellence in Education (23rd Annual Leavey Awards for Excellence in Private Enterprise Education), 2000; Lifetime Achievement Award, Defense Special Weapons Agency, 2000; Spirit of San Diego Award, San Diego Regional Chamber of Commerce, 2001; Lifetime Achievement Award, Ernst & Young, 2003.

Publications: Slow Neutron Scattering and Thermalization (with D. E. Parks, M. S. Nelkin, and N. F. Wikner), 1970.

■ J. Robert Beyster founded Science Applications International Corporation (SAIC) with a small group of scientists in 1969 and guided the engineering company for 35 years as its chairman and CEO. During that time, he built SAIC into one of the largest and fastest-growing employee-owned companies in the world. SAIC sustained revenue and earnings growth throughout its history by fostering diversity and building a corporate culture exemplary in its integration of teamwork and independence. Industry analysts acknowledge that Beyster was the company's driving force by virtue of his visionary outlook toward employee ownership and the business of science.

FROM SCIENCE TO BUSINESS

Beyster, who was a lieutenant commander in the navy during World War II, attended the University of Michigan, where he ultimately earned his doctorate in engineering and physics. He began his career in the early 1950s as a senior scientist at Westinghouse and then worked at the Los Alamos National Scientific Laboratory in New Mexico, where he conducted nuclear energy research. In 1957 he joined General Atomic as chairman of the Accelerator Physics Department and established and managed the company's 100-million-volt traveling-wave linear accelerator facility, which was a government supported research laboratory. He conducted extensive research on neutron thermalization, which is an important aspect of operating nuclear reactors.

In 1969 Beyster decided to establish his own scientific consulting firm, focusing on the knowledge that he had gained working in nuclear energy. He mortgaged his house and, with a small group of colleagues, set up Science Applications International Corporation in a tiny office neighboring a ballet studio in La Jolla, California. In the beginning, the fledgling company struggled to land federal contracts in nuclear power and nuclear weapons.

Beyster and business analysts have both acknowledged that a turning point came when Beyster was struck by the inspiration to give away stock to the researchers who worked for the company and brought in much of the business. Before long SAIC had attracted a wide foundation of experts in many emerging areas of engineering and technology. In little more than a decade Beyster established SAIC as a respected provider of information-technology software and systems and as one of the leading research and engineering companies in the country. He also led the company to become an early leader in the development of renewable energy sources and energy-efficient technologies.

TIME TO REORGANIZE

SAIC experienced steady growth, and by 1985 Beyster realized that the company's continued expansion required him to rethink its mode of operation. In addition, SAIC was facing new competition in areas where the company had once been nearly the sole provider of services. Beyster began to reconsider the company's disconnected internal structure, in which all of the various divisions were virtually autonomous. In a 1985 interview with Tim O'Reiley for the San Diego Business Journal, Beyster noted, "We have seen a great number of changes for SAIC. And we can expect to see more changes. We are driven by the business climate and tend to respond rapidly" (June 24, 1985).

In spite of the necessity for SAIC to evolve, Beyster remained reluctant to tamper excessively with the company's approach to business. At the end of the fiscal year on January 31, 1985, the company's sales had risen 19 percent from the previous year to $420.3 million, and profits had risen 11 percent to $14.7 million. As 28 percent of the company's assets were in cash or cash equivalents, Beyster was able to fund an aggressive capital improvement program without borrowing from the outside while carrying a high load of accounts receivable. Beyster was determined to remain committed to employee ownership and to the company's focus on extremely high-technology design contracts, such as those it possessed in the areas of submarine warfare, artificial intelligence, and the federal Strategic Defense Initiative, popularly known as "Star Wars."

Nevertheless, the growing magnitude of SAIC projects led Beyster to broaden the company's thin corporate staff, who oversaw divisions that were used to a degree of freedom so high as to verge on entrepreneurship. The level of management Beyster then assembled included a new chief financial officer and treasurer. Beyster told O'Reiley, "The importance of skilled project managers is becoming extremely obvious to the company" (June 24, 1985).

At this time Beyster began to place a greater emphasis on risk aversion within the company because the standard cost-plus-profit margin contracts it typically garnered in the field of research and development had grown fewer. In their place, fixed-price contracts were gaining favor, especially within the government. As a result, Beyster knew that SAIC needed to pay closer attention to accurate bidding.

Over the span of its life up to that point, SAIC had worked in relative anonymity, known primarily to the select few in the government and private sectors who needed its services. For many years, SAIC had attained nearly three-quarters of its work from sole-source contract (contracts negotiated with one source only and not put out for general bidding), because no company had been able to compete with its unique capabilities. As a response to the new competition, Beyster spearheaded a new marketing effort while trying to maintain his aversion to publicity, which was so great that the company's name did not even appear on its main office buildings.

CONTINUED EXPANSION OF EXPERTISE

Long known for its experience in space and missile systems and its support for national security policy, SAIC branched into advanced systems for military command, control, and communications. Beyster recognized the rapidly advancing computer-technology sector of private business and the dawning of a global economy; consequently, SAIC developed Internet-based solutions for companies such as the SAIC subsidiary, Network Solutions (a global registrar for high-level Internet domains). This greater focus on commercial customers ultimately led to setting up offices in more than 150 cities worldwide.

In 1997 Beyster anticipated the growing need for advanced communications networks to be integrated with sophisticated information-technology systems. Thus, he oversaw the acquisition of Bellcore, which became Telcordia Technologies, to focus on the technological aspects of wireless communications and telecommunications software. By the end of the 20th century, SAIC had grown far beyond its roots. In 1994, 90 percent of the company's revenues came from U.S. government programs. By 1999, half of its revenues came from commercial clients. SAIC had become a major provider of plant management and automation software and services for a variety of clients, including oil, utility, and health-care companies. The move into the commercial market meant greater returns for stock-owning employees. Throughout SAIC's history, the quantity of employee-owned stock grew an average of 15 to 20 percent yearly; from 1994 to 1999 employees saw annual returns of more than 27 percent.

THE RIGHT TIMING

Like most companies in the United States and throughout the world, SAIC experienced some hardships once the booming economy of the late 1990s went into recession. The company's annual sales in the commercial and international arenas dropped to 15 percent of total annual sales. Nevertheless, SAIC continued to perform well largely because of its diversity. In an interview with Diane Lindquist for Chief Executive, Beyster observed, "What's helped us during downturns is that there is usually some business area that we're in that's doing pretty well" (March 2002). As an example, Beyster pointed to the huge slump that the dot-com business underwent beginning in 2001, when SAIC lost clients just as many other companies did. On the other hand, SAIC's defense business with the government expanded considerably following the terrorist attacks of September 11, 2001.

Part of the reason SAIC fared especially well after September 11 was that Beyster had established the company's technical expertise in terrorist investigations and homeland security in 1993, following the first bombing of New York's World Trade Center. Realizing that terrorism would most likely be a dominant national security issue for decades, Beyster and SAIC formed the Center for Counterterrorism Technology and Analysis in 1997 and named the former United Nations weapons inspector David Kay the center's director. SAIC was prepared to help both the government and commercial customers prepare for possible terrorist attacks through such efforts as assessing the vulnerability of facilities, providing contingency planning, and recommending strategies for lessening the threat of biological or nuclear attacks. SAIC also sent employees to Afghanistan and Iraq to work alongside American troops in the war against terrorism, responding to the need for new technologies such as unmanned vehicles and advanced information solutions.

CUTS STILL NEEDED TO BE MADE

Despite SAIC's diversity, Beyster recognized that the company had to respond to reduced business in a variety of ways, such as by minimizing expenditures and focusing on both shorter-term and smaller research projects. As a last resort, Beyster reluctantly realized that the company would be forced to cut staff.

SAIC's telecommunications activities, in particular, had suffered a large decline in business. As a result, Beyster and SAIC ordered a reduction of two thousand to three thousand Telcordia staff members, and Beyster also approved the trimming of one thousand positions within SAIC itself. He managed to soften the blow to company morale by cutting the staff primarily through attrition, that is, by not hiring new employees after others quit or retired.

MANAGEMENT STYLE: THERE IS NO "I" IN TEAM

According to Diane Lindquist, Beyster was "considered the premier advocate of spread-the-wealth management" (March 2002). Throughout SAIC's history Beyster owned barely more than 1 percent of company stock, with the remainder being owned by SAIC's employees, who numbered more than 42,000 worldwide in 2004. Beyster established a form of employee ownership different from that which is predominant among other companies with employee stock-ownership policies, where most of the stock is withheld in the retirement plan. This more common approach can lead to problems such as those that followed the bankruptcy of Enron in 2002, when many employees experienced huge personal losses in retirement savings. Alternatively, Beyster established a flexible program in which the employees owned the stock on a primarily individual basis, with performance being the foundation for ownership. In an interview for Washington Technology, Beyster noted that SAIC's generous stock offerings initially attracted employees. Then, he added, "to keep people we build up their holdings where if they leave, they would lose a lot of money" (September 11, 2000).

Beyster's insistence on keeping SAIC an employee-owned company led to success, with the company amassing $5.9 billion in annual revenue by the summer of 2003. Despite the company's tremendous growth, Beyster was able to adhere to his philosophy of minimizing the layers of bureaucracy and management by maintaining a flexible and decentralized organizational structure. He stressed technical excellence, high standards of ethical conduct, and a firm belief in customer service. According to industry analysts, Beyster created a business based on numerous small organizations with hundreds of leaders, each involved in the entrepreneurial culture that Beyster had fostered.

Beyster was known for his extraordinary relational skill, both in making employees feel as if they were working for him personally and in making clients feel that they were unique and important. Industry analysts commended Beyster for his intelligence and for his ability to apply that intelligence to both science and business environments. He was well regarded for his facility in tracking the details on the hundreds and sometimes thousands of projects that SAIC typically handled at one time. With respect to his personality, Beyster noted on the SAIC Web site, "I was not the brilliant, flash-of-inspiration type of entrepreneur. I was more of a persistent, builder type."

LEAVES SUCCESSFUL LEGACY

In 2004 the 78-year-old Beyster retired as the company's CEO and later left his post as chairman. Assessing Beyster's importance to SAIC over the years, David Overskei, a former SAIC employee who became the president of a defense software company, asked Brad Graves in the San Diego Business Journal, "How many other companies under the leadership of one individual have gone this far and done so well?" (April 14, 2003). In addition to his achievements at SAIC, Beyster established the Foundation for Enterprise Development and the Beyster Institute for Entrepreneurial Employee Ownership. These nonprofit organizations are dedicated to advancing the use of entrepreneurial employee ownership nationally and internationally and in both the public and private sectors.

See also entry on Science Applications International Corporation in International Directory of Company Histories.