The setting is bucolic. ROLM Corp.'s headquarters here is a cluster of single-story buildings surrounded by ponds, graceful wooden bridges and thriving greenery.
Inside the buildings, the staff works in groups, chatting and listening to the radio while building sophisticated computers and telephone eqiupment almost entirely by hand.
The workers essentially can do their jobs when they please, taking breaks to use a new, $1.25 million gymnasium, complete with weight room, swimming pool and whirlpool. Lunchtime can be a regular outdoor barbecue or a couple of sets of tennis.
In this lush setting, ROLM Crop., the nation's second-largest manufacturer of sophisticated telephone-switching equipment, continues to grow from a tiny company with sales of about $20 million in 1975 to one one with sales that may top $280 million this year. It now sells telecommunications systems to a variety of companies, including 19 of the 20 largest firms in the country.
Primarily, the technology and the aggressiveness of ROLM's management have capitulated the company into the forefront of the competitive battle for a share of the co-called "office-of-the-future" market. At the same time, ROLM has adopted a loose, nonbureaucratic atmosphere with an emphasis on making the work place as pleasant as possible, which the company believes is a key to keeping the telecommunications and computer industries among the nations's thriving international businesses.
ROLM's successful operation is also an example of how the Federal Communications Commission's deregulation programs of the late 1960s and early 1970s created a new telecommunications business in direct competition with the historic equipment and service monopoly of American Telephone & Telegraph Co.
ROLM now is a player in the ongoing judicial, regulatory and congressional debate about the future of AT&T, an example of a company that fears the unleashed power of a virtually deregulated AT&T and distrusts the legistlative effort to free the Bell System from the monitoring of FCC regulators.
It's not a question of whether we'll go out of business or not," said Leo Chamberlain, ROLM's executive vice president. "We don't believe they should get preferential treatment."
"The problem we have is that we believe AT&T should compete," said Kenneth Oshman, ROLM's president. "But we think they ought to compete fairly."
For ROLM that means advocating a proposal that would force AT&T to set up a new corporation, along the lines of the divestiture suggested by the Department of Justice, to handle all competitive business. That structure, ROLM said in a policy statement, would prevent the Bell System from using ratepayers' money to fund competitive ventures, like the equipment business.
"ROLM Corp. believes that true competition can best be achieved if future legislation reflects a short transition period to a fully separate, independently incorporated, publicly owned corporation to design, manufacture, market and maintain competitive telecommunications goods and services," the company said in its policy paper.
Advocates of the current efforts to rewrite the Communications Act of 1934 say that, despite the criticism from the ROLMs of the world, it is not their intention to unleash AT&T to destroy its competition. They complain that criticism from equipment companies like ROLM and long-distance service companies, like MCI Communications Corp., is basically self-serving, designed to preserve economic success at the expense of true domestic and international competition.
"It's a big boys' game," complains Sen. Bob Packwood (R-Ore.), the chief sponsor of the current legislative effort. "I don't think I've gotten a letter on this issue from anybody with an income of less than $50,000 a year."
Surley many of ROLM's executives fit that bill, and undoubtedly their view of the world is colored by their company's success in the current, somewhat muddled regulatory environment. And because of that, they are bound to oppose dramatic change.
But a look at ROLM's history and style suggests the debate about telecommunications is far more complicated. Founded in the "Silicon Valley" of Northern California in 1969 by four Stanford University engineering graduates, ROLM began as a computer concern, taking its name from the first letter in each founder's last name. Development of military computers dominated ROLM's early days.
In 1975, armed with FCC decisions permitting equipment competition, ROLM took its computer expertise into what is now almost a $2 billion telecommunications PBX, or switchboard, business. "Frankly, I thought they were crazy," Chamberlain, then with another technology company, recalled. "They were going to compete with Bell. They must be nuts."
High-speed telephone call-switching systems or electronic switchboards then became their primary buiness, a move that has made telecommunications products about 80 percent of ROLM's sales. The growth rate has been striking, with sales rising 50 percent annually. "We absolutley expect to be a $1 billion company this decade," Chamberlain said.
"We knew we had a successful business in 1976," said Robert Maxfield, the "M" in ROLM, now the company's executive vice president. "But by the end of 1977, all hell broke loose. Competition became variable."
The company's telecommunications system sales rose to $37.8 million in 1978 and them more than quadrupled to $158 million in 1980. Now, the company is second only to AT&T's Western Electric Co. in selling sophisticated switchboard equipment.
Chamberlain and independent industry observers believe the company's success is in large part a result of AT&T's inability to adapt new technology to the marketplace. "We have out toehold because Bell wasn't satisfying the users," Chamberlain said. "If they had been, we would still be a $12 million compnay selling computers."
For example, ROLM has been a leader in the develoment of a digitized computer telephone system. While At&t has spent millions of dollars recently advertising its analog, technologically antiquated Dimension system, ROLM has been selling its up-to-date systems since 1974. AT&T had promised the speedier digital system for several years, buts its introduction is still some years away. In addition, ROLM claims to be the first manufacturer to offer a business telephone with a built-in telephone number display.
In just six years, ROLM's shipments of telephone systems has risen from 30 in 1975 to more than 5,000 this year, giving ROLM about 15 percent of the market. Their largest customer is General Electric Telephone & Electronics, the biggest non-Bell local telephone company. ROLM says its systems provide direct communications on a company's site but are compatible with a variety of microwave and computer services.
The growth of microwave, electronic mail and other communications transmission companies only helps. "The more transmisson alternatives the better," Oshman, the "O" in the firm's name said. "Our PBX is smart -- smart enough to route calls along the most efficient path."
Strapped even by the space limitations of the current headquarters, ROLM is building new facilities in Austin, Tex., and Colorado Springs, two growing technological centers stocked with engineering and telecommunications experts but locales that do not suffer from the problems of the high cost of housing in Northern California.
As further evidence of the company's growth plans, ROLM has bought a number of its distributors, moving to a whooly owned distribution equipment system. Among those moves was last year's purchase of Jarvis Corp., a Richmond-based distributor of ROLM eqipment in the middle-Atlantic states and the South, for about $10 million in stock. "I'm not aware of anyone in the U.S., other than AT&T, with a better distribution network," Oshman told analysts in New York earlier this year.
All this has happened in an unusual atmosphere, in some ways similar to the loose participatory used by the Japanese to encourage productivity. In fact, ROLM's management claims as one result of its unconventional management systems that productivity is climbing. Shipments per employe have rise steadily from $40,000 per employe in 1976 to $55,000 per employe this year, the company says.
"We like to say we have 'loose-tight' controls," said Chamberlain, whose responsibilities include development of the ROLM management system. "The tight controls are the finances, and the loose part is letting people meet their objectives."
ROLM's recreation compex is just one part of that system. "It may sound like motherhood, but we believe it. Bureaucracy is the antithesis of our system; it's more like controlled chaos," Chamberlain said. "When a company our size dumps $1 million into a recreation complex, then employes know they're something special. We tell them their great. That's the way to get performance."
Convincing ROLM's employes of that fact is a major part of the system. Chamberlain conducts regular meetings with groups of 10 to 15 employes to hear their concerns. Extensive benefits for ROLM's more than 4,000 employes, twice the figure of eight months ago, include a three-month paid vacation after seven years with the company and exemplify ROLM's apparent commitment to a new type of employe relations.
A rare memo, "ROLM Philosiphies," stresses the development of a "pleasant" work place, emphasizing "respect for personal privacy," creativity and individual treatment for each employe. "ROLM should have an environment where every employe can enhance one's self-image through achievement, creativity and constructive feedback," the memo states. CAPTION: Picture 1, ROLM's growth rate had been striking. Executive V.P. Leo Chamberlain expects sales to hit $1 billion this decade.; Picture 2, Maung ylwin works on a ROLM's PC circuit board, which is built almost entirley by hand.; Picture 3, ROLM Corp. employe relaxes in a whirlpool bath in the company's recreation center. Phots by Mark Costantini for The Washington Post; Chart; A PICTURE OF ROLM NET SALES IN THOUSANDS The Washington Post