(FORTUNE Magazine) – ON THE SPECIALLY carpeted roof of a Los Angeles hotel garage, a chorus line from the TV show Fame strutted its stuff while a flight of brightly colored balloons sailed skyward and a red canvas cover fell away from a 24-foot-high model of Polaroid's new Spectra instant camera. Even by Polaroid Corp.'s lavish standard for new-product introductions, this April extravaganza was a big bash. Indeed, Polaroid insiders view the Spectra and the hoopla as more than just another new-product introduction. It is, they say, part of a long, systematic effort to recover the corporate glamour that the company enjoyed in the 1960s. The loss of glamour has been ''a sore spot'' at Polaroid for years, admits one executive. ''Now 100% of our energy is going into looking forward. We're coming back.'' Glamour, that ineffable sparkle that lends pizazz to certain companies and their stocks, might seem a frivolous corporate objective. Yet because of the excitement, and wealth, it can generate, glamour is serious business. Managers, investment strategists, and even some academics ponder it, trying to analyze where it comes from, how companies that have got it can keep it, and what happens when it is lost. Glamorous companies past and present follow a fairly standard trajectory. It usually starts with a hot product or a new idea -- Polaroid's instant camera, the Xerox photocopier, Avon's direct selling. As sales and profits take off, security analysts become infected with the company's enthusiasm, begin believing that further triumphs must be in store, and urge the stock to celestial heights. The company's managers and employees, often upstarts under 35, are ecstatic. They can't wait to get to work in the morning and often work through the night. They buzz with new ideas. They view the company as unique and everyone working there as part of an indivisible elite. They throw lots of parties to celebrate the company's success, building the enthusiasm born of that success into the corporate culture. Managers find they can pick and choose among a rush of first-rate applicants for new jobs. That yields more good ideas and hard work, leading in turn to yet higher sales, earnings, and stock prices. The ranks of the glamorous change constantly. For investors the term recalls the glamour stocks of the early 1970s, the so-called nifty 50. While a couple of those companies, IBM and McDonald's, managed to keep some of the aura, many others, including Polaroid, Xerox, and Avon, subsequently lost it and are now striving to regain the magic. A number of nifty 50 companies, for all their appeal to Wall Street, probably never qualified as glamorous places to work. Glamour at Phelps Dodge? Aetna Life & Casualty? In the years since the two-tier stock market of the early 1970s, companies such as Atari rose in the starry firmament of corporate glamour and then descended, their places taken by the likes of Genentech and Advanced Micro Devices. People who have worked at glamorous companies on the rise almost invariably use the same word in explaining what the experience was like and why they worked so hard: fun. Consider Atari, formerly the video game division of Warner Communications. Purchased by Warner from founder Nolan Bushnell in 1976 for a mere $28 million, in the next six years Atari captured about 75% of the U.S. market for home video games and grew to $2 billion in annual sales. Warner's stock shot into hyperspace, rising from under $5 a share in 1976 to $63 in 1982. Says a former employee of those days at Atari, ''You walked into an atmosphere that was like Disney World. Everyone had a 'wow' attitude. There were all kinds of perks and goodies and joys.''

At Advanced Micro Devices, annual profit increases of over 100% from 1982 through 1984 paid for employee parties that were dazzling even by Silicon Valley's sybaritic standards for corporate celebrations. At Christmastime 1983, before the semiconductor industry went into the tank, AMD threw a bash in San Francisco's Moscone Center for 4,000 AMD staffers and their guests, with dozens of bars, several big-name rock bands, scores of groaning banquet tables, and thousands of giant balloons. Estimated cost: at least $750,000. Employees of Genentech, the San Francisco biological sciences company, stage more modest bashes, called ho-ho parties, every Friday afternoon. Managers at glamorous companies argue that festivity serves several corporate purposes. It encourages people to celebrate successes and, in theory at least, to repeat them. The smaller-scale parties provide an opportunity for employees to catch up on what people in other parts of the company are doing, which can spark ideas. Perhaps most important, these affairs and the conviviality that accompanies them instill a sense of community among employees. That's vital to glamorous companies, because in other respects they generally favor a style of management that encourages talented people to fly solo. An ex-Atari manager, wistfully recalling the glory days, says: ''It was so creative. You didn't have to get 99 approvals to get something done. No memos, no long boring meetings. It was like the old Judy Garland and Mickey Rooney movies, where someone would say, 'Hey, let's put on a show,' and you'd run with it.'' One account has it that in Polaroid's go-go days in the early 1960s, when instant photography was still strictly black and white, founder Edwin Land called an engineer into his office and told him, ''I want you to think about color.'' A year passed without any further consultations between the two, much less the formation of a new-products task force. Then one day, seemingly out of the blue, the engineer walked back into Land's office and said, ''I think I've got it.'' Recalls a former Polaroid executive, ''We were absolutely driven. And we had so much fun. It wasn't only the product, it was a whole approach to life. It inspired passion.'' To maintain the passion, and the creativity, the managers of a glamorous company must steer a delicate course between hands-off and hands-on. They must be patient, willing to wait for individuals to come up with innovations. Advanced Micro Devices' flamboyant founder and chairman, W. J. ''Jerry'' Sanders III, compares the challenge he faces in running an innovative semiconductor company to growing asparagus. That plant, he keeps telling employees, takes three years to mature, just like some new product ideas. On the other hand, the people who head glamorous companies need to work particularly hard at keeping everyone heading in the same direction. They do this in part by laboring to build a strong corporate culture. Employees immersed in the culture have a sort of gyrocompass built into them, whereby they can sense if they are straying too far from the company's purposes and methods. Building and maintaining the culture typically entail lots of communication from the top down and from the bottom up. One popular tool is the all-employee meeting. James Kouzes, a professor at the University of Santa Clara and a longtime observer of Silicon Valley, says that such meetings help foster the belief among employees that their company has a unique mission. Another way for managers to put that idea across, he says, is to publish a list of the values that the company stands for. Apple Computer, in its day as glamorous a company as ever there was, papers its offices with posters and leaflets that delineate ''Apple Values'' having to do with innovation and team spirit. Lotus Development Corp., known for the best-selling 1-2-3 spreadsheet program for personal computers, posts its values on the walls too. The last one on the list: ''A sense of humor is an important asset . . . It is important that people not take themselves too seriously, as they may be the only ones that do so.'' The principle of employee autonomy within a strong corporate culture has its dark side, however. It carries the potential for elitism bordering on hubris. Dazzled by their own success and recklessly confident that it will continue, the people in key jobs at glamorous companies may fail to notice critical changes in the marketplace. TAKE ATARI. In the company's heyday, profit margins on video games were generous, to put it mildly: a Pac-Man cartridge, for instance, cost about $6 to make and sold for as much as $20. Atari's game inventors, most in their late 20s and early 30s, often pulled down six-figure salaries. ''The compensation system wasn't designed to encourage people to work as part of a team, and it didn't instill humility,'' says a former manager. ''People would look at their paycheck and say, 'Well, I must be doing something right.' Everyone was an independent operator. It was wild.'' Even more fatefully, the glory that was Pac-Man led Atari's top executives to believe that demand for video games would continue to surge. It didn't, of course. In late 1982 kids started to yawn at Atari's products, and profits . turned to $418 million in losses over the next year -- losses that finally prompted Warner to sell Atari to former Commodore International executive Jack Tramiel. John Thompson, an erstwhile Atari executive who is now a partner in a California executive search firm, argues that glamorous companies are more likely than most to lose touch with what their customers want. ''They have a particular myopia,'' he says. ''The attitude is, 'But how could we be wrong? Look how successful we are!' Glamour really distracts from reality.'' The same hyperoptimism that blind-sided Atari also kept Avon from realizing, in the late 1970s, that women were going out to work and wouldn't be home when the Avon lady rang. Xerox, perhaps the most complacent of them all, took several years to understand that it faced serious competition. Once sales and profits start to slide, people inside glamorous companies react like hothouse flowers abruptly exposed to the cold. ''In a glamorous company you are crushed by your first defeat,'' says Richard Moran, another former Atari manager, now at a Palo Alto public relations firm. ''The first time you taste adversity, it devastates you.'' As layoffs multiply the number of empty desks, and the Friday beer bashes come to a dispirited halt, fear sets in. As another former employee of a formerly glamorous company puts it, ''You develop a bunker mentality. Nobody wants to take any risks. Everyone is quiet where they used to be ebullient.'' Talented people, accustomed to working for an elite and growing organization, leave as eagerly as they came. Can lost glamour be recovered? Clearly the challenge entails more than just getting profits back on track. In the three years since Atari's fall, Warner Communications has bounced back financially: its movie and record businesses turned in record sales and earnings in 1985, and the stock price has climbed from a 52-week low of $20 last winter to $42 in early April. But memories of the Atari debacle seem to have left Warner chastened and reticent. Says Robert Ladd, a security analyst who follows the company for E.F. Hutton, ''They used to have private film screenings for analysts and throw a lot of splashy parties. That's all over now. They're much more sober and subdued.'' Geoffrey Holmes, a Warner vice president, concurs: ''We haven't regained any pizazz yet.'' Indeed, like many others who witnessed Atari's crash firsthand, Holmes isn't sure that the magic, once gone, can be recovered. SUCH DOUBTS haven't stopped other former glamour companies from trying, particularly those whose original sparkle was never completely extinguished. Between 1978 and 1979, Polaroid's profits plunged by more than two-thirds, from $118 million to $36 million, and the stock dived. Sales and earnings since then have been erratic. But Polaroid still enjoys a patina of glamour among investors. ''It's like Coco Chanel, who still lives even though she's under the ground,'' says Brenda Landry, a Polaroid watcher at Morgan Stanley. ''The stock hasn't been selling on earnings. It's been selling on hope.'' The price/earnings multiple of the stock, a stratospheric 94 in 1972, has dropped, but only to about 47 recently. Hicks Waldron, Avon's chief executive, identifies distinct stages in the attempt to recover a company's glamour. In Phase I, Waldron observes, low morale causes ''a lot of unproductive anger and finger pointing.'' When Waldron arrived at Avon in 1983, the company's earnings and stock price had been in a skid for four years. The managers were all blaming each other. ''The last thing you want to do when you walk in and discover this is wait for it to go away,'' Waldron says. ''You have to put it on the table immediately and get people to talk to each other rather than about each other.'' Once all the accusations have been aired, it's time to bury the hatchet. ''You draw the curtain on the past,'' says Waldron, ''and say, 'Okay, guys, now let's get on with it.' '' Getting on with it, according to Waldron, requires a clear plan -- Phase II in lost-glamour retrieval. Avon, having grown bigger and richer during the 1960s and 1970s by recruiting ever larger numbers of saleswomen and exhorting them to sell harder, never had a strategic plan. Now that the magic was gone, Waldron says, employees were ''thirsting for a specific direction and specific goals. They were bewildered. They knew we were in trouble but they didn't know why.'' Waldron hired Robert Pratt, who had worked for him at Heublein as a planner, to help teach Avon managers to plan strategically. Pratt rented a small conference room at the Plaza Hotel, a few blocks from Avon's New York headquarters, and invited any interested managers to come over for a short presentation on the subject. He expected a couple of dozen. Instead, scores showed up. Pratt ended up giving the speech eight times. A clear plan of action, with specific goals, has also played a major role in Xerox's continuing attempt to put the glamour back into its office systems business. In 1982 the office systems division pulled in revenues of $1 billion but lost what Systems Group President Robert Adams calls ''a considerable amount of money.'' To try to get the glamour back, Adams reshuffled the organization chart so that people's jobs were clearly defined. Hazy notions of the still-embryonic market for office automation equipment had led Adams's predecessors to set overly optimistic goals in both R&D and sales. Adams threw out all the old targets and set new ones. Says he, ''We had to establish the idea that we could win, to get people to feel good about themselves and their work again.'' The boss then applied tireless cheerleading. ''I preached and preached and preached,'' recalls Adams, ''like a miniature Iacocca.'' In the past year Xerox Systems Group has introduced 30 new products and six new ''solutions'' -- industry jargon for collections of products that work together. Adams claims that attitudes in the Systems Group have undergone a sea change. Turnover has all but stopped, he says, and bright go-getters both from elsewhere in Xerox and from outside, people who would have shunned Systems a few years ago, are clamoring to get in. FOR GLAMOROUS COMPANIES, the preferable tack would still seem to be trying to avoid losing the magic in the first place. Jerry Sanders of Advanced Micro Devices has one piece of advice on how to hold on to it: avoid laying people off, no matter how tough things get. In its 1986 fiscal year, which ended in March, AMD's sales dropped by almost half and profits disappeared, as the semiconductor industry went through its worst period ever (see Competition). Although the company's celebrations have been scaled down, morale remains high; AMD has introduced one new chip a week since October. ''People have to see that you are committed to them and willing to absorb losses in a downturn,'' Sanders says. ''And they will stay enthusiastic if you show them you believe an upturn is coming. Layoffs don't communicate that.'' Security analysts are keeping the faith too; the company's stock continues to lead many analysts' recommended lists, and the drop it has sustained, from a peak of $41 a share in 1984 to around $30 recently, is less than those suffered by its principal competitors. The most crucial element of corporate glamour to employees -- the fun -- may also be the most difficult to maintain. In reduced circumstances, an occasional touch of extravagance redolent of the company's salad days may still do some good. David Barram, Apple's chief financial officer, put it best. In the midst of a campaign launched in May 1985 to cut costs, Apple hired the Pointer Sisters rock group, no mean expense, to entertain at a company party. Asked why, Barram answered, ''I'll be uncomfortable if we stop doing things that are a little excessive now and then.'' For the people who have tasted it, glamour dies hard.