R&D labs fail at innovation because they're not designed to innovate. They're designed to invent. And they do a pretty good job at it as well.
Without R&D labs we wouldn't have digital cameras, laser printers, the GUI, the mouse, cell phones, pharmaceutical drugs, etc.
If you want a good book on the subject, grab "Open Innovation" by Chesborough. It does a good job explaining why Xerox PARC wasn't able to monetize many of its inventions even though its managers were highly competent leaders who were following the best practices of the time.
"During its early years, Xerox was not able to capitalize on the market potential of the research and development that was getting done at PARC. The benefit of that work accrued to other companies.
During its early years, Xerox was not able to capitalize on the market potential of the research and development that was getting done at PARC. The benefit of that work accrued to other companies. For example, Apple launched the Macintosh Computer in 1984. This personal computer featured the GUI and a mouse, which for that era, was a revolutionary new innovation.
But Apple had not invented the GUI or the mouse. This brilliant work had been done by the scientists at Xerox PARC. So why was it Apple and not Xerox that was launching a product in 1984 and benefiting from PARC’s great inventions? The answer to that question lies in the fact that R&D and invention are not enough. In order to innovate successfully, companies need frameworks, tools and processes that can help them take their inventions from ideas to commercial success."
"Redmond spends more on R&D than Google and Apple combined. Think about that the next time someone tells you Microsoft doesn’t have a future."
Two words, Xerox PARC.
At Sun there was a weird joke that Sun Labs was where good ideas went to die. It was frustrating.
The point here is that good R&D is a necessary but not sufficient component of innovation, the second is a willingness to productize your work. Strangely the hardest thing about that is not making a product out of it, the hardest thing is making a product you can ship.
Good R&D isn't constrained, which is to say that you don't tell the folks doing the research you are only researching things we can sell for a profit, but that is a constraint on products. What happens is the 'Apple effect' where you have a bunch of researchers who can't make a profitable product (Xerox Star) and then a product guy comes along (Steve Jobs) who sees the essence of the innovation, and can strip away the parts where it goes too far and ships that.
Its really challenging to build something close to your vision and not ship it, it seems like it is impossible to build something that is close to your vision and then ship something only half as close as that. But that is where the success can be. "Fumbling the Future" [1] is a fascinating read for that reason.
One of the problems with corporate R&D in general it seems: what's successful for businesses and what's good for technological advancement often seem not to be in sync. Some of the best stuff has come from notoriously unprofitable groups, like the old Xerox PARC, which benefitted the whole sector, but not its originators.
Part of the fall of the R&D lab is high-profile inventions like the silicon transistor, GUI, and digital camera that the corporation failed to capitalize on. Part of why you do all this research is to find the next big thing, but if you can't see the potential of these inventions and turn them into businesses, what's the point?
That kind of innovation (a) is difficult and (b) requires precisely configured conditions. Unfortunately the lesson that corporations learned from the golden age of these labs was that though they produced amazing things, they didn't provide an adequate return on the investment. Now that everybody has learned that lesson, there are not many such labs left and the ones that are thriving operate much like either product incubators (Microsoft) or agencies (PARC).
Another problem is that there are not many properly educated people to establish and run labs like this thanks to our education system falling apart. But you won't hear anybody talking about that. Things will just get worse and worse.
> I think Xerox has been trying to unload PARC for a while
I wonder why some corporations don't see the value of R&D, or even "incidental" R&D, when you develop something revolutionary while you work on something profitable.
I would love to see the glory days of pure research groups like PARC and Bell Labs return. But, so many business folks are aware of how Xerox was embarrassed by PARC that it's unlikely that approach will be tried again anytime soon. When I speak of embarrassment here, it's not about the incredible innovation that came out of PARC, but about Xerox management's handling of that innovation.
Billions and billions (trillions?) of dollars in value was created (e.g., Adobe, 3Com, SGI?NVIDIA, Mac / Windows, laser printers, ethernet, etc.) based on their research, but ~0% of that value went to Xerox. From a business point of view, it was a disaster. And business folks are primarily the ones deciding what's funded at this level. If I'm an executive who's not sure if I, or my organization, will be able to tell the great ideas from the duds, why spend money that might expose that?
R&D in pharma/biotech can be like this. But there are fewer and fewer free-wheeling R&D groups in industry these days, probably because people saw Xerox PARC and thought it was a waste of money (a single invention at PARC paid for all of PARC).
Yes they have done great work and discovered some really cool stuff, but they have not been able to commercialize it. That's what a CEO/management chain should ultimately be measured by, not whether they've built a great Xerox style research PARC.
This seems increasingly true in recent years. What's different now that we don't see these companies yielding R&D efforts like Bell Labs, Xerox Parc, etc.?
This is a good article but I'm not sure it completely nails it.
Firstly, it's not clear the industrial R&D lab has actually fallen. The article starts to engage with this at the end but doesn't really do so properly. It's easy to find examples of firms doing large scale expensive R&D:
- Many firms making big investments in AI
- Self driving cars
- SpaceX reusable rockets, plus all the other Musk firms
- Advanced database technologies (e.g. at Microsoft, Google, Amazon)
- Advanced compiler R&D (Oracle/GraalVM)
- The huge sums thrown around in pharma R&D
- Advanced graphics R&D is driven primarily by video game firms
- Intel/AMD/ARM/etc in CPU tech
- Tons of R&D in oil and gas
and those are just examples we're most familiar with. Are these firms running "labs"? No, not in the sense of Bell Labs. That's because this model is not the most efficient model available, and has thus mostly been phased out. Corporate R&D is much better integrated with actual product development than the standalone lab model captures. In the most successful cases we don't even really perceive it as an R&D lab because the entire company is doing R&D constantly, in a completely integrated manner.
Google is perhaps the clearest case of a company that has completely integrated R&D with its operations. There is an org called Google Research but IIRC it existed mostly for a trophy hire and isn't especially important: the bulk of actual research is/was done by product teams as an integrated part of their development process. There is no lab, yet at the same time, the lab is everywhere.
The second aspect is that it doesn't discuss the role of personality or personal visions of CEOs at all. Yet this is often critical to the decision to do R&D.
Why does Google research AI? It's not because it's an obvious, slam dunk move. Google has been doing ML research since the very start of the firm, but other search engine firms didn't. Why did Google research Google Glass? Or self driving cars? Google researches these things because Larry and Sergey thought it was cool. Page has even claimed in the past Google was founded specifically to do AI research (which isn't really right, but whatever).
What about SpaceX? Tesla? The Boring Company? Neuralink? These firms exist and do R&D because Elon Musk is a futurist. He doesn't do R&D for economic reasons, let alone for regulatory reasons. He does it because he wants to invent the future.
But this type of personality is rare. Our society is not kind to futurists. It doesn't really value them. They're seen as strange or dangerous; the story of inventing new technologies is usually a story of being attacked on all sides, by journalists or politicians or regulators or all of them at once. That's why most companies set up "innovation teams" - the exact opposite of the approach taken by the most innovative companies. They're little silos where people are taken and put in a corner, then told "go innovate". The non-technical CEO has no interest in the innovation team and likely never talks to them directly, let alone gives them direction or ideas. The team members know this and usually just mimic whatever trends they see around them (IoT, blockchain, AI, cloud, etc). Their projects are usually doomed from the start.
In the end, for research to be valued people with the power to deploy it must be excited by technology, not intimidated by it. And that isn't most corporate or government leaders today.
The problem isn't that they're not inventing stuff; that R&D money isn't just spent on paperclips, and a lot of interesting stuff comes out as a result. The problem is that the inventions get squished, not released.
Apple is the top spender on R&D, as a percentage of its revenue. Second is Google. 3rd Samsung, 4th Amazon, 5th 3M. [1]
Xerox had about 10 years of glorious moon-shot type research. IBM is notoriously fickle about spending on R&D.
The only exception is Bell Labs, which succeeded due to a combination of a number of factors [2]. There wasn't any grand vision underlying it, just the interest to grab the best and the brightest, during a time when there was far less silo-ing and over-specialization than today.
I think this is the more common failure mode - a lot of innovative work happens at big companies, but those innovations never make it to market because commercializing a product requires a large investment in, well, finding customers, and the innovators at big companies are not empowered to do this.
There is still a ton of innovative research work coming out of Microsoft, Intel, and even IBM, but typically instead of being commercialized and profited from, it languishes until the company shuts down the research lab and the scientists involved get jobs elsewhere.
So do we need massive, government funded research labs to create innovation? Or is it the case that “The most interesting technical work is being done by individuals and small groups”? Those seem like contradictory statements to me.
In the past, large companies had research/innovation departments, e.g. IBM Research, Parc Xerox, Bell Labs. In recent times large companies only innovate in terms of coming up with ever faster ways of making more money (financialization) - cutting costs and research departments were the earliest casualties.
These days, real innovation happens mostly within startups.
Without R&D labs we wouldn't have digital cameras, laser printers, the GUI, the mouse, cell phones, pharmaceutical drugs, etc.
If you want a good book on the subject, grab "Open Innovation" by Chesborough. It does a good job explaining why Xerox PARC wasn't able to monetize many of its inventions even though its managers were highly competent leaders who were following the best practices of the time.
reply