It’s hip2b2

I read this interesting piece from Ars Technica (via Slashdot) on the History of Corporate R&D in the United States. It raises a few points about how people see corporate R&D today. It basically answers a previous article in Business Week describing the sorry state of research in the US telecommunications industry. This topic is pretty close to my heart as I myself have strong feelings of what academic/corporate research and development should be.

The BusinessWorld article summarizes research and development in US telecommunications sector.

… over the past decade the big telcos have mostly looked outside for technological innovation. “We develop services, and we figure out how to use and deploy technology that many others are developing,” says Verizon’s [Thomas J.] Tauke. Edmond J. Thomas, who ran the labs at Verizon when it was Bell Atlantic, puts it another way. “They do very little fundamental research and very little advanced development,” he says. “Their view of the world is: ‘We can buy it elsewhere.”‘

If this is general model for corporate R&D then we might as well consider it dead. At least, the research part. This “buy it elsewhere” attitude is in contrast with the new R&D machines promoted by the likes of Google, Microsoft and Yahoo. The ArsTechnica article describes these and highlights possible pitsfalls of today’s market-driven R&D machine which is epitomized by Google’s 20% percent research time which can be summarized into two (2) major statements below:

• Possibly narrowly focused. This is a major problem of being results oriented and time-table sensitive. Research clusters will then gravitate towards research what is sexy and popular at that time. Even if it is not explicitly instructed. Since, most research today is about Web 2.0 then a lot of research will gravitate towards that.
• Short-term corporate focus on maximizing shareholder value by inflating the stock price at all costs. Time sensitivity forces researches to attempt to find short term wins instead of long term gains. Research has to move quickly from concept to working prototype and must undergo scrutinization almost immediately. The Wow or Coolness Factor is valued over technical merit. This forces researchers to look at the shortest path to success (which is not always the path with the best returns but the shortest path).

The “buy it elsewhere” can be seen as the fastest way to get a necessary solution at the least possible cost. This also gives corporates a large array of choices when selecting technology from numerous potential vendors. However, as the ArsTechnica article mentions, there is no intellectual capital investment being made. Will corporates leave innovation to other companies? These small companies tend limited resources for long term research. In the end, all research will be short sighted. Google-style R&D, on the other hand, is still much better than no R&D at all. However, it is still generally market driven. Market driven research has its benefits: timeliness, low cost and relevance. However, it tends to be blinded by the fads of the day. These companies will be at the mercy of the “current trends” in R&D.

These statements also apply to companies in other countries like the Philippines. Giant corporates like PLDT, Globe and Smart treat R&D in a similar fashion. Generally, these companies do contribute to R&D. They even give grants to research organizations and universities. However, the way they give their grants still reflects an overall market-driven sentimentality. Expected returns are not forecasted in the far but near future. I previously blogged about this in “Industry-Academe Partnership“.

There is this growing movement towards the “let others do R&D” mentality that will drain the current generation’s intellectual capital and potentially starve future generations. However, companies like Google, Yahoo and Microsoft are coming up with R&D programs that aim to ensure continued innovation. However, these are still primarily market-driven. But, they serve as a good way to ensure research is done at all.

The Business World article has a good solution to this current dilemma.

There’s another strategy the telcos could consider … [Homezone is a] proof that a simple new idea can grow inside a giant telco. It’s a hint of what AT&T might achieve if it spent on research and development even half of what a company like Intel does. But it may not be a hint the telcos are ready to take.

Finding a way to grow small ideas in a big company. In the The Innovator’s Dilemma, there are roughly two (2) main types of innovation: constructive and disruptive. Constructive innovation is made by dedicated resources working on a particular research agenda whose benefits are incremental but close to certain. Disruptive innovation, on the other hand, is chaotic with little chances of success. But, when it does play out it takes the market by storm. Large corporations tend to focus on constructive innovation (incrementally improving their products). However, towards the end of the book, Christensen suggests that large corporations can still do disruptive innovation by creating a small organization that will focus on alternative technologies (and way of thinking) with a very broad mandate for long term research. This can be done by either creating a small semi-autonomous group within the company, outsourcing to research and educational institutions, or spinning off a dedicated research group. Innovation done one small idea at a time.

This entry was posted on Wednesday, July 26th, 2006 at 2:20 am and is filed under Technology, Musings and Speculations. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.