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August 21, 2006
Going for the short term hit
Business executives and academics have been calling for an increase in government funded R&D as a key part of our competitiveness strategy (see "Rising Above the Gathering Storm" and the National Innovation Initiative - as I discussed earlier this year). Part of their reason has been the shift over the past 50 years in corporate spending from basic research to strictly applied research. One of the effects of deregulation has been to focus companies on the bottom line - and long term research does not pay off quickly to the bottom line. The shift is perfectly illustrated in today's Wall Street Journal story - WSJ.com - With Its Future Now Uncertain, Bell Labs Turns to Commerce:
Lucent Technologies Inc.'s Bell Labs, the birthplace of the transistor and the laser, has been through a decade of turmoil during which it was reduced to a third of its size. Now, some of its scientists are warily embracing a former submarine officer and entrepreneur as perhaps the laboratory's best hope of maintaining its relevance.
Jeong Kim took over last year with a direct plan for saving the storied laboratory: Make it profitable. Among his first moves, he set more of its scientific stars to work on breakthrough technologies that could turn quickly into businesses -- the opposite of the pure research many live for.
Each of these projects is expected to make back six times what it spends on research. Those with the biggest financial potential get the most funding. Researchers often condense their work into eight-minute PowerPoint presentations. Mr. Kim also seeks more government research grants and is aiming to speed the transformation of technology into products by seeking corporate partners and venture capital.
. . .
An example of the new approach involves metal detectors made of silicon the width of three human hairs -- technology for which Lucent long couldn't find a use. Under the new regime, Bell Labs is working with a small company to develop it into a device that could help the military detect snipers. Called a magnetometer, the device also could be used by doctors to measure blood flow through subtle changes in the heart's magnetic field.
Clearly a focus on product innovation should be a priority for companies like Lucent. But changing that focus requires someone else to fill in the gap in basic research. Hence the push for greater government investment in basic science. Hence also companies' expanded search for research results from whatever source. As other nations improve their scientific capabilities, companies will logically look to tap into those resources.
A key to US competitiveness is whether that basic scientific activity needs to be physically nearby the applied work that Bell Labs is now doing. Or does formal scientific knowledge easily transfer in this wired and networked economy. It has been a standard answer that world class basic research facilities are needed locally to produce the applied spin-offs. But if scientific knowledge is easily transferred, then a more important goal is having a local workforce with the education and ability to absorb and utilize that scientific knowledge rather than a goal of having the top creators of basic research.
While basic research will always be important, it becomes a matter of finding the right allocation of resources. Finding that balance will require us taking a hard look at how the innovation and technology creation process really works. As companies move further and further away from basic research, we need to clearly understand what it takes to keep that pipeline of scientific knowledge flowing. We can no longer simply assume it works the way it worked in the past – especially clinging to the linear factory-type flow of knowledge from new science to new product. We need a new understanding. But our understanding of innovation lags the changes occurring in the economy.
We need to do better.
Posted by Ken Jarboe at August 21, 2006 3:17 PM
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