The rise and fall of corporate research and development

March 8th, 2007

The Economist has a special report, The rise and fall of corporate R&D — Out of the dusty labs, (free to non-subscribers), that discusses the current state of industrial R&D with an emphasis on IT firms. The basic message of the article is that the dominant model of the past 50+ years (articulated Science The Endless Frontier) which separated relatively pure research from development is dead.

“Modern technology firms are much less vertically integrated. They use networks of outsourced suppliers and assemblers, which has led to the splintering of research divisions. Even though big American firms still spend billions of dollars on R&D, none has any intention of filling the shoes left empty by Bell Labs or Xerox PARC. The research and development that Bush tore asunder are once again becoming entwined. Old-fashioned R&D is losing its ampersand.
    ”The lesson learnt is that you don’t isolate researchers,” says Eric Schmidt, the boss of Google, who started his career as a computer scientist at Bell Labs and later at Xerox PARC. The “smart people on the hill” method no longer works, he adds. Instead, researchers have become intellectual mercenaries for product teams: they are there to solve immediate needs.
  This view is shared by other industry veterans. “The corporate research labs of the old days are really not going to be the basis of what is new,” says John Seely Brown, the director of Xerox PARC for over a decade until 2000. “This is getting to be a new kind of game.”

It’s a good article worth reading by all of us who are in, or expect to be in, the R&D business.