One thing to say about the recently announced Nobel Prize in Physics is that it illustrates, as Congress mulls the nation’s R&D budgets, the economic rationale for bigger research investments. After all, the three scientists who shared the award won for work that helped harness light in ways that hastened the development of, yes, the Internet but also the entire digital camera revolution. That’s a pretty big pay-off.
But there’s another more specific and timely takeaway: All three of the laureates this year carried out their groundbreaking work while working at corporate research labs. And that’s actually a problem, because labs like the ones this year’s laureatesworked in don’t really exist now. Congress needs to consider that too as it continues to weigh FY 2010 and 2011 research budgets, climate legislation, and indeed the nation’s economic future.
The problem the country faces is that the conditions in which Charles Kao, Willard Boyle, and George Smith made their breakthroughs are harder to come by today. Kao, for example, made his breakthroughs in fiber optics (the thin glass threads that now carry a vast chunk of the world’s phone and data traffic) while at Standard Telecommunications Laboratories in the U.K. Similarly, Boyle and Smith designed the first digital imaging technology while working at Bell Labs, the legendary research organization that was once part of AT&T.
What was so special in these corporate labs of the 1960s?
In these settings, world-class scientists were allowed to work on deep-going, “basic” research quite freely, albeit in close proximity to commercial product development. The result was uniquely productive. No wonder Energy Secretary Steve Chu--another Nobel laureate--often recalls fond memories of his time at Bell Labs, calling it a special place that promoted high-intensity collaboration and empowered scientists to conduct long-term basic research that could lead to new breakthroughs while also holding them accountable for delivering products to the parent company. Indeed, millions of jobs have resulted from such contributions to science and technology, including such Bell Labs inventions as the transistor, photovoltaic cells, and cell phone technology.
Unfortunately though, this sort of corporate research platform is in trouble today. As noted in a recent Wall Street Journal article, the tyranny of shorter-term horizons means big companies now spend much less on potentially risky long-term basic research. Meanwhile, much of the action in long-term research has shifted to universities that have a mixed record in commercializing breakthroughs for the good of the regional and national economy. The upshot: Corporations’ shorter-term focus combined with universities’ variable record at commercialization serves to limit society’s overall innovation capacity and so its capacity for high-quality job creation.
All of which points to the need for governments--especially the federal one--to fill holes in the nation’s innovation system created by market failures such as big corporations’ retreat from deep research. And on this front, when it comes to energy issues, it is a good thing than the Obama administration and Congress are on the case--to an extent. For example, the Department of Energy’s FY2010 budget proposal introduced the idea of a network of Energy Innovation Hubs--nicknamed “Bell Lab-lettes” by Chu--that would, to an extent, recreate the special realm of the 1960s-era corporate labs by supporting cross-disciplinary R&D to translate transformative energy technologies into commercially-viable product in the energy space. The only problem is that while Chu requested $280 million to fund eight hubs across a range of topics, the concept has had a rough time gaining approval from congressional appropriators, and the final conference report on DOE’s budget provides up to $60 million for only three hubs, two in renewable energy and energy efficiency and one in nuclear energy.
The Waxman-Markey cap-trade bill passed by the House also includes the idea of Energy Innovation Hubs, but added to them a desirable added mission of promoting “regional economic development by cultivating clusters of clean energy technology firms, private research organizations, suppliers, and other complementary groups and businesses.” The newly-introduced Boxer-Kerry climate legislation in the Senate also has some vague placeholder language forecasting hubs that will likely be flushed out in forthcoming committee debates. Such initiatives, to be supported with long-term funding, represent an important start.
Can federal R&D funds be shaped by the same principles and approaches as the corporate research model? It’s no guarantee, but given that so many of the nation’s urgent needs are rooted in advancing innovation it’s not a moment too soon to try.
Intellectual rigor. Honest reporting. Influential analysis. Don't miss another issue of the magazine considered "required reading" by the world's top decision-makers. Subscribe today.
COMMENTS (3)
Maybe we should also look at reshaping corporate incentives? Seems like the short-term culture on Wall Street is responsible for a lot of other problems. I don't have a WSJ subscription, so I can't see what that article suggests, but hopefully someone is looking at that angle as well.
Maybe we should also look at reshaping corporate incentives? Seems like the short-term culture on Wall Street is responsible for a lot of other problems. I don't have a WSJ subscription, so I can't see what that article suggests, but hopefully someone is looking at that angle as well.
No one can argue with the basic premise that short-term focus has changed the way corporations do research, but the Bell Labs example is both trite, and misleading. Bell Labs was funded by an AT&T monopoly on telephone service that, in addition to allowing the innovation at Bell Labs, would, had it not been dissolved, almost certainly slowed or prevented the telecommunications revolution of the last 25 years. Bell could certainly innovate, but they were extremely bad at getting those innovations to market.
A much better case study might be IBM or HP, where corporate labs were less tied to monopolies (although IBM arguably had a near-monopoly through the 60s and 70s on corporate computin ... view full comment
No one can argue with the basic premise that short-term focus has changed the way corporations do research, but the Bell Labs example is both trite, and misleading. Bell Labs was funded by an AT&T monopoly on telephone service that, in addition to allowing the innovation at Bell Labs, would, had it not been dissolved, almost certainly slowed or prevented the telecommunications revolution of the last 25 years. Bell could certainly innovate, but they were extremely bad at getting those innovations to market.
A much better case study might be IBM or HP, where corporate labs were less tied to monopolies (although IBM arguably had a near-monopoly through the 60s and 70s on corporate computing). My sense (and I work for one of the above) is that, although corporate research is more targeted now, and is less likely to lead to Nobel prizes, it is far from gutted in the way Lucent is a shadow of Bell Labs.
Sdemuth, you're kidding, right? Virtually any important breakthrough in information/semiconductor/electronics R&D happened at Bell Labs and ATT was required to give away the patent licenses for inventions not 100% focused on telecom in exchange for their monopoly. They didn't stifle innovation, they created it. They were never really tasked to push the innovations to market as they were often forbidden to profit from the invention. The transistor was a great example. ATT gave away licenses for nothing, even to off-shore companies (Sony comes to mind). Imagine today someone handing out licenses for $0 for something as fundamental as the transistor.
A few minor breakthroughs from Bell ... view full comment
Sdemuth, you're kidding, right? Virtually any important breakthrough in information/semiconductor/electronics R&D happened at Bell Labs and ATT was required to give away the patent licenses for inventions not 100% focused on telecom in exchange for their monopoly. They didn't stifle innovation, they created it. They were never really tasked to push the innovations to market as they were often forbidden to profit from the invention. The transistor was a great example. ATT gave away licenses for nothing, even to off-shore companies (Sony comes to mind). Imagine today someone handing out licenses for $0 for something as fundamental as the transistor.
A few minor breakthroughs from Bell Labs: the transistor, the maser/laser, satellite communications, cell phones, several mathematical algorithms (Reed-Solomon code used in compact discs for one), modern telecom switching theory, etc. etc. There's no lab on earth that advanced our modern society as much as Bell Labs True, other companies profited on Bell research but those companies would never have done that fundamental research to begin with. Do you honestly think that HP ever spent that kind of cash? Bill and Dave spent but never to the extent Bell Labs did, nor was the payoff anywhere as impressive for society.
In semiconductor research, except for university research, there is virtually no fundamental R&D anymore at the corporate level. Companies only work on applied research, in particular mighty Intel. The rest don't even do that. I've worked for two of the three largest semi companies in the US and saw it first hand how they dismantled their R&D operations, as you rightly sited, due to Wall Street pressures to fatten the short-term bottom line.