Does risky R&D deliver the best results?

Corporate IT research is undergoing a crucial change – in its concepts and methods.

From a “methods” standpoint, we discussed in an earlier article how the notion of research as an activity confined within the four walls of a company’s R&D department is quickly being abandoned.

It’s being replaced by what some call “open innovation.”

In this approach the research group includes external talent – the ideas, skills and work of outside groups (students at universities, start-ups, independent researchers and so on).

Tech behemoths – such as Intel and HP – are actively pursuing such a strategy.

Santa Clara, Calif.-based chip manufacturer Intel Corp. has very successfully set up “lablets” – groups of researchers the company sponsors at academic institutions to augment its internal R&D work.

And open innovation is also a core practice at Palo Alto, Calif.-based HP Corp. that expends around $3.8 billion on R&D each year.

“The idea behind open innovation,” says HP labs director Prith Banerjee, “is that by working with others…you can tap into their ideas.” 

The focus of this piece is the more controversial trend witnessed today: the phenomenon of many tech companies seeking swifter – and more measurable – returns on their R&D investments.

This often places the research director in a quandary.

On the one hand there’s pressure from the business side to deliver timely and tangible results.

The financial community is “concerned that enthusiasm for the technology has left the research director insufficiently sensitive to some of the implications of discounted cash flow and ROI,”
note analysts Graham Mitchell and William Hamilton in a paper titled “Managing R&D as a Strategic Option.”

But the use of such criteria to measure the value of projects is also troubling to the research community.

“This is…because of a widespread sense that most investment analysis discriminates unreasonably against the longer term and more risky programs, many of which ultimately bring the largest benefits to the corporation,” say Mitchell and Hamilton.

They note that research directors, while appreciating the importance of longer term factors to their companies’ growth and survival, are being forced to “argue their case with rules of evidence that often de-emphasize these factors.”

Banerjee acknowledges this problem.

“I am [aware] of the challenges facing corporate research in general – the struggle balancing long-term and short-term research,” he says.

But the new HP Labs director also emphasizes his resolve to strike the balance between innovation and results.

“The one way we’ll decide whether to fund projects is to determine if they can have a big impact,” he says. “I want HP Labs to work on big-time, risky projects.”

Are there any such projects in the works at HP labs? What kinds of big-time benefits do they promise?

Banerjee says before giving a project the green light he would ensure there isn’t just a scientific reason – but also a market reason why the work should proceed.

In the past few years the focus on “marketable” benefits has been apparent in many projects emerging from HP Labs.

For instance, Stan Williams and Greg Snider researchers at the Palo Alto Labs facility have completed research that could potentially make field-programmable gate arrays (FPGAs) up to eight times denser, but using less energy for computation than the current breed of FPGAs.

In the area of mobility, HP researchers are working to more tightly link handhelds with backend data systems.

Other work at the labs is focused on reducing data centre power consumption. Researchers are experimenting with using sensors built into prototype servers to reduce the cost and complexity of cooling large hardware farms.

HP is hoping its research in the field of parallel computing will help clear some of today’s software programming obstacles, said Banerjee.

“We’re imagining a world where you plug in a computer and all the applications work automatically and users don’t have to worry about patches and updates.” 

Researchers at the HP labs in Bangalore, India figured out a way to encode printing information into TV signals and transmit those to a printer without using the Internet, or a PC.

Prashant Sarin, senior business associate at the lab envisions government or private businesses using the technology to broadcast information to broad swaths of people who may not have access to the Web or a computer.

While these and other research projects emerging from the labs have demonstrable market value – to my mind they aren’t innovative in the sense that author and venture capitalist Guy Kawasaki uses the term.

Innovation, Kawasaki has said, is not about taking current processes, models and practices, and trying to improve upon them. It’s about jumping to the next curve.

“Innovators,” Kawasaki said, “are not content with doing things 15 or 20 per cent better. They want to do things 10 or 15 times better.” And that’s accomplished by a leap to the next curve.

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