The Idea Factory: Silicon Valley Tries to Reinvent Research and Development

We promote the narratives that support our own cherished myths. In tech that tends to mean three smart, driven guys in a garage or extra bedroom, toiling away with no regard for time, subsisting on Ramen noodles and beer until that Eureka! moment makes them rich.

The dirty little secret is, however, that many if not most of those amazing innovations were funded by government - frequently military - research grants and were hatched in large corporate research & development facilities, chockablock with PhDs and technicians.

We could live with this idealized fantasy but for the fact that there is a very real problem: governments are being driven out of the R&D funding game by budget conscious austerity freaks - and large corporations wont invest in anything that doesnt guarantee a high enough return to trigger bonus calculations in an hour. Which is to say that the days of Bell Labs-like research for the sake of incremental knowledge are as close to extinct as the brontosaurus.

This has become an issue of late because of a growing concern that the app-centric contemporary innovation culture is not producing advances worthy of their forebears. This free-floating anxiety has reached the point where some of the larger tech companies are now investing in a new generation of idea factories designed not just to come up with astounding new concepts - but to learn from their predecessors mistakes and commercialize the latest and greatest as well.

Whether this effort  will spark a new age of thought and ferment, to say nothing of similar investments in other industries, remains to be seen. But as the earlier experience taught us, the initiative process itself often produced unanticipated outcomes of greater value than those intended. JL

Claire Miller reports in the New York Times:

While Silicon Valley mythology may suggest that modern-day innovation happens in garages, its own foundations were laid, in large part, through government research...and large companies.
Like any supersecret lab that’s supposedly trying to invent the future, Google X looks rather nondescript from the street. Besides the occasional hot pink driverless car parked out front, the facility is an archipelago of unmarked, low-slung, redbrick buildings, more Sunset Park than Silicon Valley. Inside, however, whiteboards offer clues about what exactly the future — at least as Google sees it — might look like. And while some diagrams — including one with parts labeled “snooze” and “set time” — suggest more mundane inventions, others, like one outlining a “space elevator,” seem a bit more ambitious.Silicon Valley, where toddler-aged companies regularly sell for billions, may be the most vibrant sector of the U.S. economy, fueling a boom in markets from housing to high-end toast (how many $4-a-slice artisanal bread bars does a place really need?). But as recent innovations — apps that summon cabs, say, or algorithms that make people click on ads — have been less than world-changing, there is a fear that the idea machine is slowing down. And while Silicon Valley mythology may suggest that modern-day innovation happens in garages and college dorm rooms, its own foundations were laid, in large part, through government research. But during the recession, government funding began to dwindle. The federal government now spends $126 billion a year on R. and D., according to the National Science Foundation. (It’s pocket change compared with the $267 billion that the private sector spends.) Asian economies now account for 34 percent of global spending; America’s share is 30 percent.Perhaps more crucial, the invention of much of the stuff that really created jobs and energized the economy — the Internet, the mouse, smartphones, among countless other ideas — was institutionalized. Old-fashioned innovation factories, like Xerox PARC and Bell Labs, were financed by large companies and operated under the premise that scientists should be given large budgets, a supercomputer or two and plenty of time to make discoveries and work out the kinks of their quixotic creations. Back then, after all, Xerox and AT&T, their parent companies, made so much money that few shareholders cared about the cost. “It’s the unique ingredient of the U.S. business model — not just smart scientists in universities, but a critical mass of very smart scientists working in the neighborhood of commercial businesses,” says Adrian Slywotzky, a partner at Oliver Wyman, the global management consulting firm. “Then that investment was cut way back.” By the ’80s, AT&T was being taken apart by the government; Xerox PARC, like other labs, was diminished by impatient shareholders and, in some cases, the very technology it helped create.

Most of the insurgent tech companies, with their razor focus on advancing the Internet, were too preoccupied to set up their own innovation labs. They didn’t have much of an incentive either. Start-ups became so cheap to create — founders can just rent space in the cloud from Amazon instead of buying servers and buildings to house them — that it became easier and more efficient for big companies to simply buy new ideas rather than coming up with the framework for inventing them. Some of Google’s largest businesses, like Android and Maps, were acquired. “M. and A. is the new R. and D.” became a popular catchphrase.

But in the past few years, the thinking has changed, and tech companies have begun looking to the past for answers. In 2010, Google opened Google X, where it is building driverless cars, Internet-connected glasses, balloons that deliver the Internet and other things straight out of science fiction. Microsoft Research just announced the opening of a skunk-works group called Special Projects. Even Bell Labs announced this month that it is trying to return to its original mission by finding far-out ways to solve real-world problems.

All of their parent companies, however, are determined to learn from the mistakes that Xerox and AT&T made, namely failing to capitalize on their own research. It’s Valley lore, after all, that companies like Apple and Fairchild Semiconductor built their fame and fortune on research done at Xerox and Bell. Instead of focusing on basic science research, “we’re tackling projects that advance science and solve significant problems,” says Regina Dugan, the former director of the Defense Advanced Research Projects Agency (Darpa), who now runs a small group inside Google called Advanced Technology and Projects. “What this means is you’re not compromising this idea of doing really important and interesting science and this sense of it really mattering.” To put a finer point on it, Astro Teller, who oversees Google X, told me: “We are not a research center. We think of ourselves as a moonshot factory, and the reasons for using that phrase is the word ‘moonshot’ reminds us to be audacious, and the word ‘factory’ reminds us we have to industrialize it in the end.”

There is a decidedly 21st-century quality to Google X. Teller dismisses the old “academics on steroids model.” (He would know. One of his grandfathers, Gerard Debreu, won the Nobel Prize in economics, and the other, Edward Teller, was an early physicist on the Manhattan Project.) Instead, Google X does the inverse: It picks products to make, then hires people specifically to build them: artists and philosophers and designers, many of whom don’t even know what they’ll be working on until they join. (Sample job interview question: “Do you like yellow?”) The idea, in other words, is to recreate the institutionalized and research-predicated model of Bell Labs while also trying to get rich off it.

There is worry, however, that if no major company is doing the basic science to invent new things, there will be nothing left to invent in a decade. “A big part of research is just chipping away at a problem,” says Peter Lee, the head of Microsoft Research, which is a more academic-minded R. and D. group. “At some point, maybe it’s a decade, you suddenly pass a tipping point and completely change the world.” Teller agrees but says it’s not his concern: “It’s absolutely the case that many of the projects we’re working on rely on the academic work of the last 30 or 40 years,” he said. “But I don’t think places like Google X should necessarily be responsible for basic research. The word ‘basic’ implies ‘unguided,’ and ‘unguided’ is probably best put in government-funded universities rather than industry.” It may take decades to see who is right.

A new idea, once it finds some guidance, typically travels along a path from germination to manufacturing to commercialization. The United States is good at selling stuff, but so are other countries. When Bell Labs was in its heyday, America was still very much a manufacturing nation; we made cars and steel and everything from televisions to sneakers to processed foods before sending them to consumers worldwide. Now, by and large, we make ideas. Apple’s big invention wasn’t making a better phone; it was coming up with the idea in the first place. Google’s founders thought of a better way to search the web and created a service that no one else could replicate. Now the big Silicon Valley companies find themselves in the same vulnerable position as the incumbents whose business models they once overturned. They know it is only a matter of time before the next big idea puts them out of business — unless they are the ones to come up with it.