Tuesday, December 31, 2013

Innovation, Tech, Labs

A Functioning Society, Peter Drucker

[It used to be this way]: To any one particular technology pertains one and only one industry, and conversely, to any one particular industry pertains one and only one technology. This means that all technology needed to make steel is peculiar to the steel industry; and conversely, that whatever technology is being used to make steel comes out of the steel industry itself. The same applies to the paper industry, to agriculture or to banking and commerce.

On this assumption were founded the industrial research labs, beginning with Siemens’s, started in Germany in 1869, and ending with IBM’s, the last of the great traditional labs, founded in America in 1952. Each of them concentrated on the technology needed for a single industry, and each assumed that its discoveries would be applied in that industry.

[However things have changed. These days,] there are few unique technologies any more. Increasingly, the knowledge needed in a given industry comes out of some totally different technology with which, very often, the people in the industry are unfamiliar.

No one in the telephone industry knew anything about fiberglass cables.

They were developed by a glass company, Corning. American finance has been transformed by the credit card and commercial paper, neither of which came out of traditional banking. More than half the important inventions developed since the Second World War by the most productive of the great research labs, the Bell Laboratory, have been applied mainly outside the telephone industry.

The Bell Lab ’s most significant invention of the past fifty years was the transistor, which created the modern electronics industry.  But the telephone company saw so little use for this revolutionary new device that it practically gave it away to anybody who asked for it which is what put Sony, and with it the Japanese, into the consumer-electronics business.

Research directors, as well as high-tech industrialists, now tend to believe that the company-owned research lab, that proud nineteenth-century invention, has become obsolete. This explains why, increasingly, development and growth of a business is taking place not inside the corporation itself but through partnerships, joint ventures, alliances, minority participation and know-how agreements with institutions in different industries and with a different technology. Somthing that only fifty years ago would have been unthinkable is becoming common: alliances between institutions of a totally different character, say a profit making company and a university department, or a city or state government and a business that contracts for a specific service such as cleaning the streets or running prisons.

Practically no product or service any longer has either a single specific end-use or application, or its own market. Commercial paper competes with the banks’ commercial loans. Cardboard, plastic, and aluminum compete with glass for the bottle market. Glass is replacing copper in cables. Steel is competing with wood and plastic in providing the studs around which the American one-family home is constructed. The deferred annuity is pushing aside traditional life insurance—but, in turn, insurance companies rather than financial-service institutions are becoming the managers of commercial risks.  A “glass company” may therefore have to redefine itself by what it is good at doing rather than by the material in which it has specialized in the past.


Yes a lot of the big software companies, such as Google, Facebook, Microsoft have "labs", however these companies themselves are a concoction of diverse products / interests, hence the output of the lab can be utilized in multitude of ways, and research can proceed in multiple directions. A new finding in MS lab can come in handy for the AI of an X-box game, or its handheld Os.

Also, increasingly big and small software companies are publicizing the results of their research, open sourcing their software to receive input from outside.