The Future Of Research

The Future Of Research

There is more than one reason why I feel the need for a page on the future of research

  1. I have spent a large part of my professional life – so far more than 45 years if I include the years of my Ph. D. in Japan – working in a research environment, and in a period of time where the nature of research has changed profoundly;
  2. There is a strict proximity between research and standardisation à la MPEG, actually the two are time-sequential with a long overlap and a strong interaction at the time research results are fed into the MPEG process to be transformed into standards and then exploitation;
  3. Because too many CEOs have installed too many brainless bureaucrats at the helms of research establishments, industrial research has almost disappeared leaving the task of carrying out industrial research only to companies with deep pockets;
  4. I have got some ideas about what can be done to preserve this fundamental function underpinning the progress of mankind, having myself managed the process of conversion of hundreds of research results into standard components of some industrial interest in the last quarter of a century.

It is an obvious observation that the model established by Thomas Edison and perfected by the Bell Labs does not seem to provide value for money today. In this model, research was an undertaking designed to produce innovation leading to new products and services. It worked well with T. Edison because he was himself the inventor and the rest of the organisation was just at his service. In the Bell Labs case, outstanding inventions were delivered for exploitation by the Bell System that included ATT and Western Electric, the Bell System’s manufacturing arm. The model used to work well because the task was to find technical solutions to problems that corresponded to new technologies enabling new products, e.g. electronic tube and loudspeaker; technologies to improve products, e.g. transistor replacing the bulky electronic tubes and the generic UNIX OS replacing the plethora of different OSs; and solutions to to well-identified problems and user needs, e.g. adding sound in motion pictures or mobile telephony.

The Bell Labs model was copied by other telcos in Europe and Japan, however, the research establishments of the other telcos did not, in general, produce anything comparable to the Bell Labs’ string of inventions. But these establishments did provide the technical means to plan and design the evolution of those operators’ networks from analogue to digital – again a well-identified technical problem – with the added advantage that the Bell Labs was the clear leader and all the others could be the followers, whether they were ready to declare it or not. The process ran smoothly because funding of research happened as a sort of internal tax, e.g. 1% of the company turnover.

Public broadcasters in Europe and Japan adopted a similar model. The budgets assigned to broadcasting research were in general much lower than those assigned to telco research, but the field to be covered was also substantially narrower. Besides, the headquarters of broadcasting companies tended to be more conservative in using innovation because every change had to be assessed and endorsed by relevant political circles. Only a rather small number of selected areas were attempted: colour, teletext, MAC, HDTV, MUSE, HD-MAC, digital modulation, ISDB, not all of which were successful and not so much because the technology was not good, but because of the litigious nature of that industry at the international level.

Research played a major role at IBM, the model company and the undisputed market leader in the first decades of the computer age by providing the means to sustain and extend the leadership it had acquired. But it was again the case of research being asked to provide solutions improving processes in response to precise market needs, because the success rate of more speculative innovations is not equally exciting. It was hard for other IT companies like DEC to apply the IBM model  because of the less stable flow of revenues that smaller players could rely on. 

At the beginning, the role that IBM played in the IT world was played by RCA and Philips in the CE world, even though the two never achieved IBM’s imposing global market leadership. Also in this case, research was asked to provide exploitable results in a sustained fashion to stimulate consumers’ interest in new gadgets. In the early days this was not so difficult if one thinks that consumers lived in houses that basically lacked the sort of electrical and electronic appliances that populate our homes today. With the decisions, first by Japan, by Korea and now by China, to become major players in the CE market, the Philips model was thoroughly implemented by Japanese and later by Korean CE and Chinese companies.

The situation today has radically changed. Setting aside the undisputed success in providing the fixed and mobile telephone service to ever wider swathes of population, the telco industry has basically missed all other major targets: ISDN, OSI, ATM, videotelephony and broadband services. This does not mean that no innovation was introduced in the telco business, but if anything, this happened largely in the infrastructure. Operation and management of the huge telecommunication system has improved over the decades, but what major innovation generated by a telco’s research establishment has become a traceable advantage practically exploitable by the telcos? Even such “internal” industry projects like the Telecommunication Information Networking Architecture (TINA) went nowhere. 

The disconsolate conclusion is that telcos understand what their networks need, they do not understand what their customers want. The result is that, at the service level, they simply go after the perceived whims of their subscribers, biased by such deep-rooted and naïve misconceptions as visual telephony for the masses. At the infrastructure level they keep on squeezing the system by optimising its internal workings. Unfortunately, there are physical limits to what you can squeeze out of a system: sooner or later if you want to increase the output you have to increase the input, i.e. provide meaningful services that people are willing to pay for.

The success rate of broadcasters’ research establishments is possibly even lower. The record of successful exploitation of CE research, setting aside very few but significant cases, is also low. IBM’s research is still important because research generates IP that is not just acquired by IBM’s business units but is also licensed outside. Research carried out by other major players in the IT space is more a means to find out what to do next when the current franchise will run out than a support to sustain the current business.

It can be understood that CEOs feel frustrated by the inability of their companies’ research to provide results that give value for money, but it is hard to understand their actions. If a research establishment does not provide the exploitable results they expect, the solution is not to appoint an accountant as the head of the establishment with the mandate to cut budgets, but to devise a process by means of which research provides benefits to the company. I know that the recipe is obvious and the implementation is not equally so, but cutting travel budgets is meaningless. It would be a show of courage, if not of capability to put excellent brains to good use, to close research altogether. This is being done by some, but the jury on the impact on the long-term sustainability of the company is still out.

Who else should be appointed then? The obvious remark is that it should be somebody who knows both what products the research establishment can offer and also what products its customers need. Unfortunately this is not the usual customer-supplier relationship, because I still have to see a thriving private research establishment that is able to live on the revenues of research results sold on the open market. The solution is, as for all matters that involve relationships between human beings, to create a virtuous circle whereby market-aware innovation is rewarded because it is adopted by a business unit, adoption of innovation is rewarded because it brings measurable benefits in the operation, efficiency or profitability of the business unit, and innovation is generated because there are people in the business units who are smart enough to fund the development of innovation because they know their smart choices will be rewarded.

I am afraid nothing of what I advocate corresponds to my experience. So CEO-appointed accountants-turned-heads-of-research keep on issuing orders to cut travel budgets by another 5%, thinking that with this, research will finally be channeled to business units.

In past centuries bloodletting was the prescription for many illnesses. In those primitive times not much was known about the human body and patients were often in the hands of barbers for whom bloodletting was the principal cure, as it was based on their enabling technology – the razor. Today a doctor prescribing bloodletting would be regarded with high suspicion because we know we can do better than that. In the same way it is high time that research management in companies stop using cost cutting in research as a means to hide the vacuum in their brains.

If you do not know what to do with research don’t cut travel expenses by another 5%. Take responsibility and close down the establishment. Then go to the Board of Directors to explain and hope that you do not find me as a Board member.

Of course a different story is told for those new but already large companies that have sprung to life in the last 15 or 20 years. It is very nice to be able to count on huge revenue flows and mix research with new business models. They call it creative destruction and I may return to this topic in the near future.