
The rise and fall of the industrial R&D lab - npalli
https://worksinprogress.co/issue/the-rise-and-fall-of-the-american-rd-lab/
======
amgreg
Bob Metcalfe, self professed “conservative hippie,” inventor of the Ethernet,
founder of 3Com, of Xerox Parc fame, has this to offer:

> One of the few things that government should do is finance research, because
> — I have learned from many years — the only companies that can afford to do
> research are monopolies. Real companies cannot afford to do research other
> than monopolies. And there are some famous ones. The telephone monopoly —
> Bell Labs. The computer monopoly — Watson Labs. The copier monopoly — Xerox
> Parc. And on it goes. In retrospect the monopolies aren't worth it for the
> research they do. It's nauseating how much we hear about how cool Bell Labs
> was, but other than the transistor and Unix and the princess telephone, what
> did we get for all that money? And then for years AT&T as a monopoly sat on
> innovation — and IBM after that, and Xerox after that — it's just not worth
> it, so let's kill those monopolies. And if we need research, have it done at
> research universities. And the other spin I would offer there: as a
> practitioner of technological innovation, I worry about technology transfer
> — how do you get technology transferred from the lab into the marketplace.
> And the best way to do that is with people; and it is the business of
> universities to graduate people. So let's do our research there, and I think
> the ARPANet is a great example where government financed the research.

Source:
[https://youtu.be/zKz07DdaKzw?t=3772](https://youtu.be/zKz07DdaKzw?t=3772)

~~~
criddell
I just finished reading Mitchell Waldrop's book _The Dream Machines_ which is
largely about J.C.R. Licklider and it has a lot of stories about the things
Metcalfe is talking about during the 60's and 70's and into the 80's. It's a
long, detailed book and I recommend it.

After finishing the book it made me feel like progress has slowed
tremendously. Look at the changes from 1960 to 1970 or from 1970 to 1980 and
compare that to 2010 to 2020. The last decade produced lots of incremental
improvements but where are the giant technological shifts?

I was born in 1970 and if I look back over my life, the giant change was going
from a non-networked world to a networked world. I think it's similar to how
my grand parents could remember the world before and after commercial flight
or how my great-grandmother remembered the arrival of automobiles.

I wonder what it is my kids will point to 40 years from now. A colony on the
moon or Mars maybe?

~~~
one_electron
genuine question (asking because i have a biased perspective): why dont you
consider advances in ai to be a major shift? in the past decade, there has
been a rapid increase in capabilities in computer vision, language
understanding, robotics, etc.

~~~
criddell
AI researchers have been over-promising and under-delivering for 70 years now.

It seems like AI has settled into making discriminators. Maybe intelligence
really is just pattern matching and grouping? I don't think it is, but I could
be wrong.

~~~
petra
It doesn't seem that AI and robotics over-promise. Sure, we're not at AGI, but
if you look at the potential(i.e. startups) to replace jobs, there are tons of
that.

~~~
criddell
The same was said of expert systems in the 1980’s. Yes, there’s potential, but
that potential hasn’t been realized yet. At least not to the point where
people compare the impact of AI to the impact of semi-conductors and
integrated circuits.

~~~
petra
It will take time. Like every big innovation.

The question is: will the potential be fullfiled.

Maybe, given the many startups doing real work with machine learning(besides
the many that just hype), it's reasonable to guess that that the potential
Will be fullfiled.

------
Ozzie_osman
> No one is quite sure why the lab model failed. It’s obvious that a scenario
> where Xerox is paying scientists to do research that ultimately mostly
> benefits other firms, potentially even competitors that help to put it out
> of business, could never survive.

I don't agree with this. The lab companies had gotten really good at
attracting some of the smartest people (in academia and elsewhere), designing
models to motivate them to invent while giving them tremendous latitude, and
then profiting from their discoveries.

See people like Wallace Carothers[1], a chemist that DuPont hired out of
Harvard and let him run a lab. He ended up inventing nylon which was obviously
tremendously profitable for DuPont. So the model did work.

I don't have data for this, but I think what actually happened was just a lot
more short-termism as investors, companies, and executives focused more and
more on short-term profits, so large recurring R&D expenses that might require
longer horizons to recoup investments made less sense.

[1]
[https://en.wikipedia.org/wiki/Wallace_Carothers#Move_to_DuPo...](https://en.wikipedia.org/wiki/Wallace_Carothers#Move_to_DuPont)

------
friseurtermin
This reads a lot like this blog post [0] that was shared here a while ago, the
discussion is quite interesting as well [1]. Although I appreciate the
additional background and citations.

[0] [https://blog.dshr.org/2020/05/the-death-of-corporate-
researc...](https://blog.dshr.org/2020/05/the-death-of-corporate-research-
labs.html)

[1]
[https://news.ycombinator.com/item?id=24200764](https://news.ycombinator.com/item?id=24200764)

~~~
fuzzfactor
Science takes time.

Time is money on different terms for different people.

So science costs money.

How much science would you like?

>the tension between managing scientists with their own pure research goals in
such a way that they produce something commercially viable, while still
leaving them enough latitude to make important leaps, seems huge. But these
problems were always there in the model. What is harder to identify is an
exogenous shock or set of shocks that changed the situation that existed from
the 1930s until somewhere between the 1960s and the 1980s.

Not that hard.

During this period the US dollar had been tied to gold at $35 per ounce while
Americans and their firms were prohibited from owning or speculating in gold.

The strength and stability of the dollar gave confidence in what it would
purchase in the future. This is very important if long-term projects are to be
considered. Especially if the projects themselves have uncertain outcomes.
Which is actually supposed to be intentional for research.

It was pretty good knowing that 35 dollar bills in your wallet would get you
an ounce worth of gold, even if you were only allowed to own a limited amount
of it, and jewelry form.

Then one day Nixon comes along in the early 1970's and destroys the currency
by fiat.

No longer backed by gold, the dollar floats. Like the Titanic.

Gold can't float it was the backing, realistically since before biblical
times.

As rapidly as possible as many Americans as possible and crucially other
target dollar holders were only worth about half of what they were a year or
two earlier. From the top corporations to the everyday citizen, it was
devastating.

With wage & price freezes, middle class was bumped right down to lower-middle
with downward pressure going forward.

The rich were still rich, but only half as rich. So their losses were actually
very significant and added more pain to the economy as a whole. Even in some
of the biggest corporations the cutbacks were huge. No way they were going to
be able to afford research again until they can get as much of it for $35 as
they did when it was really working.

There was no recovery from the Nixon Recession.

The malaise continued and by the 1980's even the most well-insulated from the
initial shock had adjusted to the _new normal_.

Never again were Americans going to be able to fit enough dollar bills in one
wallet to purchase an ounce of gold, not even close.

Never again would the dollar be trustworthy enough to accomplish as legendary
a form of scientific progress.

It would have to be done in some other way on some other terms for labs that
take longer to build than the dollar can be expected to remain stable, with no
risk of further losing value.

~~~
wbl
Inflation doesn't change the value of an investment. It increases the price
that the new products fetch as well. You need to look at rates when trying to
explain this, and rates and inflation have been low for decades without a
return to major industrial R&D.

~~~
fuzzfactor
I remember watching as it died a painful death not without dismemberment, and
as we have seen there have been no rates capable of bringing it back to life
since.

Inflation occurred after people had been made too poor to even continue some
projects, much less start new ones.

Everyone who really made the big science possible never got rich enough to do
it again.

Even NASA.

------
RcouF1uZ4gsC
I think the big driver for a lot of these research lab consists of two parts.
First, the company having a lot of money (many times from having a monopoly)
and a desire to keep a bunch of smart people from going to any potential
competitors. They really did t need the smart people to make any money, they
just needed to keep them locked away from competitors. The best way they could
do that was to have these research labs that provided decent money and a lot
of support and resources to pursue their intellectual curiosity.

In addition, given that capital funding was a lot harder to acquire back in
the day, it was about as good a deal as a smart person could get.

Nowadays, a couple of things have changed. First, a corporate job is no longer
expected to be lifelong. In addition, if you have a brilliant idea, it is a
lot easier to get funding and do your own startup for that idea, and maybe get
acquired by one of the big companies.

~~~
konjin
Having talked to a lot of old folks who worked there the tax breaks were a
huge incentive too. Lowering the corporate tax rate since the 60s has meant
that corporations no longer needed to invest in R&D, just pay accountants
instead.

~~~
turbinerneiter
I think this is a very important point.

Usually, taxes incentivize companies to spend their profit on making the
company better - buy new machines, pay the workers more, invest in r&d. This
way, they reduced their taxable profit by spending the money on themselves.
The companies profited from getting better, the state (or society) profited
from growth and innovation.

Now with reduced taxes, but even more importantly tax evasion and offshoring,
this incentive is gone, companies hoard money and pay out to the shareholders.

And that is just lazy. Giving money to the shareholders is like telling your
investor that their money is better spent elsewhere.

~~~
p_l
Tax incentives are also responsible for the return of open office plan since
1960s, as depreciation rules regarding buildings and furniture changed.

In addition, you have people believing that Milton Friedman's biggest lie is a
law, namely that maximising shareholder value (which is often interpreted to
include dividends) is fiduciary duty for the corporation. (It's not)

~~~
opo
>...Milton Friedman's biggest lie is a law,

You are misrepresenting what is called the Friedman doctrine. He didn't claim
it was the law of the land. As the wikipedia article states:

>...The Friedman doctrine, also called shareholder theory or stockholder
theory, is a normative theory of business ethics advanced by economist Milton
Friedman which holds that a firm's main responsibility is to its shareholders.
This shareholder primacy approach views shareholders as the economic engine of
the organization and the only group to which the firm is socially responsible.
As such, the goal of the firm is to maximize returns to shareholders.[1]
Friedman argues that the shareholders can then decide for themselves what
social initiatives to take part in, rather than have an executive whom the
shareholders appointed explicitly for business purposes decide such matters
for them

[https://en.wikipedia.org/wiki/Friedman_doctrine](https://en.wikipedia.org/wiki/Friedman_doctrine)

~~~
p_l
I'm not saying he claimed it law. I'm saying that his claim of it being
fiduciary duty is _taken_ as law by many, when it's not.

~~~
opo
Thanks for the clarification. When you wrote "Milton Friedman's biggest lie"
the implication to the reader is that Friedman is deliberately saying
something is true when it is not. As the wikipedia article says, Friedman did
not say it is recognized that maximizing returns to shareholders as a
fiduciary duty simply saying he thought it should be. As a normative theory of
business ethics, people can agree or disagree with the idea. (Just as in a
different context, if someone argues prisons should focus on rehabilitation
and someone disagrees, that doesn't mean the first person lied.)

------
micheljansen
I worked at a large industrial R&D lab around 2010 and it was awesome. It was
not pure R&D, because the lab was funded by various business lines as
“clients”, which sometimes came with strings attached, but as a model it
worked pretty well.

By my estimation about half of the work was real fundamental research with no
obvious immediate market or clearly guaranteed business value. There was some
pressure to “sell” this work internally after the fact, but that usually ended
up making it better.

The other half of the work was more directly commissioned by various business
lines. They were responsible for product development, but would enlist us to
look into 3rd wave innovation and technology (which we would be experts in
because we spent the other half of our time on it).

The mixed model kept the lab grounded in reality, but also created enough
freedom to do real R&D.

------
supernova87a
Well, I think a major factor is that with less friction for workers to move
between countries / industries / companies, it no longer pays for companies to
cultivate their talent from within.

Either the talent will leave, or it is easy to find some talent by hiring from
elsewhere -- by the way, where the work to cultivate and support the talent
has already been done for you. And all you're doing is applying the filter /
cutting the top candidates to choose from.

Back when there was much more friction and lack of info for people to move
about between good opportunities, you were tied to your employer and a better
bet to invest R&D money in. Not now. Except for a few select industries where
there are artificial barriers put in place to prevent this. (Certification,
unions, national security, etc)

~~~
ben_w
> with less friction for workers to move between countries

While I agree with regard to companies, I disagree with regard to countries.
The equivalent for a nation is education, which would mean every nation would
be happy to accept any immigrant who can speak the local language while also
doing whatever they can to prevent people leaving. The higher the education,
the more this matters, but even K-12 equivalents are ~13 years of state
support. Potentially more if they were born somewhere where the state pays for
early childhood and p/maternity.

Moving country is still hard for most people.

~~~
usrusr
> Moving country is still hard for most people.

That doesn't invalidate the assertion that it used to be even harder before in
any way.

------
randcraw
I think most of the changes to corporate R&D in the past 30 years closely
reflect the shift in focus toward short term profits, thereby reducing
stockholder will to invest in high risk new new things like quantum computing
or single cell genomics.

At the same time, the cultural rise of tech startups has encouraged corporate
R&D heads to farm out much of their interest in cutting edge tech to
underwrite those startups from afar. By investing in startups from funds
separate from mainstream R&D, it's easier to lay blame for failures _outside_
the internal R&D organization.

I've worked in big pharma R&D for 15 years and gov't/military R&D for 20 years
before that. Increasingly I see the forms of R&D diversifying and extending
outside the org's primary lab, just as 100% of DARPA projects are fielded
external to the DoD labs. As external R&D investments and partnerships rise,
it's little wonder that primary R&D labs shrink and their focus shifts to
better serve short term RoI like improving / debugging internal processes and
inefficiencies.

------
raverbashing
Buying off-the-shelf technology works if you want the cookie-cutter solution
(which, don't get me wrong, is _fine_ for a lot of things)

Now, newsflash for the MBAs, if you just sell the same thing as everybody
else, you're just competing on price (and maybe marketing/sales channel).
Otherwise you need to get your hands dirty. (Though apparently there's still
money in dropshipping to be made, until people realize everything was already
on DX/AliExpress)

But oh thank to the wise Master minds of Business Administration, everything
is on the shelf to buy somewhere and what isn't doesn't exist. R&D? It's a
cost center.

~~~
criddell
> Now, newsflash for the MBAs, if you just sell the same thing as everybody
> else, you're just competing on price (and maybe marketing/sales channel).

You don't think MBAs know this?

~~~
raverbashing
They know, what they don't know is how to get out of that position.

------
CTNW
Here are some interesting conversations with people with long history of
working in R&D labs:
[https://www.catchingthenextwavepodcast.com/episodes/608-ton-...](https://www.catchingthenextwavepodcast.com/episodes/608-ton-
kalker)
[https://www.catchingthenextwavepodcast.com/episodes/609-davi...](https://www.catchingthenextwavepodcast.com/episodes/609-david-
millen)

------
fastaguy88
The argument being made here, that industrial research labs have disappeared
because they did not produce enough return on investment, ignores competing
sources of ROI. Today, the easiest way to make a lot of money is in finance,
not discovering new things. Other stories on HN have bemoaned how Boeing has
destroyed itself by shrinking engineering and expanding cost cutting. As is
pointed out in another comment, if the Fed is subsidizing the stock market,
finance is the place to be. Research not so much.

------
LatteLazy
Corporations are basically unable to do R&D for a whole bunch of reasons.
That's why we have all sorts of start ups and angle investment instead. Once
an idea is half proven, then corporations can come in, finance it, run it
effectively and market it etc. While also paying off the people actually
taking the risk. This is a much better more efficient system for everyone.

~~~
thatcat
How is that better for R&D scientists and engineers? They now have to come up
with a possible technology progression, secure funding, build out the tech
using some secondary business model, and then convince the corp to buy their
company. It only seems more efficient for the corporation.

~~~
LatteLazy
They actually get rewarded when they succeed. The man who invented artifical
diamonds, a billion dollar industry, got 10usd savings bond.

Plus no bureaucracy.

[https://en.m.wikipedia.org/wiki/Tracy_Hall](https://en.m.wikipedia.org/wiki/Tracy_Hall)

Also, I imagine that getting funding from a pool of VCs (looking to fund long
shots, with some expertise in the field maybe) is easier than from a single
CEO who happens to run the place and has to justify all this on quarterly
earnings statements etc...

~~~
aspaceman
But what if they want to research something that will never, ever be
profitable.

~~~
LatteLazy
Well they'd never be given that chance under either the corporate or the
venture models. That's why governments or charities are for I guess?

------
dehrmann
Part of the fall of the R&D lab is high-profile inventions like the silicon
transistor, GUI, and digital camera that the corporation failed to capitalize
on. Part of why you do all this research is to find the next big thing, but if
you can't see the potential of these inventions and turn them into businesses,
what's the point?

~~~
andrekandre
remimds me of...

[https://www.amazon.com/My-years-xerox-billions-
nobody/dp/B00...](https://www.amazon.com/My-years-xerox-billions-
nobody/dp/B0006C0O4O/)

------
thu2111
This is a good article but I'm not sure it completely nails it.

Firstly, it's not clear the industrial R&D lab has actually fallen. The
article starts to engage with this at the end but doesn't really do so
properly. It's easy to find examples of firms doing large scale expensive R&D:

\- Many firms making big investments in AI

\- Self driving cars

\- SpaceX reusable rockets, plus all the other Musk firms

\- Advanced database technologies (e.g. at Microsoft, Google, Amazon)

\- Advanced compiler R&D (Oracle/GraalVM)

\- The huge sums thrown around in pharma R&D

\- Advanced graphics R&D is driven primarily by video game firms

\- Intel/AMD/ARM/etc in CPU tech

\- Tons of R&D in oil and gas

and those are just examples we're most familiar with. Are these firms running
"labs"? No, not in the sense of Bell Labs. That's because this model is not
the most efficient model available, and has thus mostly been phased out.
Corporate R&D is much better integrated with actual product development than
the standalone lab model captures. In the most successful cases we don't even
really perceive it as an R&D lab because the entire company is doing R&D
constantly, in a completely integrated manner.

Google is perhaps the clearest case of a company that has completely
integrated R&D with its operations. There is an org called Google Research but
IIRC it existed mostly for a trophy hire and isn't especially important: the
bulk of actual research is/was done by product teams as an integrated part of
their development process. There is no lab, yet at the same time, the lab is
everywhere.

The second aspect is that it doesn't discuss the role of personality or
personal visions of CEOs at all. Yet this is often critical to the decision to
do R&D.

Why does Google research AI? It's _not_ because it's an obvious, slam dunk
move. Google has been doing ML research since the very start of the firm, but
other search engine firms didn't. Why did Google research Google Glass? Or
self driving cars? Google researches these things because Larry and Sergey
thought it was cool. Page has even claimed in the past Google was founded
specifically to do AI research (which isn't really right, but whatever).

What about SpaceX? Tesla? The Boring Company? Neuralink? These firms exist and
do R&D because Elon Musk is a futurist. He doesn't do R&D for economic
reasons, let alone for regulatory reasons. He does it because he wants to
invent the future.

But this type of personality is rare. Our society is not kind to futurists. It
doesn't really value them. They're seen as strange or dangerous; the story of
inventing new technologies is usually a story of being attacked on all sides,
by journalists or politicians or regulators or all of them at once. That's why
most companies set up "innovation teams" \- the exact opposite of the approach
taken by the most innovative companies. They're little silos where people are
taken and put in a corner, then told "go innovate". The non-technical CEO has
no interest in the innovation team and likely never talks to them directly,
let alone gives them direction or ideas. The team members know this and
usually just mimic whatever trends they see around them (IoT, blockchain, AI,
cloud, etc). Their projects are usually doomed from the start.

In the end, for research to be valued people with the power to deploy it must
be excited by technology, not intimidated by it. And that isn't most corporate
or government leaders today.

~~~
aspaceman
> Advanced graphics R&D is driven primarily by video game firms

Just going to speak from my experience here; this makes it very hard to get
into computer graphics research. Any academic won't want you working on stuff
that's "funded by industry" rather than funded by NSF and DOE. But you won't
be able to get an industry research position unless you did graphics research
during schooling. You can sometimes make a case with HPC and CUDA work, but
I've found it to be a tricky dilemma.

~~~
thu2111
Surely the issue there is academia? Some universities do publish papers in
collaboration with industrial researchers, why do academics block that in
graphics?

~~~
aspaceman
Industry blocks it. They want to keep all advances as IP and trade secrets, so
they’d rather all research was done in house. Academics would love to
collaborate, but they can’t if all the research is under-NDA and not
publishable.

