Living in Rochester, one hears a lot about how science is done at Xerox and Kodak. Xerox was a little better at it, but their experience was still rather painful. It looks like the company has recovered from some of its stumbles and has posted a reasonable record in recent years.
The standard model of industrial research is that knowledge gained by basic research has to pass through a long chain to be turned into profit. First, it has to be converted to some useful devices; then to a marketable product; then it has to be manufactured, advertised and sold. A single error in any of these steps is fatal, no matter how good the original research. Linear pathways cause blockages, as anyone stuck in a traffic jam knows.
Well-meaning managers have developed sophisticated mathematical models using the Black-Scholes theory of options to justify the value of basic research to their superiors. It is a hard sell though, because each later step in the chain turn out to be about ten times more valuable than the previous one. So the models end up showing instead the relative insignificance the original research contribution .
What is wrong with this analysis? The mere use of mathematics cannot turn a bad model into a good one.
Knowledge is like a gas. Once created, it will expand in all dimensions. Not just the one you want. It will find its way to those who seek it. A savvy competitor can simply take it, especially if you are slow to realize its full potential. Conversely, you need to be ready to jump on someone else’s bright idea. Any resources you spend on hoarding and containing your knowledge are likely to be wasted. Small nimble groups have an advantage in this non-linear process.
The most famous example in modern times is another branch of Xerox (Paolo Alto, not Rochester). Much of the technology that sparked the computer revolution was created by the brilliant scientists there: the personal workstation, the ethernet, even the mouse. But it was Apple computer that first brought the ideas to market. Part of the legend of Silicon Valley is that Steve Jobs was given a tour of Xerox Paolo Alto and jumped at the opportunity. He was twentyfour years old at that time.
So is the lesson that Xerox should have hermetically sealed its research facilities and not give tours to any long-haired young guys? That would not have worked, because somebody else would have got to it, somehow. In hindsight, it is clear that they should have hired that enthusiastic young man. Or at least invested in his company. As Hewlett or Packard would have done.
No system that is based on containing and monopolizing knowledge can succeed in the long term. Especially not in our age of instant and widespread communications. The only way to master knowledge is to be smart, to never stop learning, and have a system nimble enough to adapt as changes happen. A linear product chain cannot do that.
Or does this mean that one shouldn’t do basic research? No, it just means that the people managing the research have to be as quick on their feet as the people creating it. There should be room for changes of direction, not just small course corrections. The knowledge created by basic research must have multiple outlets. It should not be hoarded, it should be widely disseminated. Its real use may be very different from the original intent. So researchers must be willing to follow their ideas to unfamiliar fields. Managers must be tolerant of such excursions by their researchers.
Although universities may be better at creating knowledge than corporations, the recent success of Hotmail, Google, PayPal, EBay, NetFlix, YouTube etc. and the continued success of Hewlett-Packard, Boeing,Intel, AMD and GE shows that it is still possible in industry. It just can’t be done linearly.
