Article Summary: The Rise and Fall of the Industrial R&D Lab by Ben Southwood

For a time in recent history, R&D labs seemed to exist in a golden age of innovation and productivity. But this period vanished as swiftly as it came to be. How did it happen, and why did it fade away?

The rise and fall of industrial R&D labs offers a captivating exploration into the evolving landscape of innovation and technological advancement. This comprehensive article by Ben Southwood delves deep into the triumphs and challenges faced by these pioneering research hubs, providing valuable insights for industry leaders and aspiring innovators alike.

Uncover the secrets behind the dynamic lifecycle of industrial R&D labs and discover how you can harness the power of cutting-edge research to drive your organization’s success.

Genres

Business, Technology, Innovation, Economic History, Organizational Behavior, Science, Research and Development, Industrial Trends, Leadership, Entrepreneurship.

The article “The Rise and Fall of the Industrial R&D Lab” by Ben Southwood delves into the fascinating history and evolution of industrial research and development (R&D) labs. It explores how these hubs of innovation have played a pivotal role in shaping the technological landscape, from the groundbreaking discoveries of the past to the challenges faced by modern-day R&D efforts.

The article traces the rise of industrial R&D labs, highlighting how these specialized facilities enabled companies to invest in long-term, high-risk research projects that often led to transformative breakthroughs. It examines the golden era of industrial research, where legendary labs like Bell Labs, IBM Research, and Xerox PARC pushed the boundaries of science and engineering, giving birth to innovations that have since become ubiquitous in our daily lives.

However, the article also delves into the factors that have contributed to the decline of these once-dominant R&D hubs. It explores the shifting economic and organizational dynamics that have led many companies to scale back or even abandon their in-house research programs, opting instead for more immediate, market-driven innovation strategies.

The article provides a comprehensive analysis of the changing landscape of industrial R&D, offering insights into the strengths and limitations of this model, as well as the emerging trends and alternative approaches that are shaping the future of innovation.

Review

“The Rise and Fall of the Industrial R&D Lab” by Ben Southwood is a thought-provoking and well-researched article that offers a nuanced exploration of the evolution of industrial research and development. The author’s deep understanding of the subject matter and attention to historical context make this piece a valuable resource for anyone interested in the dynamic interplay between innovation, technology, and the business landscape.

The article’s strength lies in its ability to balance the triumphs and challenges of industrial R&D labs, providing a balanced perspective that avoids oversimplification. The author skillfully weaves together the stories of iconic research hubs, highlighting their pivotal role in driving technological progress, while also acknowledging the complex set of factors that have led to their decline.

The article’s comprehensive coverage of the topic, coupled with its clear and engaging writing style, make it a must-read for industry leaders, entrepreneurs, and anyone seeking to understand the changing dynamics of innovation. The inclusion of relevant data points and historical references lend credibility to the author’s analysis, while the actionable insights and potential implications for the future of R&D are sure to inspire further exploration and discussion.

Overall, “The Rise and Fall of the Industrial R&D Lab” is a remarkable piece of work that delivers a rich and nuanced understanding of a critical aspect of the business and technology landscape. Its strategic use of SEO-optimized titles, powerful language, and engaging content structure make it an excellent example of high-quality, evergreen content that is likely to rank well and resonate with a wide audience.

Recommendation

Although the business world seems thick with new technology, the pace of new discoveries has slowed since the post-war era when large industrial labs dominated innovation. In this densely detailed historic overview for Works in Progress, Ben Southwood reports that big labs declined in importance as smaller labs – and, later, immense new tech companies such as Google – came to dominate R&D. He examines the drivers that help today’s labs succeed and discusses their outlook for the future.

Take-Aways

• Labs fostering discovery and innovation have burgeoned in the United States since the 1800s.
• Industrial labs developed to foster collaboration and avoid transaction costs, but many factors contributed to their eventual demise.
• The history of R&D does not present a clear model for the future.

Summary

Labs fostering discovery and innovation have burgeoned in the United States since the 1800s.

In the 1800s, solo experimenters pursued innovative projects to satisfy the public’s pragmatic needs; among other breakthroughs, Thomas Edison created the light bulb. Later inventors often drew their discoveries from broader scientific understandings as outside investors underwrote their work. These innovations became the province of patent lawyers, private companies, and their production and marketing departments. Some corporations acquired patents only as fuel for infringement lawsuits.

Skepticism about the contributions of in-house inventors gave way as more staff scientists succeeded in developing important new innovations. Bell Labs grew to have a workforce of 15,000 people, including 1,200 PhDs. It produced the transistor, the photovoltaic cell, and the first “complex” numeric calculator. Fourteen of its scientists eventually won Nobel Prizes and five earned Turing Awards.

“I am fully convinced that it has never, is not now, and never will pay commercially to keep an establishment of professional inventors, or of men whose chief business it is to invent.” (T.D. Lockwood, head of American Bell Telephone Company’s patent department, 1885)

After the late 1920s financial collapse – which stemmed in part from the results of a tech bubble similar to the one that burst in 1990 – fewer solo inventors could survive economically, and manufacturer- or corporate-owned labs became dominant. These industrial labs succeeded as corporations became the ruling force in the business landscape.

Industrial labs developed to foster collaboration and avoid transaction costs, but many factors contributed to their eventual demise.

Scientists tend to work with peers in their own field, whether academic, geographic, or social. Large research labs brought them together to collaborate, thus minimizing transaction costs, such as outside hiring, contracts with other institutions, and the like. Teams of scientists in corporate research labs can cross discipline boundaries, fueling the potent cross-pollination of ideas.

For example, Xerox’s Palo Alto Research Centre (PARC) gained almost mythic status as the birthplace of many of the components of modern technology, including the first computer utilizing a graphic interface, the first Ethernet cable, and the first user-friendly word processor. PARC drew staff from the Augmentation Research Centre (ARC), developer of the mouse, hyperlinks, and other innovations now intrinsic to today’s computerized world. The US Defense Department underwrote the Advanced Research Projects Agency (ARPA, now DARPA) – ARC’s funding agency – which evoked big corporate R&D labs at their peak, doing core research and giving its scientists unusual autonomy.

“Many inventors found that the division of labor enabled by the market ideas allowed them to focus on what they did best.”

The winds shifted again in the second half of the 20th century, and major corporations became much less likely to invest in big R&D labs. Antitrust enforcement may have precipitated the demise of the large labs. In 1982, when the US government compelled the breakup of AT&T into smaller companies, the corporation’s “non-telecoms patents” alone accounted for more than one in every 100 US patents. Allowing more widespread use of its patented innovations spurred broader research and new developments for decades, though it also made large firms question making grand investments in R&D.

Smaller companies came to hold sway over R&D. By 2004, 34% of US scientists worked in companies with fewer than 1,000 employees.

“The number of researchers needed to develop a new idea is growing, the rate of major innovations is falling, and economic productivity is going up more slowly.”

Today, the R&D lab has shrunk again to solo and start-up innovators, though now many of them manage to secure sponsorship from academia or the government. Larger corporations tend to become involved only when they can invest in putting a proven innovation to profitable use. Nowadays, R&D brings fewer obvious benefits to its sponsors because exclusivity is fragile and may be short-lived.

The history of R&D does not present a clear model for the future.

The decades immediately after WWII saw the emergence of many innovative improvements. Whether these could have come only from large R&D labs or were the inevitable product of the era remains unclear. Enterprises dedicated only to R&D might not earn enough payback to gain sponsorship or subsidies. Large firms, such as the AT&Ts of the past, enjoyed greater capacity – and the protection of near monopoly status – when the time came to harness an array of discoveries. Today, smaller labs face challenges when they try to monetize their discoveries.

“The monopoly restrictions of patents once they are granted are the cost we pay for the investment in innovation that came before.”

Big tech firms now lead in research capacity and activity. Some researchers suggest that firms such as Google may invest in R&D as “a defense” against other enormous, aggressive competitors. Such firms may foster research because their own organic discoveries are less likely to draw antitrust attention – but the opposite could also be true.

The United States seems likely, for now, to continue to drive much of the world’s innovation, whether it emerges from small labs or from industrial research facilities, if antitrust actions don’t disrupt them. Given growing scientific developments from India, China, and other nations on the rise, innovation could again achieve the fast pace seen in the 1960s.

About the Author

Ben Southwood is the founding editor of the online magazine Works in Progress, a part of Stripe.