Where Have You Gone Bell Labs?

Management consultant Adrian Slywotzky wrote an incredible think piece and call to action in this week’s BusinessWeek. This is a must-read story about the future of America.

I couldn’t agree more with his conclusion that America needs another Manhattan Project or DARPA to inspire and stimulate the next blockbuster industry or two that will keep our nation prosperous and secure.

President Obama clearly appreciates the importance of science. Now he needs to take things to another level and launch the equivalent of our generation’s space race. And this story provides a blueprint to do that.

Where Have You Gone, Bell Labs?
How basic research can repair the broken U.S. business model

By Adrian Slywotzky
Name an industry that can produce 1 million new, high-paying jobs over the next three years. You can’t, because there isn’t one. And that’s the problem.

America needs good jobs, soon. We need 6.7 million just to replace losses from the current recession, then another 10 million to spark demand over the next decade. That’s 15 million to 17 million new jobs. In the 1990s, the U.S. economy created a net 22 million jobs (a rate of 2.2 million per year), so we know it can be done. Between 2000 and the end of 2007 (the beginning of the current recession), however, the economy created new jobs at a rate of 900,000 a year, so we know it isn’t doing it now. The pipeline is dry because the U.S. business model is broken. Our growth engine has run out of a key source of fuel—critical mass, basic scientific research.

The U.S. scientific innovation infrastructure has historically consisted of a loose public-private partnership that included legendary institutions such as Bell Labs, RCA Labs, Xerox PARC XRX, the research operations of IBM IBM, DARPA, NASA, and others. In each of these organizations, programs with clear commercial potential were supported alongside efforts at “pure” research, with the two streams often feeding one another. With abundant corporate and venture-capital funding for eventual commercialization, these research labs have made enormous contributions to science, technology, and the economy, including the creation of millions of high-paying jobs. Consider a few of the crown jewels from Bell Labs alone:
• The first public demonstration of fax transmission (1925)
• First long-distance TV transmission (1927)
• Invention of the transistor (1947)
• Invention of photovoltaic cell (1954)
• Creation of the UNIX operating system (1969)
• Technology for cellular telephony (1978)

In the decades after these initial discoveries, vibrant industries and companies were born. The transistor alone is the building block for the modern computer and consumer-electronics industries. Likewise, DARPA’s creation of the Internet (as ARPAnet) in 1969 and Xerox PARC’s development of the Ethernet and the graphic user interface (GUI) further developed the transformative computer and Internet industries. The basic research breakthroughs unleashed subsequent cycles of applied innovation that created entirely new sectors of our economy.

But since the 1990s, labs dedicated to pure research—to the pursuit of scientific discovery—have seen funding slowly decline and their mission shift from open-ended problem solving to short-term commercial targets, from pure discovery to applied research. Bell Labs had 30,000 employees as recently as 2001; today (owned by Alcatel-Lucent ALU) it has 1,000. That’s symbolic and symptomatic of the broken link in the U.S. business model. With upstream invention and discovery drying up, downstream, industry-creating innovation is being reduced to a trickle.

Click here to read the rest of the story.

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One Response to “Where Have You Gone Bell Labs?”

  1. Bob Says:

    Spencer – You are right – this is a MUST READ. The lack of investment in fundamental R & D is the most significant challenge facing the strength and viability of the US Economy and the American standard of living. According to the National Science Foundation, large corporations (through their labs) represented more than 70% of US Industrial R & D in 1981. By 2006, that figure was down to 37%. While these numbers are chilling on their surface – of even more concern is that the reduction in investment came mostly at the expense of the “R” in “R and D”. This is where the seed corn upon which future generations of technology-based innovation are produced. When you end “R” – eventually you run out of innovation upon which to “D”. The US is in desperate need of a coordinated effort to reinvigorate research in America and the ecosystem that supports it..

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