[IP] more on Talent leak drains AT&T think tank
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Sun, 21 Mar 2004 16:07:40 -0400
From: Claudio Gutierrez <cgutierrez@xxxxxxxxxxxxxx>
Subject: Re: [IP] Talent leak drains AT&T think tank
To: dave@xxxxxxxxxx
Dave
reading through the story we can learn: "Others have gone to Israel's
Weizmann Institute of Science and to Microsoft Research -- maybe the only
shop rich enough to support basic research as Bell Labs did in the Cold War."
Regarding Microsoft Research, Financial Times published an article
about them just a couple of weeks ago. I think it is worth reading
Good old-fashioned innovation (subs req)
http://search.ft.com/search/article.html?id=040312001006&query=microsoft+research&vsc_appId=totalSearch&offset=10&resultsToShow=10&vsc_subjectConcept=&vsc_companyConcept=&state=More&vsc_publicationGroups=FTFT&searchCat=0
Innovation used to be easy, in principle if not in practice: build a
laboratory, hire brilliant scientists, treat them well and wait for ideas
to flow. The technology giants of the last century - DuPont, General
Electric, AT&T, Xerox, International Business Machines, Glaxo - relied on
this recipe to find breakthroughs and fuel growth.
But times have changed. The generation of companies that flourished from
the 1980s onwards - Cisco, Oracle, Intel, Nokia - has relied instead on
acquisitions, corporate venture capital, and academic partnerships. While
each of these companies still does in-house research, today's technology
titans have all eschewed the temptation to build big labs.
All, that is, with one mighty exception: Microsoft.
The Seattle-based software group has spent the past decade assembling a
team of scientists to rival the great industrial research labs of
yesteryear. Microsoft Research now has 700 researchers, including many of
the biggest names in computer science, and an annual budget estimated at
between $500m and $1bn (£280m-£560m).
"Microsoft really is an anomaly," says Hank Chesbrough, executive director
of the Centre for Technology Strategy and Management at Haas School of
Business in California. "It is about the only company in the world that is
still trying to round up the best and the brightest and put them on the
payroll."
The drawbacks of this approach are well documented. Big research labs can
become inward-looking, obsessing over their own ideas while discounting the
inventions of others. For companies trying to stay at the cutting edge,
this can be disastrous. For example, in the 1970s and 1980s IBM failed to
grasp the importance of the shift from mainframe computers to client-server
architecture - even though IBM Research virtually invented the field of
computer science.
Moreover, in the modern era of start-ups and venture capital, can any
company hope to corral the best researchers and the brightest ideas within
its own laboratory?
The breakthrough technologies of the digital age did not arise from orderly
industrial research. They came instead from Silicon Valley's chaotic mix of
accident and experimentation.
Notable examples of this include Apple (developer of the first mass-market
personal computer), Netscape (progenitor of the first web browser) and,
most recently, Google (undisputed champion of internet search).
"Technology firms must break away from internal innovation and redefine
their 'innovation perimeter' to include ideas that come from outside," says
Georges Haour, professor of technology management at IMD in Lausanne.
In his new book, Prof Haour calls on companies to use a range of techniques
- including corporate venture capital, spin-outs, acquisitions and
licensing - to blur the line between "inside" and "outside". Against this
background Microsoft looks distinctively retro, a throwback to a golden age
of orchestrated research.
If Bill Gates is Microsoft's chief software architect, the architect of
Microsoft Research is Rick Rashid, a computer scientist hired from the
faculty of Carnegie Mellon University in 1991. The lab's growth came in two
distinct spurts. Between 1991 and 1995, Mr Rashid built a team of about 150
scientists, almost all of them based at corporate headquarters in Redmond,
outside Seattle.
Microsoft was determined, he says, to avoid the mistakes of Xerox's Palo
Alto Research Centre, the California lab that in the 1970s laid the
foundations for personal computing but failed to persuade its east coast
parent to turn its inventions into products.
The lesson? Proximity matters. By locating its researchers cheek by jowl
with business managers, Microsoft hoped to encourage more effective
transfer of new technologies from its labs to its range of products.
The second growth spurt ran from 1997 to 2000, when Microsoft Research's
headcount rose to 650. New labs were opened in Silicon Valley, Beijing and
Cambridge.
The management philosophy, says Mr Rashid, has been consistent throughout:
select a subject for research (there are currently more than 60 on his
list, from artificial intelligence and audio to wireless and web services),
hire a top name in the field, let them set their own research agenda and
provide the right environment for them to shine.
"I see myself as a ringmaster," says Andrew Herbert, director of
Microsoft's Cambridge Lab. "Here are a collection of great performers. My
job is to make sure they can put on the best show they possibly can."
If this sounds too good to be true, consider that one of Microsoft's most
eminent researchers, Jim Gray, has spent the past few years tying together
the world's astronomy databases into what he describes as "the worldwide
telescope".
Do not expect to find this feature embedded in the next generation of
Windows. The project, says Mr Gray, a veteran of AT&T's Bell Labs, Xerox
Parc, IBM Research and numerous universities, sprang from his interest in
large, distributed computer systems.
This intellectual freedom - combined with freedom from the grind of
applying for research grants - is what makes this individualist happy to be
a part of Rick Rashid's international army of brainiacs.
Microsoft's researchers are brilliant, well-funded and free to advance what
Mr Rashid calls "the state of the art" in software and computer science.
Their work is published in peer-reviewed scientific journals, presented at
conferences and discussed with the hundreds of PhD students who do
internships at Microsoft each year.
Prof Chesbrough remains sceptical: "When you bring in so many really
talented people there is a natural tendency for them to justify themselves
by their own ideas and inventions, not by their ability to spot really
important ideas. There is a marginal tendency to talk down what is
available on the outside."
Gary Hamel, the academic and consultant, points to another concern: "How
many companies [such as Microsoft] with more than 50 per cent market share
and more than 50 per cent margins have had a mean-ingful second act? None."
The reason, he says, is that most important new businesses are built
through a process of experimentation and rapid learning. Big companies tend
to be bad at both. They do not experiment enough in new markets and they do
not learn fast enough from the results.
On this diagnosis, no matter how good its research capability Microsoft
will tend to see opportunities late, by which time it will face stiff
competition.
Sure enough, much of Microsoft's history has been spent playing catch-up
with market leaders. Whether in computer operating systems (Windows versus
Apple's MacIntosh), desktop applications (Word versus WordPerfect),
commercial databases (SQL versus Oracle), web browsers (Explorer versus
Netscape), internet portals (MSN versus AOL), or hand- held organisers
(PocketPC versus Palm OS), Microsoft has played the role of "fast follower".
But so far this strategy has been hugely successful. The brainpower
corralled within Microsoft Research - combined with the company's dominance
of the PC operating system market - has allowed it to arrive late at the
party and still go home with the belle of the ball, almost every time.
Back in Redmond, Mr Rashid is reluctant to endorse the idea that Microsoft
Research exists mainly to enable a strategy of catch-up. However, he does
concede: "We are a reservoir of technology and people for when the world
changes. When you suddenly decide that you need to do something new, if you
don't have people who understand it, you can't do it."
Last year, for example, Mr Gates declared that it was a strategic priority
for Microsoft to take on Google, which dominates the emerging market for
internet search and, unlike so many internet ventures, has built a
profitable business on the back of its market position.
The call went out to Microsoft Research. Starting with a "summer school" in
Redmond attended by 30-40 researchers, brainpower has been focused on
out-thinking and out-engineering the latest upstart.
The danger, says Mr Hamel, is that as Microsoft tries to grow from its
already very large base, it will face much more formidable competitors.
Beating AOL, Palm or Google is one thing; taking on the likes of Sony (in
games consoles) and Nokia (in mobile phones) presents tougher challenges
altogether.
Microsoft will have to latch on to new ideas and act on them more quickly
than ever before. Will Rick Rashid's big lab then prove to be a help or a
hindrance? Think of it as a big experiment in the management of innovation.
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