Platt Perspective on Business and Technology

Pure research, applied research and development, and business models 2

Posted in book recommendations, strategy and planning by Timothy Platt on January 12, 2017

This is my second installment to a series in which I discuss contexts and circumstances – and business models and their execution, where it would be cost-effective and prudent for a business to actively participate in applied and even pure research, as a means of creating its own next-step future (see Part 1.)

I began this series with a brief orienting discussion of research per se, and on how this series connects into my ongoing writings on innovation and related issues in general. And I ended that Part 1 beginning by posing a question, and by offering at least a few lead-in ideas as to how it might be answered, which I repeat here (with minor rewording):

• What type of business, and business model would be best suited to conducting research
• With that including both pure and applied elements,
• As an effectively managed, cost-effective foundation for empowering its next generation product development?

The traditional answer to that is big businesses and corporations, and particularly I add when they are backed by government funding. I would argue that a smaller, leaner business that has an explicitly research and development-based business model, can also effectively compete and thrive in this arena.

My goal for this posting is to at least begin to discuss more traditional big business research and how it is carried out and maintained and as a source of realized value. And then and with that perhaps default, historical baseline model in place, I will turn to consider leaner, more focused smaller business competition for this area of activity and for the markets that it can create. And to put all of this into clearer perspective, that second as of now still just anticipated discussion – analytically presenting and discussing this newer, smaller, leaner research business model, is my primary overall goal for this series as a whole. But first, I would begin with the more traditional, baseline research-in-business, organizational model. And I begin that by repeating my definitions of pure and applied research per se:

Pure research seeks to develop new basic knowledge, independently of any concern or consideration as to how that knowledge might be applied in developing specific technologies or products.
Applied research can also arrive at basic knowledge, and certainly when it is carried out in new and less explored areas. But it is organized and prioritized with more specific and at least intended-practical goals in mind.
• Applied research does not always successfully lead to practical new technologies or products but it is carried out with a goal of doing so, and can be seen as a practical next-step approach in creating usable, marketable value out of pure research’s basic findings.

There are a number of renowned private sector businesses that have developed and run highly effective pure and applied research facilities, and that are known in large part for having done so. And there are also public sector/private sector collaborations that have done this, and at least a few government sponsored and funded agencies that have been set up and run specifically to carry out future-creating research and with a goal of feeding the fruits of their efforts into private sector production systems and markets.

The United States government run Defense Advanced Research Projects Agency (DARPA) is a remarkably successful example of that. It is an agency that holds as its primary mission, the development of disruptively new innovation in service of the national defense, but at the same time it also has a mission of creating new sources of innovation that can be sent out into the private sector for more openly public development and use. And the initial invention of the internet, and of the packet switching technology and connection protocols that make this global network possible, only represents one of many of its more disruptively innovative, world changing products in this.

But my focus here is on the private sector as a site for both applied and pure research, and with default model large corporations as they participate in it. And I begin my discussion of large-scale corporate research as pursued according to that model with one of the best known examples available from the 20th century. And it is also one that also fits the pattern of having secured government funding and regulatory support, and large government sales contracts as an at least significant source of support there too: AT&T and their storied Bell Labs.

I recommend you’re reading the following book as a offering a well written and informative accounting of Bell Labs, and how it was founded and staffed and run:

• Gertner, J. (2012) The Idea Factory: Bell Labs and the Great Age of American Innovation. Penguin Books.

I have cited this work before in this blog, and most recently in Don’t Invest in Ideas, Invest in People with Ideas 24 – bringing innovators into a business and keeping them there 7. But I offer it here, as a very different source of insight and for very different purposes than I was pursuing before when referencing it, and certainly in that posting. My focus then was on the book’s discussion of individual innovators and individual innovator enablers who helped to make Bell Labs work. Here, my point of focus is on the last chapters of the book and on how the great innovation machine that Bell Labs had made of itself, collapsed as its monolithic (and judged to be monopolistic) parent company was broken apart.

Read Gertner’s book and relevant background reference works that he cites there for the details, which are telling. But as a disclaimer of sorts, and to protect that scholar and author, I acknowledge that the analysis that I in part derive from it, is not his or his responsibility. It is, rather, a direct product on the overall approach to innovation that I have been developing here in this blog and that I initially conceived of in my own business practice.

And with that in place, I turn to consider two core parameters that enter into the determination of when and how research: pure and applied, would cost-effectively fit into a business model and its execution:

• Timeframes and the determination of what is more a cost center and what is more of a profit center in a business – and how they interrelate.

I will continue this discussion in a next installment, focusing on that complex of issues, and doing so in terms of the AT&T and Bell Labs example. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory.

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