Not Your Grandfather's Industrial Lab

Nowadays, companies ranging from high-tech firms to service companies have invested in a new generation of idea factories. They share one trait: a mantra that time equals money.

January 17, 2013

Justin Rattner urged the audience of the U.S. Innovation Summit to see Bell Labs as he does: an outdated approach that even in its heyday fell short of getting products to market.

Bell Labs produced inventions, argued the chief technology officer of Intel Labs, not innovations.

"Every time I hear people reminiscing about the good ol' days of research when Bell Labs or IBM Research was winning another Nobel Prize or Xerox PARC was off inventing the future of computing, I just cringe," Rattner told the 282 executives and government leaders at the Washington, D.C., event last year. They were "great inventors of things" but "absolute disasters at making them practical and getting them to market." At Intel Labs, he advocates an approach that balances improving existing products with pursuing concepts that have no immediate application.

Intel isn't the only company with sites dedicated to exploring new ideas. Nowadays, companies ranging from high-tech firms to service companies have invested in a new generation of idea factories. They share one trait: a mantra that time equals money.

"The key thing for us is: Let's fail fast so we don't waste time on a concept that's not going to get us anywhere," says Rocio Echeverria, director of product management and engineering at Xylem Inc., based in White Plains, New York.

During the recession, water-equipment manufacturer Xylem wanted to find new markets and new applications for products such as leisure-boat pumps whose sales had fallen.

Echeverria says she quickly realized the company needed a dedicated cross-functional team that could quickly come up with ideas and commercialize them, giving way to Xylem's innovation lab.

The company traded an environment focused on productivity to one focused on creativity and allowing the lab staff to try new ideas quickly, Echeverria says. Xylem moved what it considered to be some of its brightest talent to its lab. There, they adapted Google's concept of "pretotyping": creating crude prototypes built largely from existing parts, testing them and revising them based on customer feedback.

The result: Xylem's innovation lab has delivered two new products—a cordless rechargeable pump and a solar-powered rain-barrel pump, which uses water collected from roof gutters. The lab went from idea to launch in 11 months, shaving six to nine months off the traditional turnaround time.

"Things that in the past took us months to get to the point where we understood that this is what we need to design, now it's a matter of days and weeks to get there because of this quick prototyping," Echeverria says.

Like Xylem, many corporate research and development labs today pride themselves on their ability to turn ideas into products quickly. Not everyone appreciates this approach. The tight funding and short incubations used in many labs worries Samuel Bacharach, director of the Institute for Workplace Studies at Cornell University. "We used to think of Bell Labs as the place where Nobel Prize winners come from," he says. "Where are the Nobel Prize winners coming from?"

David Hounshell, a professor of technology and social change at Carnegie Mellon University, says the type of research done at Bell Labs happens today primarily at universities. He considers Microsoft Research as one of the few with "the same attitude" as Bell Labs. Some labs do little more than look for technology they can "use, adapt or steal one way or another," Hounshell says, rather than conduct pure research—or they buy it.

IBM Corp. is one company whose name is uttered next to fawning recollections of Bell Labs and in conversations about contemporary innovation. It operates 40 innovation centers in 33 countries, where business partners develop and test their applications on IBM technologies. It also has IBM Research Labs, where some of Big Blue's best talent develops new technology. In addition, IBM has found a way of linking its researchers with those at universities: the Internet.

IBM understood that it had many employees who teach at universities and could serve as bridges, looking for "places where we can make better connections between their goals and our goals," says Chuck Hamilton, the lead for mentoring, social learning and smart play at the IBM Center for Advanced Learning.

Dubbed "Around Campus," the IBM program encourages employees to meet regularly in online forums, provide briefings about interesting university research and see if anyone within IBM is working on something similar.

Hamilton, for example, is an associate professor at the Centre for Digital Media in Vancouver, British Columbia, where researchers were looking at better ways to use smartphones in hospitals. Through an Around Campus meeting, Hamilton learned that a team at IBM was looking at the same opportunity.

"We've made a connection and now we're starting to share research and thoughts and thinking about where this can go," Hamilton says.

But how should companies staff their innovation labs in the first place? Alberto Savoia, Google's former director of engineering and "innovation agitator" and co-founder of consulting firm PretotypeLabs, suggests companies identify innovators by following "their tracks." In other words, look for innovative products and track them back to the people who made them happen.

To find those who have yet to leave tracks, he recommends something akin to Silicon Valley's "hackathons," one-day to one-week events where workers test their ideas.

"When you are looking at an investment of a few hours or a few days, it's easy to say: 'It's a completely crazy idea, but let's try to build it and see what happens,'" Savoia says. "Hackathons can help you identify not only innovative ideas, but people who can have those ideas and turn them into something concrete and testable."

Intel Labs uses internships to find some of its talent. Once selected, new hires not only complete the chip-maker's companywide orientation but also participate in initiatives meant to boost retention, says Tricia Hinds, operations manager in the Intel Labs. "Buddies" show them the ins-and-outs of Intel. Mentors guide their careers. And senior managers take them to lunch, so they have opportunities to network.

In keeping with Rattner's emphasis on practical-minded innovation efforts, Intel Lab employees spend half their time on exploratory work and half on work tied to business units.

One sign Intel's approach is working: the new Thunderbolt data-transfer connection featured in Apple computer products. Cooked up by Intel Labs, the technology is able to transfer a typical Blu-ray movie between devices in less than 30 seconds.

Intel supplements the research in its own labs through university collaborations. There are seven Intel Science and Technology Centers in the United States and five Intel Collaborative Research Institutes in Europe and Asia, with each center or institute led by a "hub" college and spans multiple "spoke" universities intended to create a multidisciplinary community of researchers.

"We look to these centers and institutes for the long-range research work that was typical of that being done at Bell Labs in the '40s and '50s and Xerox PARC in the '70s and '80s," Rattner said at the U.S. Innovation Summit.

He and others are convinced that a more cost-conscious, collaborative approach to corporate labs is the way of the future. "While Bell Labs may have been the model of 20th century industrial research, and there are still a number of companies chasing that vision," Rattner said at the summit, "it is increasingly dated and out of step with today's fast moving information and communications technologies."

Todd Henneman is a writer based in Los Angeles. Comment below or email