The Need For a New/Old Bell Labs

Marcus Weldon, October 06, 2015

The recent announcement of the formation of the Alphabet parent company for Google’s businesses highlighted the intention to create an industrial research organization that would be “the new Bell Labs.”

This organization, it was argued, would tap into the substantial cash reserves generated by the core operating businesses and so be able to sustain the level of explorative research that characterized Bell Labs as part of the AT&T telecom monopoly. There are two implied elements to this argument: i) it requires billions of dollars per annum to support the type of disruptive innovation that led to Bell Labs inventing the transistor, the laser and fiber optics, the solar cell, Unix operating system, C/C++ languages, information theory and coding, and many other technologies that now drive the digital era; ii) the current Bell Labs is in decline and in need of re-creation in another form.

And therein lies the issue; I don’t think either holds true. As the 13th president of Bell Labs, I have the accumulated perspective of many great minds who have previously pondered the secret of Bell Labs’ success.  I think this secret formula can be boiled down to seven essential factors:

  1. Attract the best and brightest minds, with a diversity of perspectives, skills and personalities. Include some who “think” and many who “do,” but all with exceptional ability. 
  2. Create an organization that is a meritocracy, where the only thing that matters is the best idea, not the source of the idea, or the hierarchical support for the idea.
  3. Focus on the real problems that confront humanity with the ideal that the bigger the mountain to climb, the more “impossible” the problem to surmount, the better.
  4. Challenge the diversity of “thinkers” and “doers” to collaborate and challenge each other to understand the limits and push beyond them in ways that were previously unimaginable.
  5. Guarantee sufficient funding with a long-term (5+ year) commitment to allow unconstrained problem solving without undue pressure to focus on near-term business needs. 
  6. Maintain constant contact with the market to remain grounded in the problems of the day. But focus the majority of the effort on solving the next (bigger) problem, rather the current (smaller) problems.
  7. Measure success primarily by the long-term impact of the disruptive innovations and new game-changing products that result, and second by the near-term satisfaction of the associated parent company businesses with the value being delivered.

Bell Labs has never really lacked in any of these dimensions; there have been eras of greater and lesser success, but largely driven by the natural variance in disruptive innovation and the changing market dynamics. The one exceptional period was the “Internet bubble” era of the late 1990s and 2000s when the emergence of new players and business models were met with an insufficient reaction to this change, and a distance appeared between Bell Labs and the market — a critical failure in point 6) above. 

However, Bell Labs adapted to the new reality and is innovating faster than ever, as the rate of evolution and innovation in the ICT space is ever increasing. And I would argue that as we enter a new human era defined by the digitization and connection of everything and everyone and the ‘virtualization of the physical world’, the network will again come to the fore, and so will Bell Labs.  Indeed, the cloud (data centers) will move into the network to provide support for lower latency, higher bandwidth services at massive scale. And consumer devices will increasingly be ‘hosted’ in this ‘cloud network’ to allow access to seemingly infinite processing and storage, from anywhere, on any device.

So, assuming that an institution like Bell Labs is still able to attract top talent, and operate as it always has, the real question is the ‘affordability’ of the required funding. If we assume that Bell Labs has a net cost of $100M, and every year it produces innovations that will create $1B of profitable revenue for the parent company, the calculus is simple.  And this calculus has remained the same over the entire history of Bell Labs.

Returning to the assertion that there is a need for a new Bell Labs with a new funding source, I would simply say there is always room for another Bell Labs, with another funding source. And that is something that should be welcomed and lauded by all. But it is not because the “old” Bell Labs is dead or unsustainable — it is very much alive and kicking — it is because the more such institutions exist and compete or cooperate to change human existence for the better, the better. 

So, to Alphabet I say, ‘Bet on Bell Labs’ to be there inventing the future with you.