It’s been said that the best way to stifle creativity by researchers is to demand that they produce immediately marketable technologies and products. This is also effectively the story of Bell Labs, originally founded as Bell Telephone Laboratories, Inc. in January 1925. As an integral part of AT&T and Western Electric, it enjoyed immense funding and owing to the stable financial situation of AT&T very little pressure to produce results. This led to the development of a wide range of technologies like the transistor, laser, photovoltaic cell, charge-coupled cell (CCD), Unix operating system and so on. After the break-up of AT&T, however, funding dried up and with it the discoveries that had once made Bell Labs such a famous entity. Which raises the question of what it would take to create a new Bell Labs?
As described in the article by [Brian Potter], one aspect of Bell Labs that made it so successful was that the researchers employed there could easily spend a few years tinkering on something that tickled their fancy, whether in the field of semiconductors, optics, metallurgy or something else entirely. There was some pressure to keep research focused on topics that might benefit the larger company, but that was about it, as the leadership knew that sometimes new technologies can take a few years or decades to come to fruition.
All of this came to a rapid stop following the 1982 court-ordered breakup of AT&T. Despite initial optimism at Bell Labs that things could remain much the same, over the following years Bell Labs would be split up repeatedly, with the 1996 spinning off of Western Electric into Lucent Technologies that took much of Bell Labs with it being the first of many big splits, ending for now with five pieces, with Nokia Bell Labs (formerly Lucent Bell Labs) and AT&T Labs being the largest two. To nobody’s surprise, among all these changes funding for fundamental and theoretical research effectively vanished.
![A blue LED held up by its inventor, [Shuji Nakamura].](https://hackaday.com/wp-content/uploads/2024/02/shuji_nakamura_with_blue_led.jpg)
Ultimately Bell Labs would seem to have been at least partially a product of unique historical circumstances, especially the highly specialized field of telecommunications before the same transistors and other technologies that Bell Labs invented would make such technological fields something that anyone could get started in. It’s possible that even without court order, AT&T would have found itself facing stiff competition by the 1990s.
The short answer to the original question of whether Bell Labs could be recreated today is thus a likely ‘no’, while the long answer would be ‘No, but we can create a Bell Labs suitable for today’s technology landscape’. Ultimately the idea of giving researchers leeway to tinker is one that is not only likely to get big returns, but passionate researchers will go out of their way to circumvent the system to work on this one thing that they are interested in. We saw this for example with [Shuji Nakamura], who cracked the way to make efficient blue LEDs, despite every effort by his employer to make his research unnecessarily difficult.
If there’s one thing that this world needs more of, it are researchers like Nakamura-san, and the freedom for them to pursue these passions. That, ultimately could be said to be the true recreation of Bell Labs.
Unfortunately corps today are effectively run by big shareholders who demand profits every quarter and don’t give a shit about fundamental research that may turn up something interesting
I mean if this was 100% true then all biomedical research groups publicly trading on the stock market would have a near 0 value but because of the belief that some of them might become something successful a large number of them are worth a ton. Sure once the idea flops they often tank but I wouldn’t expect a company to continue working on an idea after someone went “I’ve got it this time” and then it caught fire.
Sadly true, and made worse when even techo-jesus cough Musk is trying to fleece billions out of his companies purely for his own greed (sorry, I mean ‘to keep him motivated’). Just think how much amazing reseacrh could be done with a float of $50B+
He asked for that amount, gave a performance target, board of directors approved the target and the payout, he reached the target.
What’s wrong with that?
$50 Billion
He pretty much had them over a barrel even if he wasn’t effectively negotiating with himself: like it or not+ he is the thing that makes tesla share price what it is, it’s certainly not P/E or the idea they will completely corner the car market in the coming years, it’s almost a meme stock at this price.
+and I don’t like it, or him.
Some companies are defined by their leaders and Elon’s companies have successfully developed in extremely challenging industries like electric vehicles and commercial space. I would not bet against him and his companies wouldnt be the same with another leader. Apparently the shareholders believe so as well. He also puts his money where his mouth is being the largest investor in his own companies. Anyone who wants to can establish a company, go public and maintain the majority share position…. Only a rare few can do it successfully.
If you are talking about fundamental analysis of a public company from an investing standpoint, you are absolutely correct.
Budding investors are often hear terms such as “fundamental analysis” (which basically means understanding the company and also the industry in which the company operates, to know how well a company performs). That is the last most investors hear of that term, because no one except the absolute top tier investors (mostly institutional investors) care about how an industry works, when they consider any stock or option. And they make money too! Incredible amount of it!
Without knowing what the company actually does or sells.
“…but passionate researchers will go out of their way to circumvent the system to work on this one thing that they are interested in…”
Hmmm… you could also state: “investing lot’s of their spare time and private funding, being considered strange and awkward pursuing a goal that nobody believes in and when its finally done ‘the hero’ gets nothing in return but a pad on the back and in very special rare occasions a Nobel prize.”
I know this, at first, all sounds pretty negative… we shouldn’t do negative comments any more, but read again, the hero won a Nobel prize, that’s pretty positive isn’t it?
I can put numbers on that position.
In studies of creativity in corporate projects, only 1 in 5 needs to be a success for the company to justify having an R&D section based on profits.
Now IIRC that was specific to a company making commercial electronics products, but it’s probably a good rule-of-thumb for discussions of this nature. Expect 1-in-5 of your research projects to actually work out and lead to a profitable product for the company.
We might consider actually studying this and getting a more nuanced metric. Google is famous for allowing employees to work on personal projects, these sometimes get publicly released, and they’re also famous for shutting things down after a year or two. The 1-in-5 rule is probably a different value for biomedical devices, drugs, mechanical things, and books. For example, about 2.5 million books are sold in the US, only about 1,500 make any sales at all, and roughly 25 are good sellers.
I seem to remember that the reason Bell labs was so creative is for two reasons: 1) that they had a cafeteria where everyone had lunch, and you could sit and talk with someone from a different field and they’d have a different viewpoint that might solve your current problem (ie – chat with a chemistry PhD about your math problem), and 2) a manager that would approve/disapprove funding for projects that would generally nudge the research in a direction that would benefit AT&T, but not completely.
I think the cafeteria model is key. Get lots of people together with different areas of expertise, and they will push through any bottlenecks you find in your project.
I remember when “synergy” was the buzzword of the day.
Despite the remote collaboration tools that exist, I just haven’t seen the same value as the in-person, impromptu, sanity checking/problem solving sessions of the olden days.
Boomer out.
3M had a philosophy that people could work on their own projects 1 day a week with no commitment to show value. One of the things that came out of it was sticky notes
Generally I find that if the slavishly follow the management requirements you waste a lot of effort going in the wrong direction, while if you give engineers time (and as important, resources) to just play, you can end up with truly innovative products, but this goes against managers who feel every minute should be logged and justified
It is however harder and harder to get companies to buy into this
http://amasci.com/weird/unusual/e-wall.html
3m had an accidental forcefield at their plant that was fixed rather than studied. can’t let new science get in the way of business i guess.
The hard bit isn’t doing the thinking, it’s getting management to actually implement the fantastic idea.
Most employees, by nature of their contracts, having to give all their IPR to their employers, who then squander it.
As the classic BSD fortune said:
There are in this country two very large monopolies. The larger of the
two has the following record: The Vietnam War, Watergate, double-digit
inflation, fuel and energy shortages, bankrupt airlines, and the 8-cent
postcard. The second is responsible for such things as the transistor,
the solar cell, lasers, synthetic crystals, high fidelity stereo recording,
sound motion pictures, radio astronomy, negative feedback, magnetic tape,
magnetic “bubbles”, electronic switching systems, microwave radio and TV
relay systems, information theory, the first electrical digital computer,
and the first communications satellite. Guess which one is going to tell
the other how to run the telephone business?
Wasn’t the telephone business at the time a monopoly and perhaps not providing best value and service for the average consumer though?
Having huge piles of cash to play with is nice but you do need to remember where they got it.
Very well stated. Thanks.
Here in the Netherlands we had the Philips Natlab
https://en.wikipedia.org/wiki/Philips_Natuurkundig_Laboratorium
I think it was very similar in setup and type of goals as the Bell lab and linked to a big diversity of inventions. It is for example tightly linked to the start of ASML. But there is not much left of Philips either. Natlab has been sold to some investment firm.
Up to some 20 years ago it was government policy to break up or limit big companies to prevent them from becoming monopolies. Looks like they were too successful in some area’s, while failing in other areas (google, amazon, etc) But I think I’m glad the merger between Nvidia and ARM got blocked.
I don’t do much with politics, but I’ve got a vague idea that goals and long term plans have mostly evaporated and been overwhelmed by short term prestige and damage control.
I did not know, albeit I’ve always suspected this about Philips, it is an splendid parallell. Thank you :-)
And the article is excellent.
I suspect that what you need to get companies to be innovative again has little to do with the companies and more to do with the taxes.
I was reading through stuff the other day about corporate tax rates in the USA. I don’t remember where it was now, but one thing I read mentioned that while the corporate tax rate was much higher in the past, the companies at the time didn’t pay anywhere near the official tax rate.
That was not because they were cheating, but because they had a legal and publically useful way to reduce taxes:
Invest in research.
They could pour money into research, which reduced the taxable income.
The companies got a reduced tax burden and the USA got innovation. The companies preferred to invest in research because they could profit later from the new technologies as well as paying less taxes today.
Starting in the 1980s, there were reductions in the corporate tax rate, to the extent that the companies no longer feel as much of a need to (legally) reduce their tax burden by investing in research. They prefer to jack up prices and browbeat the Republicans into giving them ever more and more tax breaks.
Do you want to see more innovation and private money spent on research? Jack up the corporate tax rate and reinstate corporate tax breaks for research investments.
That’s how Bell Labs was financed back in the day, and I expect that’s what it’ll take to get research and innovation going at high speed again.
The problem is stated yourself. Corporations themselves don’t want high tax rates and lobbied to lower them. They are the ones who wanted it this way. It won’t change back because they don’t want it to. So it never will. There needs to be a different way to get it done now.
That system breaks however, when politicians grow a pair, ignore lobbyists, and stick to their principles.
Yeah, like that’s gonna ever happen! :-)
Regardless of the size of the corporation, high tax rates are the problem. As a US citizen, taxes and inflation are crushing working class citizens and small businesses. Those of you thinking manipulating companies with tax code need to go start your own business and tell the rest of us how that works out for you.
One of the most amazing pieces of social engineering the ruling class in America ever pulled was convincing the average joe their problems were our problems.
High corporate taxes rates don’t crush you or your small business. They help you. They help carve out some space in the market for your business to grow.
Bell Labs existed because it had a strong, regulated monopoly to finance it. “Regulated” would be the key to re-creating the kind of research you think you want to see, because otherwise you have Amazon, WalMart, and Verizon.
America is a financialized economy is what you are saying.
Yes, and long distance phone calls cost consumers 1970s dollars, and today very few are concerned about the price of their long distance phone calls.
The Bayh-Dole act was one major reason of the tide turning against corporate research labs (at least on the scale of Bell Labs and others). This led to a major build-out of the research facilities (and funding) with the incentives that federal labs, universities, etc. could ‘own’ and profit (I use this term loosely because these organizations rarely make significant cash flow) from IP. But, hey, it’s an ‘asset’.
There is a tremendous amount of IP on almost any subject that can often be licensed for little $. I have done this with NASA and also with universities. There is a site ‘flintbox’ that many labs are associated with to list their available IP. It’s a fun rabbit hole to go down once and awhile.
Circling back to the first paragraph, large companies essentially let the federal labs and universities de-risk the more fundamental tech in two ways. Look at the runway between first patent filed on fiber optic and first revenue. The initial patents have long expired by that point. Companies can play the long game knowing that a lot of the IP being touted for license are simply not going to be enforce by the time commercialization actually happens.
Finally, the the huge build-out of facilities at federal labs, but mostly, universities, these institutions have a huge amount of fixed expenses just to maintain them. The result is that anyone with some $’s can walk in and hire these places to do ‘sponsored research’ with one of the results being that any IP belongs to the sponsoring company or some really cushy licensing terms on the tech developed. All of this essentially means that the companies no longer have to carry the overhead the capital investment or the long-term employment of scientists, etc.
The ultimate result is that large scale corporate labs will not return.
Some told me a long time ago that AT&T spent around 2% of (don’t recall what pot it came from) on R&D. Search brought up this bit, as expected it was not management that created Bell Labs, it was incentives and requirements:
Government funding
Bell Labs was funded by a tax on phone bills, which was essentially a built-in “R&D tax”. This funding allowed Bell Labs to support long-term research projects that didn’t have an immediate commercial payoff.
This still exist as all over the darn place and is called grad school. While the experience and various institutions varies wildly, basically a young fresh creative mind is given some guidance then turned loose “to science” for 5-7 years. With access to million dollar instruments and brilliant supervisors or people down the hall to talk to.
And a ton of this is already funded via US government grants. So the federal government AKA taxpayers pays for it.
Obviously this is a very charitable view of the process and it has tons of faults that I’m not mentioning.
But R&D is very alive and very well.
Ha-ha-ha… Bu*t!
1. A lot of PI spend time not to do science but to get new grants.
2. A lot of “young fresh creative mind” are not americans. Not to much young americans ready to be poor scientists. And they left science and switched to corps because they tiered to worry “Will we have new grant or i need looking new lab?”.
3. Most of “million dollar instruments” was ordered by heads of department or directors to personal needs and chance to change or add something ~0.
4. I’m not talking about “down the hall” situation but on conferences(!) peoples mostly talking about their studies.
5. Good luck to get “US government grant” for basic science!
6. If R&D is alive why NASA’s SLS don’t flying yet?! And same situation mostly everywere.
Bell Labs is still around… their current incarnation is Nokia Bell Labs-
https://www.bell-labs.com/#gref
That’s all covered in the article (above and linked one). It’s by no stretch of the imagination the Bell Labs as it existed until the 1980s.
I suspect that the unique situation wasn’t a particular point in technology; but in regulatory status.
Bell was in the atypical position of being both an absurdly hegemonic monopoly with a steady stream of basically-can’t-screw-this-up money coming in; but also had regulators breathing down their necks about how they were actually allowed to exploit that position(both on specific points, like UNIX System V being an AT&T thing that they weren’t allowed to use to move laterally into trying to gain computing marketshare; and more broadly in the sense that they couldn’t get away with just taking the monopoly profits and turning them straight into dividends or otherwise extracting them from the company).
This isn’t to say that setting up a legendary R&D operation is trivial or anything; I’ve no doubt that there are a variety of ways to fail at it; and the people you’ll need to do it well are a talented and special breed; but, if you want blue-sky research or projects without immediate application, providing a steady supply of cash that’s largely free of competing incentives seems like a very helpful start.
There aren’t really any obvious candidates for an equivalent today: few companies have as much of a solid money spinner under their control; and the ones who could afford it are under much looser regulatory control where they could also just use it for stock buybacks or acquisitions, or attempts to break into new markets or whatnot.
It’s only the combination of being exceptionally secure in your income and mostly forbidden from doing easier or more immediately profitable things that leads you to do genuinely interesting theoretical poking.
It’s not clear that even federal research funding has quite the same properties: it is certainly unbound by “will it get me a product in Q3?” concerns; but the grant process, for understandable reasons, involves a lot of having researchers scrabbling for more grants and futzing with applications; rather than Bell Labs just deciding that you were a clever sort and seemed busy so they should probably have payroll keep writing your checks.
Problem with government funding is the agenda or which way the wind is blowing for funding your research (to keep the money coming in, better make sure your ‘conclusions’ match up politically). The current climate change train track is an example. That said I think it would be hard to have another Bell Labs style department now-a-days… More likely be in the academia space now… Problem there though is keeping ‘experienced’ researchers (not just grad students doing the work). And as pointed out research departments are still just an ‘expense’ on the bottom line.
Can’t have nice things..
It’ll be a cold day in hell before Google or Apple is able to actually let a research lab run the show on their own. It is just a unfortunate fact.
I wonder if the society that spawned Bell Labs wasn’t a victim of its own success…
The technologies that Bell Labs and others of that era spawned gave us our current information environment with its normalization of short attention spans (both at the human and institutional scale) that forms the cultural backdrop, informs the mindset, and furnishes the necessary tools (computer, high speed data links, automation) for today’s short term data-driven “investment” culture (really more speculation than investment).
This is why we can’t have nice things…
This post is merely a regurgitation of Brian Potter’s lengthy – and original – blog post from a few months ago.
Your point being?
Step 1: The tax policy that favored Think-Tanks in the 1950’s/60’s like Bell, Boeing Research, Hughes Malibu, etc.
Can I state a case.
Where great wealth is in one place. Great things are being done. ATT Labs, or Xerox Labs.
Elon Musk.
It used to take a company that had resources to do this. Now a single person that is stupid wealthy can do this. And make great companies that can make great things.
Cars, Space, Robotics, Nuralink.
If great money can invest in diverse amazing things, amazing things come from them.
It takes vision, with money.
There will only ever be one Musk, he will be remembered much the same as Einstein, Newton, Galileo, Leonardo etc as a light for the path forward for humanity – not that I hold out much hope for it personally…. Indeed in awe of the dude…
I am in awe of the things SpaceX has accomplished.
I am far less impressed by the man that Elon Musk has shown himself to be.
It takes a concentration of resources to do what SpaceX has accomplished.
Concentrating such resources in the hands of one man unfortunately leaves far too much room for misuse.
In a hundred years, SpaceX will be remembered for making space accessible.
I hope that Musk himself will be forgotten.
So build your own competing company and allocate the resources how you would like. What makes people think that resources developed through ones own hard work belong to anyone else. Every system that has tried that has failed terribly.