There’s a subtle distinction between freedom to suggest ideas and freedom to pursue ideas

# §Bell Labs Model

### Questions
- [[Why was Bell Labs Different?]]
- [[Why hasn’t Bell Labs been replicated?]]
- [[Was Bell Labs an anomaly?]]

### Conclusions
- [[Bell Labs and AT&T had timescale alignment]]
- [[Bell Labs is one of the few examples of an innovation org that was aligned with its money factory]]
- [[Bell labs had a budget of 2.8 billion 2020 dollars]]
- [[Bell Labs was only profitable in conjunction with AT+T]]
- [[AT+T benefitted significantly from creating better technology]]
- [[Regulation drove many of Bell Labs’ actions]]
- [[All the work at Bell Labs needed to tie back to the system]]
- [[Bell Labs empowered young people]]
- [[Bell Labs hired people before they had a role or expertise]]
- [[The work at Bell Labs that was most valuable to AT+T and the work that was most valuable to the world was fairly disjoint]]
- [[The famed bell labs research was a fraction of their activity]]
	- [[Bell labs was primarily not researchers]]
- [[Bell labs brought many disciplines together under the same roof and broke down barriers between them]]
- [[Bell Labs did not give researchers complete freedom]]
- [[Bell labs asked people to do useful things but left them room to say huh that’s funny]]
-  [[Bell Labs management was extremely light]]
- [[Bell Labs didn’t have a unique model]]
- [[Bell Labs selected for people with only academic pedigrees and with a sense of adventure]]
- [[Bell Labs was not a business]]::NW::
- [[Bell labs existed before continuous improvement was expected]] ::NW - stub::
- [[Bell Labs was a dance of individuals and institution, prototyping and manufacturing, invention and discovery]]::NW::
- - [[Bell Labs enabled free radicals]]



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Systemic decay theory of stagnation

Why hasn’t Bell Labs been replicated?

All the work at Bell Labs needed to tie back to the system

We need new institutional structures to fill the role that corporate labs once occupied

Corporate labs no longer fill the niche they did in the early-mid twentieth century

Why try to emulate DARPA and not Bell Labs

Notes on the changing structure of American Innovation

ICT Distillation

26 Oct 2020

An Institute for Creative Technology - Riffing on ARPA

ICT Outline

Startups have taken over a chunk of corporate R+Ds niche

# AI research is an exception to the decline of corporate R+D
AI research bucks the trend of the decline of corporate labs as a place where globally important, cutting edge work is done. ([[The decline of science in corporate R&D]]) If you squint, Organizations like [[Facebook AI Research - FAIR]], [[Google Brain]], [[DeepMind]], and possibly [[OpenAI]] [^1] bear strong resemblance to [[Bell Labs]], [[Xerox PARC]], and other legendary Corporate R&D orgs (I’ll just refer to these as Legendary CR&D)  in their heydays.

The parallels manifest in several ways. It’s worth speculating on why they exist in these labs but not elsewhere to understand why the dynamics may or may not be replicable in more areas.

AI research (can) require massive resources - in this case it’s just thousands of dollars of compute for training models and the datasets to train on. These resource requirements mean that there is exploratory research that people just can’t do with the resources available to most labs at universities. You saw a similar effect pulling professors away from universities and into corporate labs in the first half of the 20th century. 

At the same time, corporations running AI labs reasonably expect the research to create value commiserate to the costs of this research. Machine learning can directly improve the core product lines of all the companies listed above, in the same way that Bell Labs’ work directly improved [[“The System” of AT&T]]. [[Innovation orgs need to be aligned with their money factory]]. Additionally, AI promises massive value over long but not infinite timescales. OpenAI’s business model is implicitly based on the assumption that they will create literally infinite value in the not unforeseeable future. 

This alignment between the research and the money factory allow modern AI labs to do highly regarded work and collaborate closely with academia, *without* seeming like a waste of money. Bell Labs was the home for the work that led to nine Nobel prizes. Today, AI conferences are dominated by work from corporate AI labs, not just in quantity but quality as well. 

Like the electronics work at Bell Labs, AI research benefits from having multiple disciplines in the same place and the people who will eventually produce it. When you’re creating “AI for X”, it’s generally helpful to have someone who is an expert in X around. Similarly [[Business and finance people are utilities]]. Training and implementing ML algorithms at scale requires a different skillset than creating and prototyping the algorithms. Corporate AI labs have the budget to hire research engineers and also make it easy for researchers to talk to some of the best infrastructure and production engineers in the world. This dynamic roughly parallels the close ties between Bell Labs and Western Electric.  [[Prototyping needs manufacturing in the room]]. 

The perhaps uncomfortable parallel is between AT&T’s status as a high-margin, cash-printing monopoly and Google/Facebook’s similar situation. AI labs suggest that successful corporate labs can only exist in domains where there are large corporations with monopoly-like power. The decline of corporate labs in chemistry and physics-related domains may have been caused by commoditization of those products. GE, Dupont, Kodak, and others’ share prices suggest that they at least are no longer perceived as monopolies. However, monopoly profits -> high quality corporate research isn’t the entire story because you don’t see a lot of high-quality non-product research coming out of Boeing and Amazon[^2] ::are there other examples::?  Perhaps the missing difference is whether or not the monopoly perceives that it will benefit from significantly better technology. [[AT+T benefitted significantly from creating better technology]] because they had an effective pact with the government at as long as they kept making the system better they wouldn’t be broken up. I wonder what the counterfactual is - being left as a monopoly without the pact. While Google and Facebook have no (publicly known) agreement with the government, I believe [[Peter Thiel]]? Made the argument that at least Google’s monopoly does depend on them continuing to have the best search engine - people have no loyalty to google beyond the quality of their searches. Similarly one could make an argument that advertisers will abandon Facebook as soon as they have worse ad targeting or the kids move to another platform like TikTok or Snap. 

Microsoft is an interesting beast to examine through this lens. It’s unconfirmed, but arguably [[Microsoft Research]] was started as a public offering in the same way Bell Labs was. However, it both explicitly set out to do more product-focused work than PARC and Microsoft’s cash cow was Windows and the Office Suite, both of which didn’t benefit much from MSR work. MSR was subsequently pretty neglected and used for stunts like China expansion. However, Microsoft’s core business has begun to shift towards cloud services, which *do* benefit from AI research and it’s becoming clear with things like GPT-3 that AI research can augment Office Suite products that are now actually under threat. This shift coincides with a[partnership with OpenAI](https://news.microsoft.com/2019/07/22/openai-forms-exclusive-computing-partnership-with-microsoft-to-build-new-azure-ai-supercomputing-technologies/#:~:text=The%20partnership%20covers%20the%20following,promise%20of%20artificial%20general%20intelligence) that looks a bit like the relationship between AT&T and Bell Labs if you squint. Amazon remains a challenge to this just-so story because it also has a massive cloud business but is not (publicly) doing as much speculative AI research.

If it’s accurate, this narrative suggests an uncomfortable truth. Instead of declining because of  “corporate short-termism,” speculative corporate R&D might depend on companies with monopoly-level margins perceiving their fate being intimately tied to a high-potential technology.  This trifecta (monopoly + clearly high potential technology + that technology being tied to the company’s core business) can’t be created by policy or even a cultural shift.  [[Healthy corporate R+D requires a trifecta of conditions]]. The trifecta is the most straightforward answer to the question [[Why hasn’t Bell Labs been replicated?]] and suggests that attempts to “create a new Bell Labs” are doomed to failure if they try to follow the playbook too closely. At the same time, I strongly suspect there are incredibly valuable technologies that don’t fit the criteria of the trifecta (clearly high potential to solve an existential threat for a monopoly rentee) but do need the environment and resources that were once provided by healthy CR&D labs to realize that value.  This is why[[We need new institutional structures to fill the role that corporate labs once occupied]].

### Related
- [[aroraChangingStructureAmerican2020]]
- [[Bell Labs didn’t have a unique model]]
- [[Corporate R+D orgs experience a tension between Research and Development]]
- [[§Corporate R+D Constraints]]
- [[gertnerIdeaFactoryBell2012]]
- [[aroraChangingNatureCorporate2015]]
- [[Does the nature of the activities to create new technology and science change over time?]]

[^1]: At this point OpenAI resembles the Bell Labs equivalent for Microsoft
[^2]: Maybe it’s a [[Seattle]] thing?



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Bell Labs

Bell Labs management was extremely light

Ideally corporate R+D enables work on a general purpose technology before it’s specialized

Bell Labs enabled free radicals

Ideally corporate R+D enables targeted dicking around

§Bell Labs Model

Labs Document Outline

# Bell labs asked people to do useful things but left them room to say huh that’s funny
[[Bell Labs did not give researchers complete freedom]], however they also didn’t stop people from exploring if they discovered something that made them say “huh that’s funny.” [[The ability to say ‘huh that’s funny’ is important for discovering new phenomena]].  I suspect this mix of direction-setting led to results that wouldn’t happen either through pure bottom-up idea generation or focused top-down management.[[When is push or pull appropriate for innovation orgs?]].

The discovery of the [[Cosmic Microwave Background]] is of course, the exemplar of this operational mode. Penzias and Wilson were originally tasked to do something useful (experiments for satellite communications)  but had the bandwidth to run to (back)ground the reason for the persistent noise they picked up. It’s easy to imagine that on one hand, they might not even have been pointing the telescope at empty space if they weren’t working on the larger satellite system. (As trained astronomers I assume they would be looking at something more interesting.)  On the other hand, if they were under extreme pressure to get the project done or publish a paper about satellite communications they could easily have written off the noise as problematic equipment. 

This balance between pressure and [[Slack - concept]] resembles how [[DARPA does multiple levels of top-down problem generation and bottom-up solution generation]], both between directors and PMs and then between PMs and performers. The similarity suggests that that it might be an effective framework for approaching Pasteur’s Quadrant ([[Quadrant Model of Scientific Research]])  in a way that can enable Bohr’s quadrant type discoveries. 

There are a couple tactical upshots for innovation organizations in general. One is the fact that light management ([[Bell Labs management was extremely light]])  is actually structural. Another is that a major role for people higher in the hierarchy is to make problems as legible and precise as possible. Legible problems both shove people out of a comfort zone but give them the room to discover the unexpected. [[Legibility enables action]] 

### Related
- [[Why is there so little slack in mission-focused research?]]
- [[Bell Labs didn’t have a unique model]]
- [[Why hasn’t Bell Labs been replicated?]]


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gertnerIdeaFactoryBell2012

§Corporate R+D Constraints

AI research is an exception to the decline of corporate R+D

Bell Labs was not a business

AT+T benefitted significantly from creating better technology

Government research is corporate R&D for United States Inc

The niche corporate labs once occupied still needs to be filled

Peter van Hardenberg Conversation 20 Nov 2020

# Healthy corporate R+D requires a trifecta of conditions
A pattern starts to emerge when you start to ask “how are ‘golden age’ corporate R&D orgs” different than one today, which no longer seem to have the impressive output or cache that they once did? [[Corporate labs no longer fill the niche they did in the early-mid twentieth century]].

It seems that all of them have a trifecta of conditions
1. They were run by a monopoly 
2. They were working on a clearly high potential technology 
3.  That technology addressed one or more existential threats to the company[^1]

*Digging in*
1. **They were run by a monopoly**
More specifically, they were run by companies that were extracting monopoly rents on some high-margin product. Xerox was the only game in town for copying machines (which, believe it or not were core to many businesses), Dupont controlled well-known materials like Teflon or Lycra, Corning was Pyrex and Silicone, and of course AT&T controlled the telephone networks. 

2. **They were working on a clearly high potential technology** 
The technologies were the sort of thing where they had strong conviction that if they could actually pull it off technically, they would be able to sell it. Of course if you can replace a vacuum tube with something that uses 1000x power people would use it. Of course if you can create glass that won’t shatter when you heat it up and cool it down people will use it. 

What’s not clears why so many fewer technologies seem to fall under that umbrella now. It could be that we picked the low hanging fruit in atom land. [[Low Hanging fruit theory of stagnation]]. It could be that people are just more pessimistic about what we can build. It could be that timelines have shrunk, and there is no high-potential technology on those timelines. It could be that people think in terms of products instead of technology. Or it could be that companies have scoped down. 

3. **That technology addressed one or more existential threats to the company** 
1+2 are insufficient if the technology the lab works on doesn’t address existential threats to the company. This is important and ignored because there is a huge gap between an invention and widespread impact. Someone needs to put in active effort to diffuse technology into the world and if the company doesn’t feel intense pressure to do the diffusion work, technology will languish. The importance of diffusion is also why, while it’s not necessary, it really helps for the technology to be in line with the company’s core product capability. A technology that can take advantage of existing manufacturing and distribution channels is just more likely to be impactful.  [[Someone needs to buy manufactured technology eventually in a monetized economy]].

[[Xerox PARC]] is an illustrative example through the different dynamics of the laser printer, the personal computer, and the lab itself.  While PARC is legendary because of the impact of its personal computing work, structurally most of that impact shouldn’t have happened. PARC’s personal computing work *wasn’t* tied to Xerox’s core business. The only reason it was impactful was because of  a crazy set of contingencies - Steve Jobs’ ‘raiding party’ and Bill Gates quickly following suit. Xerox wasn’t set up to scale up and build a *business* around personal computing. [[Different technologies require different organizations]].

The laser printer, on the other hand was directly in line with Xerox’s core business - they already sold printers and copiers and this was just a better, faster version. 

Through this lens, AT&T almost cheated on this front because its core business was the full stack of “communications” so everything from chemistry that kept telephone poles from rotting to information theory were actually tied to the company’s core business. 

Transistors had the potential to integrate directly into AT&T’s system and enable faster, cheaper service. Faster, cheaper service was an existential priority for AT&T because if they didn’t continue to improve, the US government would have an excuse to break them up. [[Regulation drove many of Bell Labs’ actions]]. 

I suspect that the existential threat criterion in a big factor in the difference between [[Google Brain]] and [[Google X]].  Better machine learning technology directly ties into google cloud, search, etc. While drone delivery and autonomous cars can potentially be big businesses they are basically orthogonal to google’s core business. 

### Related
- [[Alignment requires existential threats]]
- [[Expensive research needs to address an existential threat eventually at an organizational level to maintain support]]
- [[Innovation orgs need to be aligned with their money factory]]

[^1]: Condition #3 was originally “1+2 are insufficient if the technology the lab works on isn’t tied into the company’s core business.” However, this isn’t quite right. There are situations where technology work on the core product can have nothing to do with existential risks to the business (for example Salesforce.) Similarly there are situations where technology work has little to do with the core product but addresses an existential threat (for example flashy research at Bell Labs keeping regulators from breaking up the monopoly.) 



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Bell Labs is one of the few examples of an innovation org that was aligned with its money factory

Healthy corporate R+D requires a trifecta of conditions

Why doesn’t the US government treat Google, Facebook, and Amazon the way they treated AT&T?

# Regulation drove many of Bell Labs’ actions
AT&T maintained their monopoly only with tacit approval from the government. This approval rested heavily on Bell Labs’ output - both continuous improvements to AT&T’s offerings and open licenses from the lab. 

![](../BearImages/32CB28E9-C907-4B60-BA16-9E43543555A6-88049-000786A139B67224/IMG_0114.jpg)
The “government approved monopoly” was basically a self-preservation tactic that [[Theodore Vail]] employed to prevent AT&T from anti-trust lawsuits in the early 20th century. As noted in [[gertnerIdeaFactoryBell2012]], a key to this was the perception that AT&T was working on behalf of Americans, and a big way that happened was from a stream of improvements coming out of [[Bell Labs]]. 

![](../BearImages/844869D5-1F58-4709-82F5-ED4A50A645DE-88049-000786C17D1257EA/IMG_0129.jpg)
Avoiding anti-trust was a strong incentive for AT&T to improve its services both in terms of quality and price, which they achieved through technological improvement at Bell Labs. It seems fairly straightforward to measure the price and quality of a telephone system. By contrast, many of the modern monopolies have much less legible products. While Google, Facebook, and Amazon are continuously *changing* and *adding to* their products, it’s much harder to say whether they are *improving* them. It’s not germane to this note, but it’s worth wondering whether software products price and quality could be measured better and what the result would be. Of course, beware [[Goodhart's Law]].

![](../BearImages/1D866F87-6421-42F5-8232-84CCFA4A7B75-88049-000786C703E9E7CC/IMG_0212.jpg)
The pressure from government waxed and waned. Arguably, some of the most valuable of Bell Labs’ outputs (modern electronics and computers) happened because of particularly intense pressure in the 50s. The counterfactuals are intriguing. What would have happened if Bell Labs hadn’t opened the licenses and gone out of their way to help other people understand and use transistors? Arguably transistors are one of the exemplars of [[There is a significant class of innovations that would create drastically less value for the world if their value had been captured by their creators]]. [[The work at Bell Labs that was most valuable to AT+T and the work that was most valuable to the world was fairly disjoint]].  

![](../BearImages/B11118F9-527B-4E8B-A310-F79C420D5511-88049-00078A3FF6F76C4C/IMG_0246.jpg)
Bell Labs could only begin work on mobile phones once the FCC released the spectrum for it.

![](../BearImages/65C5B9BF-6C79-4AB9-84FB-744EA3DFB9A7-88049-000786D180820867/5082BE7F-5871-43BC-B95A-782C111B1E5E.png)
![](../BearImages/A3A06F11-C10D-47F5-8EA5-941EBFE932F6-88049-000786CC30315F9D/IMG_0188.jpg)
It’s easy to think of Bell Labs researchers as being totally unfettered but [[Bell Labs did not give researchers complete freedom]]. One of the boundaries on exploration was driven by concerns over regulation, as illustrated by the pressure on Shannon when it was hard to justify that his work was tied to communication.[[It’s hard to know exactly where a line is until you cross it]]. This incident is an important case study because it emphasizes that Bell Labs was still behooven to the rule that [[Innovation orgs need to be aligned with their money factory]] and [[Alignment requires existential threats]], it’s just that the existential threats came from different places than for many modern organizations. 

Regulation’s influence on Bell Labs’ output raises some questions about the relationship between regulation and technological development in general. My bias is to lean towards the view that “regulation bad.” See [[Regulations slow down technological advancement]]. However, I find it hard to argue that the world would be a better place without the regulatory pressure on AT&T. Would it have poured as much money into Bell Labs? I suspect not. Either it would have maintained its monopoly and kept more of the profits instead of plowing them back into research (which didn’t help it maintain monopoly in the absence of regulatory pressure) or competition would have forced AT&T to think on shorter timescales, leading to adverse incentives on Bell Labs’ outputs. Bell Labs is figure 1 in the argument that the relationship status between technological development and regulation is “it’s complicated.” One tentative thought is that the beneficial regulations on Bell Labs were for the most part focused on the company, rather than the technology. 

### Related
-  [[Some 80’s deregulation may have been a bad thing]]
- [[Regulations have increased by an order of magnitude]]
- [[Regulation should lag innovation]]



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The Idea Factory

# Was Bell Labs an anomaly?
# Was Bell Labs an anomaly
### Related
- [[Why hasn’t Bell Labs been replicated?]]


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Bell labs asked people to do useful things but left them room to say huh that’s funny

Was Bell Labs an anomaly?

# Why hasn’t Bell Labs been replicated?
# Why hasn’t Bell Labs been replicated
Is this actually true - could you argue that PARC was a replication of Bell Labs?
- [[Regulation drove many of Bell Labs’ actions]]
- [[Conversation with Daniel Windham 31/10/2019]]

### Answer
My answer is that no R&D labs *working on physical technology* meet the conditions  necessary to create a high-quality corporate R&D lab. [[Healthy corporate R+D requires a trifecta of conditions]]. Note that [[AI research is an exception to the decline of corporate R+D]]. 

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Benʼs working notes

Why hasn’t Bell Labs been replicated?

Why hasn’t Bell Labs been replicated

Answer

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