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TR: Of course, this system produced some dead ends as well as some fabulous technology.

LUCKY: It certainly did. With R&D decoupled from the market, a lot of ideas fell on barren earth and never grew up. And ideas by themselves are pretty worthless-somebody’s got to take them and make it happen. Over the years, I have gained a lot more respect for the people who turn ideas into realities. Now we’re in a world where ideas are judged only by market utility. And in the market world, you don’t allow people to wander in the woods. I regret this, but I can’t afford to have people who are just crashing around looking at crazy things. Even though, historically, these are the kinds of people who make the biggest breakthroughs.

TR: What’s an example of the old system of innovation going astray?
LUCKY: Picturephone is a classic case. It was decided that this was the way that communication would go. The funds were immediately made available-armies of scientists and engineers were mobilized, the technology breakthroughs were scheduled and made. The service was offered. Then nobody wanted the thing. But that was OK according to our mindset at the time. If picturephone was what was right, we could do it, because we had total control over it.

TR: Conventional wisdom these days is that the market has to play a much stronger role in driving technology and in setting research directions-that this is how to make innovation productive.
LUCKY: That is the theory, and it’s generally true that the market stimulates innovation. It’s hard to know where the truth lies because we’re not running a controlled experiment. But I do worry that the pure market focus will lead us to ignore some research of great value. I also think that in places like Silicon Valley, the pressures to make money have become too strong.

TR: Isn’t that what business is about?
LUCKY: Primarily, but not entirely. A lot of the innovators that I’ve known have been driven by the desire to produce something that helped people in their lives or work. Financial reward was important to them, but not their overwhelmingly dominant incentive. Now I get a sense that the whole object is to start a company and take it public and make a lot of money. This really discourages me.

TR: In telecommunications, the field you know best, is industry dropping the ball anywhere?
LUCKY: One of the things that everybody wants is broadband access to the home. And if you were running the world, you’d say, hey, let’s just put fiber out there in the homes, we’ll have all the bandwidth we want. But that’s not happening because of the risk of stranded investment. You dig up the streets, you put the fiber in and a guy comes along with a wireless solution and you’ve dug up the streets, the money is gone. The risk of investment here stops this from happening. So there’s a case of the market prohibiting a development that everybody agrees is needed. Also, I’m bothered that senior management is still essentially clueless about the Internet. According to a recent poll, more than 60 percent of executives think the Internet is owned by a corporation; 23 percent think it’s part of Microsoft. The good news is that 98 percent of sixth-graders polled knew that nobody owns the Net.

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