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When mathematician Rajiv Laroia joined Bell Labs in the summer of 1992, he thought he had found his ideal niche-if not for life, then at least for a comfortably long time. Armed with his new doctorate and a passion to make his mark, he reported to the Mathematical Sciences Research Department, where he found a sweet opportunity to work with world-class mathematicians, engineers and statisticians. “There was no specific charter,” Laroia relates. “We were given sort of free rein to do anything we wanted to do.” Bent on first broadening his horizons, he dived into the basics of communications-wireless, optics, theory and more. Laroia envisioned writing papers and contributing to state-of-the-art systems. But he didn’t foresee leaving AT&T’s (now Lucent’s) illustrious research division-especially not to start a company. He wasn’t an entrepreneur.

What a difference a few years and the age of Internet fever can make. Early this year, Laroia did the once inconceivable by helping found Flarion Technologies, which is out to make ubiquitous, wireless data access so affordable that a vacationing California family of four could tool along a Maine highway and simultaneously be surfing the Web, listening to the Oakland A’s over the radio, watching The Simpsons and sending e-mail-all without denting the budget. It turned out Laroia’s horizon-broadening pursuits had engendered a novel idea about how to achieve such wonders, an idea so far outside the conventional wireless paradigm that it couldn’t find a ready home at Lucent. So Laroia convinced his whole five-person team to come with him to start Flarion. Job security went out the window. In exchange for equity, people took pay and benefit cuts. Bye-bye Bell Labs.

Only not quite. Laroia and friends may have left their jobs to pursue technology that could, if it pans out, usurp a piece of their former employer’s business-but it’s all been done with Lucent’s blessing and support. In fact, Flarion’s launch was spearheaded by Lucent’s three-year-old New Ventures Group (NVG), a division chartered to scout out Bell Labs technology that doesn’t mesh well with current business lines, help researchers develop financial plans, attract venture capital and get the innovations out the door. The expectation is that these emigrant technologies will either go it alone or acquire enough critical mass to thrive inside Lucent, if repurchased by the mother ship. In this way, the company hopes to strengthen an Achilles’ heel of any big firm: the effort to capitalize on “disruptive” or “white space” advances that buck the status quo-even if those new technologies spring from in-house research. Explains Bell Labs President Arun Netravali, “If you try to nurture that new thing in the same organization, with that same set of people who are today managing fairly substantial businesses using older technology, it becomes very difficult for this new thing to get much attention.”

So far, Lucent’s New Ventures folks have kicked off at least 24 other efforts designed to complement or compete with established business lines-raising $150 million in outside venture capital, not to mention the company’s own contributions of roughly $225 million, to nurture these enterprises in a more focused and friendly environment. Three have now been brought back to the parent corporation, and one (the Internet multicasting concern Talarian) has gone public, with several additional IPOs planned for 2001-and the endeavor’s success is setting the tone for similar efforts around the globe. But that’s only the half of it. As Technology Review inaugurates its first Corporate Research & Development Scorecard, tracking spending trends in 150 leading technology-oriented corporations, NVG’s very existence underscores a critical point: There’s far more to research and development spending than meets the eye. Indeed, while the Scorecard nicely reflects the current robust state of corporate health-especially among U.S. firms-it’s only by looking beyond the numbers to programs like New Ventures that it’s possible to get at the important changes that have reshaped the industrial research landscape in recent years.


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