In 1990, the prevailing sense among technology watchers was that U.S. industrial research was in trouble, and that somebody had better do something about it quick. Nervous about Japanese competition in critical areas, democrats led a move to allocate $100 million for the Advanced Technology Program, 10 times more than President Bush had requested for the next fiscal year. Rejecting the administration’s largely hands-off industrial policy, the House passed the measure by more than 3 to 1.

How things change. In computers, communications, biotech and other key technology areas, America has surged to the front of the pack while Japanese industrial growth has stagnated. The real credit for the turnaround goes to the big companies such as General Electric, AT&T and Hewlett-Packard that downsized and restructured their research labs in the early 1990s, shifting resources formerly squandered on basic research toward meeting the technology needs of real-world customers. That’s according to Robert Buderi, a former editor at Business Week and a TR contributing writer, in his new book Engines of Tomorrow.

What Buderi heard in hundreds of interviews at dozens of companies was that their research labs had lost relevance and accountability, pumping out scientific papers and even Nobel Prizes-but contributing little to the corporate bottom line. Sometime between Sputnik and the breakup of the Soviet Union, industry
leaders had developed an unquestioning faith in the power of basic science to drive technological innovation. As Buderi shows in two excellent chapters on the history of industrial research, this faith was partly justified; it took only a handful of brilliant chemists and physicists to give birth to the German chemical and pharmaceutical powerhouses in the 1880s, for example. But this kind of research had been resultsdriven. During the Cold War, by contrast, the government and corporate spending lavished on research freed many scientists to ignore product development.

Buderi’s remaining chapters detail how IBM, Siemens, Bell Labs, GE and other industrial giants recognized and rectified this problem.Arno Penzias, the Bell Labs researcher who co-discovered the cosmic background radiation in 1965, exemplifies the change in thinking. As research vice president for the labs in 1989, Penzias realized that “the business units were going to need help, and we were going to have to do something about it.” He pushed through a reorganization that refocused the lab on a few key areas, such as lasers and silicon, and put researchers in closer touch with product developers. The reorganization ultimately led to the formation of Lucent, one of the bull market’s highest-flying technology companies.

Buderi’s narrative is flowing and lucid, and contains just enough detail to satisfy historians without overwhelming lay readers. My only criticism is that Buderi’s writing sometimes falls into the mixed metaphors endemic in the business world. At Bell Labs, he writes, “The dam only broke when a steel-nerved manager went against the grain.” But this is, as they say, a minor quibble. On the dog-eat-dog battlefield of business journalism, Engines of Tomorrow will get a lot of mileage.