Hewlett-Packard is in trouble. Smart phones and tablets threaten to trivialize its status as the world’s largest PC maker; cloud computing is destabilizing its server business; printers are no longer seen as high tech. HP’s stock price plunged in 2011 as the company groped for a strategic direction.

A major part of new CEO Meg Whitman’s plan to revitalize the company is to lean more heavily on ideas from the 500 at HP Labs, the global research arm headquartered in Palo Alto, California. Those researchers are explicitly tasked with creating disruptive innovations—even if these challenge HP’s current business. Among the labs’ recent achievements: persuading the company to try low-cost server chips and pioneering a novel memory component known as the memristor. The director of HP Labs, electrical engineer Prith Banerjee, told Technology Review IT editor Tom Simonite why technological disruption can be a helpful internal force at HP, not just an unwelcome external one.

TR: When Meg Whitman became CEO in September, she asked that you report to her directly. How does that help HP innovate?

Banerjee: We used to report to the CEO through the CSTO [Chief Strategy and Technology Officer]. Now there is no filtering through someone involved with the core business; the CEO can get a completely untarnished opinion of where the technology is headed. We also now work directly with the top heads of the business units, so we can help influence the technology vision of the company more. Our mission is to create absolutely disruptive innovation beyond the current road map of products even if that disruption could cannibalize part of our business today.

What’s the biggest advance that HP Labs has made during your tenure?

The Central Nervous System for the Earth [CeNSE]. We developed a Richter accelerometer 1,000 times more sensitive than existing sensors. We are working with Shell on using that for energy exploration, combining HP sensors, networking, servers, and software to provide a better picture of existing and alternative energy resources. It will allow Shell to perform more targeted discovery and reduce their environmental impact.

What is an example of an idea from labs that HP is adopting even though it disrupts the existing business?

Project Moonshot, where we launched servers based around low-powered chips with an ARM or Intel Atom architecture like those in mobile devices. Our server business is a very lucrative cash cow; we want people to buy these hunks of metal with large profit margins. But my researchers could see that the future is not heavy number-crunching—it is the tweeting, real-time-updating Zyngas of the world. The architecture we need for that is not a server with a high-performance Intel processor—it’s a lot of low-powered processors working together. Eventually the head of our server business said, “We’re going to do this.”

Isn’t it difficult to get leaders in the business units to listen to ideas that challenge their current products?

There are times it’s not enough to explain something or show a research prototype. We have a program called “demonstrators” to build a product from scratch that really convinces people. For example, we had been ­researching photonic [networking] interconnects—that use light, not electricity—for several years. But the businesses said it was expensive and couldn’t be built. We took a very high-end router that HP makes and changed the [internals] into photonics. When we demoed that, everyone said, “Wow, this is a great innovation.”

HP has struggled with smart phones and tablets. How is HP Labs helping the company respond?

We have a mobile team in the lab that works hand in hand with the business; we are passing them the tools to adapt. This is a very fast-moving market, so we can’t talk about it in detail.

We also are researching areas that HP is not currently working in, and that goes for our mobile team, too.

HP Labs has sites in the U.K., Israel, Russia, Singapore, India, and China. Does that help you find disruptive ideas?

If you are only U.S.-centric, you are missing a lot of opportunities. Let’s say you’re trying to create a tablet device for India. You would think of the iPad, but out of India’s one billion people, only 50 million access the Internet—but 500 million have access to simple phones. Our researchers in India built a hardware device called the Vayu and a whole cloud system to deliver the Web via SMS, called Siteonmobiles. Our researchers in Palo Alto would never have thought of that.

After you joined HP Labs, you consolidated research into fewer areas. Why?

We were working on far too many cool things. We had 150-ish projects, each involving one or two researchers. We felt that we needed to channel the creative minds of these people. If every project would bring together two computer scientists, one chemical engineer, a social scientist, and a physicist, something really cool could happen.

Most people associate disruptive technology with startups. Why should we believe big companies can innovate?

Startups take research from academia and innovate around how to bring it to market—the execution. The majority of them do very little R&D. A startup could not invent a technology like the memristor: it took us five to 10 years to come up with the right combination of materials and everything else. We are doing fundamental innovation and bringing that to market within the next three years.