Actually it worked very well for many companies. The Amazon Kindle came out of Lab 126, Amazon's innovation program.

The idea isn't just to remain dynamic, but to allow for new products and services to be developed despite posing a threat to the company's main cash cow.

So Lab126 was completely independent from most of Amazon, including being based in the Bay Area vs. Seattle. This allowed the to develop a product that went directly against the main cash cow at the time (selling physical books) and make it to market.

Microsoft had one as well, but would always fail because the existing businesses heads held too much power, and would always kill the products. Just take a look at the history of the Surface.

> The Amazon Kindle came out of Lab 126, Amazon's innovation program.

I know this from all the com.lab126 Java packages in the firmware :)

Well, ereaders and ebooks are really obvious things to develop if you are in selling physical books business.

Not if you're Kodak and making film.

Or, at least, the technology might have been obvious (they did have a hand in developing digital cameras), but the idea that they should bet big on the new technology eventually replacing them evidently wasn't obvious.

It is even worse than that for Kodak -- Steven Sasson actually created the first digital camera using a CCD sensor while working at Kodak [1] and Kodak owned the patent for a digital camera [2].

[1]: https://www.seattlepi.com/business/article/Kodak-engineer-ha... [2]: https://patents.google.com/patent/US4131919

For a company in Kodak's position, trying to reinvent themselves may not have been the best idea. Another possibility would have been to recognize that the basis for the company was going away and attempt to milk it for as much money as possible as it died. If this meant paying large dividends then shutting down or carving up the remnants of the company, so be it.

The PARC was (contrary to the popular myth) a huge success for Xerox, as the laser printing technology invented there turned out to be a great money maker for the company.

Except when it does to the extent that the common term for this approach ("skunk works") derives from a big company that did exactly this.

you're assuming the point of R&D is soly to launch new products.

There's other benefits. Such-as institutional knowledge that can be used to determine where to invest VC money / acquisitions.

Or the strategic part where you leverage R&D spend to sign quid pro quo contracts...who's earnings might boost some quarterly earning metric.

It's worked plenty of times. Intuit is highlighted in Lean Startup for having it's internal innovation programs playing a pivotal role in the company. The CEO at the time says that it saved the company from stagnating growth problems.

do you know where I can read about this, I've always been curious about that

Try industrial organization in econ

Thanks a lot

also cisco - http://www.businessinsider.com/why-cisco-showered-three-men-...

This is wrong. The article even mentions this. Look at Bell Labs

I am not surprised that an PR article would try to spin the positive side.

There are rare exceptions in anything - but the existance of lottery winners does not mean the expected payout of a lottery ticket is positive.

Bell Labs used its monopoly profits to fund research - which was good for research, but no so much for Bell.

If we consider AT&T as Bells successor, it only allowed Bell to stay relevant. Still, AT&T now is nowhere close to Bell it is heyday. Same for Xerow now. Research doesn't pay as much as companies seems to think.

While google position in online advertising is as close to a monopoly as legally possible, it will not change the structure of the incentives. The odds are against them.

But maybe they do not aim for the kind of success they claim they will have, and only want to stay relevant, like Microsoft is now. That is more possible, even if it will be hard to pull.

Personally, I think most R&D money that companies like Microsoft (or Google) have sunk into internal R&D could have had much better uses. But it's not my money! And eventually white elephants get butchered for the meat, so no big loss there.

> Research doesn't pay as much as companies seems to think.

Some companies are constantly researching ways to improve their products. Facebook, Amazon, Google, Microsoft, and Apple come to mind.

Some companies are constantly researching for new ways to find their resources. Every oil company comes to mind.

I think your claim is way, way off.

By "research", I meant it in the context of this discussion : "internal incubator" style R&D to try to spawn a brand new line of products totally outside of the current business line.

Ex: tablets for Microsoft in 1994. Google driving cars.

Android, Chrome, Maps, YouTube, GMail...

The "current business line" of Google was Search. Full stop.

Some people thought it was absurd when Google started doing email, or smartphone OSs, or browsers...

I could go on and on.

Microsoft doing gaming consoles. Amazon doing web services rather than online storefront...

Waymo has a good shot at being huge.