R&D Alternatives
By William Cate
July 2004
[http://home.earthlink.net/~beowulfinvestments/]
[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
Bill Gates purchased DOS. He didn't develop it. He spent no R&D dollars to own it. DOS is the foundation of the Microsoft dominance of the PC and Net Markets.
R&D is the Black Hole of investment. R&D takes millions of dollars of expansion capital from any company. It rarely produces anything of value. Focusing on R&D is a sure path to bankruptcy.
There's a Better Way
It's out there. Find it. Most High Tech companies are trying to reinvent the wheel. It may cost less to reinvent the wheel in India than in the Silicon Valley. But, why bother inventing what already exists? The worst case scenario should be that an existing technology must be modified to meet the company's needs.
Free Technology
In the Silicon Valley, NASA in Sunnyvale is the largest supplier of free technology to industry. The U.S. Government wants to prove that the Space Program has practical applications. They will work overtime to find technology, developed at taxpayers' expense, that meets your commercial needs. There is a significant list of these free resources available to anyone who bothers to seek cost effective technology development.
Open-Source Technology
It powers more than 70% of all Web servers and routes much of the world's e-mail traffic. It makes surfing the Internet simple and provides the muscle behind Google's search engine and countless e-commerce sites. It's operating systems like Linux or FreeBSD.
University Technology
The University of Illinois' National Center for Supercomputing Applications, which created an early browser, Mosaic, and Web server, HTTP, gave both away to Industry for nothing other than any re-distributions give the University credit. The University decision lead to the development of the Apache Software Foundation in 1999.
Overseas Technology
From Russia to India, there are hundreds of thousands of excellent engineers who have developed products that will never be used. Some of those products will meet your needs. Take the time to search for them.
Patent Office Technology
There is more than one patent office in the World. There are at least two websites that offer anyone the chance to do a net search for patents. Taking an hour and using these resources can save a company millions of dollars.
Bankruptcy Technology
As the DotCom Bubble Burst proves, most High Tech companies spending scare resources on R&D go broke. It's worth the time and effort to see who has filed for bankruptcy. If they have nearly developed the technology your firm needs, it will cost you pennies on the dollar to own it.
Competitor's Technology
Let your competitor spend the money for the R&D. If they succeed in developing it, buy their company.
The SLAC Paradox
My mantra of Do An Extensive Literature Search Before R&D appeals to High Tech Company CFOs. The company's engineers usually oppose it. This conflict tends to create what I call the SLAC Paradox. When the U.S. Dept. of Energy (DOE) offered funding to Stanford University for a Linear Accelerator, the Government wanted to spend the least possible amount of money for the High Tech project. An abandoned mine was found in Washington State that exactly met the technical requirements for the project. Using the Washington State mine would have saved the DOE nearly 90% of the costs of developing the Linear Accelerator. None of the Stanford Physicists wanted to move to Washington State. The Physicists developed a complex set of invalid technical arguments against the Washington Mine and the DOE paid tenfold to build the Stanford Linear Accelerator Complex (SLAC) on the Stanford campus in California.
Sales Not Research is the Goal of Business
The question is not will a literature search result in finding the best technology in the world. The question is will this low cost technology that was found in a literature search meet our needs and allow us to sell our new product? If the answer is "yes," use the low cost technology. Forget R&D.
To contact the author: Visit the Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit the Global Village Investment Club Website:
[http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
About the Author
He has been the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] since 1981 and is the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]