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How to run a research lab

The key premise of running a research lab is that it is a form of investment. There may be many motivations for investing in research, but some of the more common ones include

  • The big payoff

  • This is, in effect, a form of gambling. You put up a lot of money and hope that some of it will lead to a new ground-breaking profit that will allow you to clean up.
  • Insurance

  • You want to reduce your exposure to some long-term risk that might come out of left-field and blow you away.
  • Fill the pipeline

  • You need someone whose skills are developing new products, but not necessarily manufacturing products, to keep the pipeline full.

All of these are legitimate, although the first 2 are for 'hi-rollers' only: research labs are inherently expensive and these uses are particularly unlikely to pay off. When and if they do pay off then the rewards can be immense (think of Xerox Parc). But, like the lottery, you could live and die without seeing the benefit; and think that your money was wasted.

I have already argued that the third option is not really suited to a central research lab. The leader of the Business unit that owns the product family should also lead the development of new products.

There is another option not often considered, but I think critical:

  • Taking care of critical success factors

  • Addressing technologies, marketing, etc. that are critical to the success of the company; but not inherently directly linked to particular products.


The idea is that there are topics in any business that are 'at the heart' of the business but not necessarily contained within a given product.

A great example of a CSF for a software company is security. Security is clearly important: a security failure can destroy a business. Security affects many (all) products but is not easily confined to a single product or technology.

Addressing security is best done from an overall/overarching perspective. Incidentally, as ay security specialist will tell you, security technology is not limited to encryption but includes policy management, architectural considerations and many other factors.

Putting a team to work to 'own' security would be a sound strategy for many companies. That team would take responsibility for ensuring that the company had the best security strategy and execution possible. That team is best placed centrally: for example in a central Corporate research lab.

Another good example CSF for a software company would be usability. Usability is another one of those make-or-break aspects that can lead to riches or disaster. It is also something that applies to all the products and services offered by a company. And so, a usability team may also be a wise investment; again placed in the central lab.

The pattern is that these CSFs often denote important properties that one would like to be associated with all the products and services offered by a company. And this importance is inherently connected to the relationship between the company and its customers.

Viewed this way, it is easy to see how and why a company might invest in a research lab that focuses on critical factors; and for that investment to be sustainable in bad times as well as good.

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