PARC CEO Mark Bernstein on innovation, R&D, Steve Jobs and Xerox

The Palo Alto Research Center (PARC) has a storied history and is responsible for much of the computing technology we take for granted. Today, PARC has a more refined mission as a wholly-owned yet independent subsidiary of Xerox.

We caught up with PARC CEO Mark Bernstein to talk shop and innovation. Bernstein has led PARC since 2001. The conversation was spurred by a question raised by Marvell co-founder Weili Dai, who argued that the U.S. needs a new Bell Labs.

What follows is a recap of my conversation with Bernstein with a bit of color commentary.

Are the glory days of R&D gone? Bernstein noted that research for just innovation's sake is a dying breed. Here Bernstein made a few notable points. The aim to turn innovation into products has altered the equation somewhat. This topic gets at that Bell Labs question. Do we need another Bell Labs? "Historically, monopolies developed research labs to discover knowledge and give it to the world to utilize," said Bernstein. Something like Bell Labs was measured on Nobel prizes. "These labs were figures of merit. Monopolies supported research because they thought it was a necessity to prepare for the future and preserve the monopoly." I noted that Ma Bell could have created Bell Labs to keep regulators off the company's back. There was a little of that too.

So do we need more monopolies? Bernstein chuckled at that argument, but did note that companies like General Electric, RCA and AT&T (when it was one massive monopoly) did tend to like research. "Every monopoly is ultimately doomed," said Bernstein.

How is corporate research changing? "Research is viewed through business performance," said Bernstein. "And generally that means short-term expectations for return and research focused on returns in less than three years," said Bernstein. Microsoft Research today is the closest thing to representing the old model where you research is conducted just to think about the future without a lot of product pressure, said Bernstein. Although some of those innovations at Microsoft Research do wind up in products. "(Bill) Gates appreciated having bright people around thinking about the future unbounded and breakthrough ideas," said Bernstein.

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Do labs need a focus? Bernstein noted that PARC has always had a focus on the future of work. All the breakthroughs---PARC had an iPad-ish device called the PARC Pad way before it was cool---were focused on how people would work in the future. Even though Xerox was largely interested in laser printer breakthroughs every research effort somehow tied to work. "The vision was to have multiple unique perspectives on the office of the future," said Bernstein.

How do you gauge success? To Bernstein and PARC research is successful when it is utilized in the world. And it doesn't necessarily have to be utilized by the home team. PARC's discoveries wound up in companies like 3Com, Adobe and Apple. "Success is when disruptive technologies make their way to the world," said Bernstein. That take is interesting since one view of PARC is that it created all of this cool stuff, but Xerox never really capitalized on it---or at least as much as it could have. There was a good reason for that, said Bernstein. "Xerox didn't want to turn into a computer company. It wasn't attractive," he added. Indeed, the laser printer technology alone paid for PARC. In Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age, Michael A. Hiltzik writes:

Another great myth is that Xerox never earned any money from PARC. The truth is that its revenues from one invention alone, the laser printer, have come to billions of dollars---returning its investment in PARC many times over.

Would Bernstein let Jobs in the PARC facilities today? That view that Xerox/PARC didn't capitalize enough on its breakthroughs is common. For instance, Jason Perlow said I should ask whether PARC would let Steve Jobs in the building since a lot of those PARC ideas built Apple. "It would be great to have Steve come over," quipped Bernstein. "I'd just have to be careful about what I showed him." To set the record straight, Jobs was invited to PARC. It's not like Jobs snuck in the building and ran off with a graphical user interface. Apple engineers visited PARC in 1979 and then incorporated PARC's approach to a user interface. According to Hiltzik, PARC got private shares of Apple in exchange for the demo.

Even more comical was Apple's 1988 lawsuit against Microsoft alleging that the software giant stole the Macintosh's look and feel. Microsoft's defense: We both stole the GUI from Xerox's PARC. In any case, Hiltzik reported in his PARC tome that no two people have the same account of Jobs' visit. However, the book is worth a purchase just for the Apple chapter about the Jobs' PARC demo.

But that whole line of thinking about PARC, Apple and success of research does get at how perceptions have changed. A few decades ago research utilized by anyone was a success. Today, that view could be deemed as frivolous in an ROI-happy world. "Success for innovation is not the invention, but the adoption of the technology," said Bernstein. "Patents just protect an idea, but that's just stacking BBs. What you do with that technology is what's important."

On PARC past and present? Xerox's initial take on PARC was similar to the Bell Labs approach. Then in 2002-2004, PARC was up for sale or prepped for a spin-off, but Xerox couldn't find a suitable buyer in a rough market. However, today PARC is a very interesting hybrid and Xerox probably would be kicking itself if it unloaded it. Bernstein explained the PARC model now. Today, half of PARC is focused on being independent and pursuing clean-tech and change-the-world type discoveries. The other half is focused on helping the parent, Xerox, and its ACS services unit. That collaboration between PARC and ACS will the worth watching in future years. Why? IBM has that research and services game down. Xerox with PARC and ACS could do something similar. Research and services could be the secret sauce for Xerox. Bernstein said that PARC "is happy to be working with ACS and the opportunities are huge."

"We have the opportunity to create more valuable services that hide the complexity of work," said Bernstein. A lot of that work with ACS and PARC will focus on information flows in corporations and systems. Meanwhile, ACS' focus on transportation and healthcare are ripe areas for PARC's knowhow, said Bernstein, who added that the research lab's favorite areas are health and energy.

Cleantech's role. Bernstein said PARC has had a cleantech practice for five years. Key areas include solar energy, using CO2 as an energy source, hydrodynamic separation and government work focused on things like desalination for the military, said Bernstein. "These things have broad applicability," he said.

How does PARC make money? For starters, PARC's financials are summarized on the "other" line in Xerox's consolidated results. Bernstein said PARC works with clients such as Samsung, incubates startups, licenses its technology and collects royalties and cashes in equity stakes. For instance, Powerset, a search engine bought by Microsoft, was built on PARC codebase and 63 patents. "We cashed in when Microsoft bought Powerset out," said Bernstein.

What does PARC look for in a researcher? Bernstein is looking to hire another 25 researchers to built PARC's roster to 200. Some of that hiring will be used to support ACS, but researchers can work on multiple projects. Bernstein said the main thing PARC wants in a researcher is passion. "That person has to believe in the power of ideas and defend them while collaborating and listening," said Bernstein. In addition, a researcher has to want to change the world---something Bernstein says is prevalent in the younger generation. "They have to want to make a difference to fit into the PARC nervous system," he said.

What does the U.S. need to do on the research front? Bernstein agreed that there should be some completely non-commercial entity focusing on research that transforms "science into technology." The Feds have taken some steps in that direction with funding of the National Institute of Health (NIH) and DARPA, but the U.S. needs a purpose for the funding as well as a sustained effort. DARPA is making progress on logistics research, clean water and things that influence how wars are fought. "The key is that it has to be a sustained research effort," said Bernstein. "The U.S. is taking some steps in the right direction, but it's unclear how sustainable it is given the politics," says Bernstein. That sustainable point is interesting. For instance, the U.S. lacks a rallying cry. There's no space race or anything that captures the imagination of the broader public. Health and energy are important, but don't quite spur the enthusiasm that other research efforts have enjoyed.

This post was originally published on Smartplanet.com