Research and development spending: Does money, products or efficiency matter most?

Hewlett-Packard CEO Mark Hurd shed some light on his company's approach to research and development spending. Hurd argued that it's not about the money spent as much as it is the products in the roadmap that come from the labs.

Hewlett-Packard CEO Mark Hurd shed some light on his company's approach to research and development spending. Hurd argued that it's not about the money spent as much as it is the products in the roadmap that come from the labs.

Hurd's response came after he was asked about HP's R&D spending, which is roughly at the levels in 2000. The company's revenue has more than doubled since then.

Hurd noted:

R&D was one of the biggest consumers of overhead in the Company. That’s one point. Second point, we’re in a mode to look for processes that we can standardize. Simple things like testing, QA, how many development tools we’ve got. All of these have been, because of acquisitions, very random and very unique, and very, if you will, siloed.

So our ability to get standardized on those processes gives us an opportunity to take out cost.

The game: Boost innovation without spending on the stuff that doesn't matter.

After my post on ZDNet I've received a lot of questions about the topic via email. IBM Research spends more on research and development, but believes in short-term and long-term research. In fact, IBM's brainiacs will cook up a lot of things that may never become products. Microsoft Research also has a bevy of interesting experiments that may never make it to Windows or Office.

That approach may not work so well for HP Labs. HP looks at R&D through the prism of bringing products to market.

So what is the best approach to R&D? It's clear that some corporations can get too wonky, deliver great research and never make a dime. Other companies may lean too far the other way.

You're king of R&D for a day and here's $7 billion a year to spend over the next 10 years. That's $70 billion in a decade. How would you structure your efforts?

This post was originally published on Smartplanet.com

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