Podcast: Xerox CTO Sophie Vandebroek's $1.5B R&D budget and how she spends it

When most people think of big successful IT companies, names like IBM, HP, Sun, Intel, Oracle, and Dell come to mind. But there's one company that very seldomly gets mentioned in the same breath but whose solutions can probably be found everywhere that any of those other tech giants are doing business: Xerox.

When most people think of big successful IT companies, names like IBM, HP, Sun, Intel, Oracle, and Dell come to mind. But there's one company that very seldomly gets mentioned in the same breath but whose solutions can probably be found everywhere that any of those other tech giants are doing business: Xerox.

Going back to it's humble beginnings as the inventor of xerographic technology -- the stuff found inside copy machines -- and heading into the beginning of this decade when the company's tagline was "The Document Company" (now it's "Technology, Document Management and Consulting Services"), Xerox's history has always seemed inextricably linked to paper. And, as long as our love affair with paper shows no signs of abating (we seem to have hit a resistance point), Xerox, which now makes everything from personal printers to multifunction devices to industrial strength high speed copiers to something called the iGen that could one day make printing presses obsolete, should have no problems.

But, with one of the holy grails of today's businesses being the so-called paperless office (and with environmentalists saying that that day can't come soon enough), what's a document company to do?

Answer? Invent. 

About the only thing that has remained consistent since its earliest days is the spirit of invention. Inventions that the company is banking on to not only carry it through sea changes, but to help lead those disruptions. In fact, there are few companies in Xerox's class when it comes to research and development. Xerox Group's annual R&D budget is whopping $1.5 billion dollars per year, the result of which is a staggering two patents per day. While I was in Rochester, I had a chance to sit down with the company's CTO Sophie Vandebroek for a podcast interview.

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Here's a taste of the Q&A: 

ZDNet: You generate so many patents, connect those patents to the success of Xerox...the business success of Xerox. I'm guessing that some number of them never materialize in the bottom line of Xerox and some number do...So, how many matter, how many don't? How do you run the technology operation that you run and form a budget for it? 

Vandebroek: So there are many questions, let me give an example, I have twelve US patents. About half ended up in a product and I'd say of that half, maybe one third or half really mattered. So, I think if you take that as a calculation, you could say maybe 30% of patents ultimately, in our own products, really make a difference. In addition though, we are in the licensing patents business. So we have an intellectual property organization that goes out and we license our IP to others who want to start up their own companies, or embed it in their own products and solutions that they make. So even if your IP doesn't end up in your products and create new revenue growth and differentiated solutions for customers, [maybe it ends up in the products of others].

In addition I believe 75% of our products that were launched in the last two years are newly developed. So, they're new products to the market and a lot of those products really embed a lot of intellectual property of our researchers around the world as well as our engineers, because the other question is, which you asked earlier is, how many patents are early versus more mature, when the concepts are closer to maybe being commercialized. I think [in] an iGen product, it's mostly 50/50. 50% of those patents might be generated by the researchers in the early phases of the product and another 50% might be generated by engineers, business groups, and the supply team...right before we commercialize, so it's a combination of both. 

ZDNet: Should Xerox be playing more of a proactive role in driving towards a paperless environment? In other words, for the benefit of the world and the environment...The longer companies like Xerox help their customers stay in a [paper] world, the longer we're going to be harming the environment. Is Xerox playing a proactive role in trying to teach companies how to get out of a paper-bound environment?

Vanderbroek: That's exactly what our consulting business does and I agree with you 100%.

ZDNet: Is this important to you as an individual? In terms of you personal beliefs about global warming and the environment...how much of that drives the way you manage your R&D everyday? 

Vanderbroek: I think it's extremely critical. I talk about it with my teenagers all the time. We have some university relationships...especially funding environmentally friendly projects, as well as some other foundations that are focused on environmentally sound solutions. I think it's extremely critical that companies like Xerox are focused on that. So, some of the research projects that we have started more recently, one of them is called 'erasable paper' or transient documents...you might have seen it in the blog space recently...we did a work practice special at the Palo Alto research center...spent a lot of time with customers...so we know...40% of what people print goes into the recycling bin at the end of the day or it's just waste. So what we have invented is [eraseable] paper...you print on it and 24 hours later, it's blank. It's really cool...you can just reuse, keep on reusing the same paper...and not waste...

ZDNet: It's like invisable ink...

Vanderbroek: It's physical first, then it gets eliminated.

ZDNet: So the question is, when [the current generation of] kids arrive in corporate America, and they say, 'You're kidding me, this is the way things are done here?' You know, can they make change (environmentally).

Vanderbroek: ..The research technology wiki, that [one that] we have in our research labs, I would say 90% of the contributors to the wiki were our new hires. People who grew up with Facebook, Myspace, IM, I mean my middle schooler does his homework with three buddies in IM and they chat about their spanish homework...I mean it's completely different than the way we grew up. And I think Xerox researchers around the world at Palo Alto, Grenoble, and Canada are all looking at how we can help lead that drive to the vision of the future today...because unless companies like Xerox and of course others [who] are creating these capabilities, they won't exist. So that's one of the fantastic things [about] leading research for Xerox...[It] is always [to] be able to envision the future five or ten years from now and what is it that we need to be working on today to make the future real.

Finally, here on Testbed,  in response to my post that I was heading to Xerox for a day, ZDNet reader EJHonda responded with a post that Xerox printers were his companies "security Achilles heal." EJ, in case you missed it, Xerox's Rick Dastin responded to your post with his e-mail address and asked if you wouldn't mind dropping him a note with more details. Hopefully, you're already exchanging notes. Even if you're not, kudos to Xerox for jumping right into the conversation in hopes of solving a customers' problem. If nothing else, that quick, personal, and very public response sends a message that this is a company that pays attention and that's willing to participate in "the conversation," even if the conversation isn't exactly a postive one. If only more companies would do the same.