Hide your research! Not from your competitors but from your investors?

By Emilio De Lia, Instructor, Management & Global Business.

Google has a clandestine research lab working on “new future” breakthrough innovations. That story broke in the New York Times a couple of weeks ago and was not surprising to those who follow Google and their culture of innovation. The lab is full of robotics, artificial intelligence and other cutting edge researchers working on things like driverless cars and refrigerators that restock themselves.

Google has always been dedicated to spurring the creativity of its people and to bring to market amazing developments.  Over time they have changed how they go about it.  Google recently modified its renowned Innovation Time Off, where Google engineers were encouraged to spend 20% of their work time thinking creatively about new ideas that intrigued them. The change was to simply and rightly ask that the ideas and innovations thought about were related to Google’s strategy.

But in this era of open innovation where collaboration, alliances, and open architectures are accelerating innovation across industries, Google’s need for secrecy is puzzling. That is, until you consider that Google is likely being driven less by worry about competitors stealing trade secrets than concern about punishment by the financial markets for spending on stuff that may not have immediate pay off. The Times quoted one financial analyst, representing that view, who said that such behavior is only being tolerated because Google’s “core business is firing away.” Google management was apologetic and assured investors that they had not taken leave of their senses and, more importantly, their duty to their stock holders because the sums invested were small.

That a leading technology firm must defend spending on fundamental research is a sorry story. Innovation, especially breakthroughs, requires strategic direction and long term commitment of resources and development of capabilities. The payoffs take time, determination and management. Wealth is created from innovation and a financial criterion that undervalues a bed rock of innovation is counterproductive to true investors in a business.

Professor De Lia is the Executive Director of the Network for Innovation Expertise Development (NIED) at Rutgers Business School. The mission of the Network for Innovation Expertise Development (NIED, pronounced "need") is to help businesses and other organizations become expert at product and service innovation.  NIED’s sole focus is on the management capabilities needed to generate streams of new products and services over time within and across businesses.