As the 1990s dawned, companies focused more on development, product development, to be precise. During my early career, I witnessed Nortel Networks absorb Bell Northern Research (BNR) and co-opt its basic research thrust to help move Nortel product. The focus on product development gave Nortel a solid two-decade run with its optical transport products, pioneering 10 Gb/s solutions, for example, embodied in the S/DMS TransportNode OC-192.
Grant Moulton, a former engineer at HP who joined Cerent as an optical engineer in late 1998, opined this fact, “The design structure for Hewlett Packard was much different from that of the telecom manufacturers . . . experimentation with multiple designs and prototypes of almost every idea was encouraged at HP in the 1990s, while in the telecom space, the demand was to produce a board that worked and could be sold ASAP.”
Today, Grant argues, “Companies acquire and develop and leave the venture capitalists [VCs] to perform basic research.” The National Science Foundation supports this notion. Total spending on R&D (as opposed to A&D) as a percentage of GDP has flat-lined since the 1960s. That might not be so bad but the problem is that the proportion of R&D spending going to basic research, the R in R&D, has declined significantly.
This decrease in basic research has been recognized by the scientific community who, among others, believe that research and development is critical to creating new technologies. A great example is the Internet. Early investments in DARPA, established under the Eisenhower administration, were made to outline and execute R&D projects “to expand the frontiers of technology and science.” Without such government investment, America is unlikely to have spawned this alternative form of communication and connectedness now enjoyed by the world. Without this tool, companies such as Cerent, Facebook, Shutterfly, Amazon, and eBay would never have existed and productivity would’ve remained stagnant.
But there is no need to despair. Christopher Mims, a Wall Street Journal columnist, highlighted that billionaires such as Elon Musk, Peter Thiel, and others , have stepped in with their own money to replace the missing one-third of basic research the U.S. government used to fund as a matter of course.
Mims wrote in October 2014, “Now that startups are the engines of innovation, the high-risk ventures funded by individuals so wealthy they can afford to lose hundreds of millions on companies they find personally compelling are arguably the primary way that humanity goes about developing fundamentally new technologies.”
Money seems to find a way to fund great ideas and take them from “crazy to viable,” something a government agency would be crucified for even considering.
 Grant sent me a follow-up to his interview, “. . . in the 1980’s at HP, we often did not know how we might accomplish a design task, and needed to do investigation work to explore that problem. It was new engineering, if not new science. At times we also had the encouragement of HP management to do personal investigation and projects (called G-jobs, short for Government Jobs). This improved our craft and experience with the preferred parts and also delivered new designs for new products . . . I don’t believe that the G-job tradition continues at HP’s legacy companies, and all engineers probably have many more time pressures now than they had a few decades ago.”
 At his latest startup company, Grant said that he “desired to invest in new engineering with my own efforts. We self-funded our company in order to avoid the constraints of VC funding or public ownership. Leverage [of existing technologies] remains much more profitable than new [science] efforts, but we have to invest in the future. We have to invest in new engineering or we will not grow, and we don’t survive if we don’t grow.”