Leading Corporate Innovation: HP Labs Director Prith Banerjee (Part 7)

SM: I have been on a lot of campuses lately and talked with a lot of young people. There is a trend I am seeing which did not exist when I was in school. People are not doing things based on their passions as much, and they are now doing them for money. People have decided that finance is the easy way to make money, and it is. A great computer scientist or astrophysicist can go be a hedge fund manager and make a lot more money than they can at HP Labs.

PB: I have agreed with that for a long time. At HP we are exploring the ways in which we can provide financial rewards for our researchers.

SM: If a researcher makes a $1 billion business possible at HP, that researcher deserves to take a huge percentage of that profit. If HP cannot come up with a structure to compensate a researcher in that mode, then capitalism fails.

PB: I agree. We are exploring what we can do. Obviously the compensation for researchers is based on a total rewards system of salary, bonuses, and stock options. Those three levers are what we use, and we are exploring how to motivate researchers to come up with huge opportunities based on those levers.

I should also tell you that there is a lot of work that goes into making a $1 billion business. It is not just the researcher’s idea that should entitle them to 30% of the result. We know we must reward individuals whose research is significant. There is no way that within HP the compensation will be the same as it would be in a startup. That is the trade-off. Startups are a lot more risky. They can go out of business anytime.

SM: If you take a swing at a startup, it does not hurt your résumé in Silicon Valley.

PB: Absolutely correct. We are exploring how to best structure compensation to motivate these people.

SM: Cisco spins off business areas for their researchers with the guarantee that if the problem is solved, it will be brought back into Cisco. Everybody concerned makes money on that.

PB: We are exploring something similar at HP. We call it the spin-in model because we spin it out with the intention of spinning it back in. We are practicing all kinds of models now. We have technologies at the lab that HP the mother ship did not see a business value in, yet HP Labs saw the benefit to society. We spun out that technology in some sort of licensing deal.

There are two examples of that. One is the Pico compiling project, which became Synfora. HP is not in the EDA world so it did not make sense for us to keep that. The second example is inkjet printers. You actually spray ink on a piece of paper. In the past we used to spray big blobs of ink. Now we are at 1200 dpi, which is very small amounts of ink in various colors. HP Labs invented inkjet printers, which are now a billion-dollar business. We really understand the theory of spray at the nano scale. Researchers adapted that spray technology to drug delivery.

Typically, drugs are injected into a patient multiple times a day. Mistakes can happen. Our researchers used the same concept of an inkjet spray to create a drug patch which can be placed on the skin. Micro needles and a computer figure out at what rate multiple drugs can be sprayed and injected into the skin. HP is not in the medical business so we licensed that to Crospon. They are running with it and they have a very successful spin-out.

SM: So non-core you spin out, core you spin in?

PB: Right. Now there are other technologies such as reflective displays. Our emitting displays today require glass and backlighting. They are power-consuming devices. If we could use reflective displays and take advantage of ambient lighting there would be no power requirements. Right now if you take your laptop outside you are competing with the sun and you cannot read your laptop. Reflective displays, if done right, takes advantage of the sunlight and you will still be able to read.

We have come up with a plastic reflective display which supports color. It is incredible. HP does not manufacture displays, yet we sell 65 million components that have displays in them. The model for this is licensing to a startup. The whole intention to that is that if the startup is successful we will buy a boatload of displays from that vendor and use them in the supply chain. There are other examples of research that is going on. We will make them part of the HP ecosystem.

This is a commodity market. If we save $10 for every display we buy, that is huge for us. Since most computer manufacturers use the same components, we will also get licensing fees when someone like Dell buys and uses those displays in their millions of devices. It is a double win.

SM: Technology licensing is an incredibly profitable business model.

PB: We don’t do it just for the sake of it, but we will when it is strategic.

SM: This has been a pleasure. Thank you for your time.

This segment is part 7 in the series : Leading Corporate Innovation: HP Labs Director Prith Banerjee
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