New Strategy for HP Labs: Placing Fewer, Bigger Bets

In a major shift in priorities, Hewlett Packard’s corporate laboratories will concentrate its effort into 20 to 30 big projects, instead of the roughly 150 smaller projects that it currently supports. The new strategy aims to get more products out of the research labs, and into customer’s hands, in less time.

Prith Banerjee, has been head of HP Labs, Hewlett Packard’s corporate research facility, since August 2008. On Thursday he announced a new direction for the Labs. HP Labs will reorganize into 23 new, independent labs, in seven locations around the world. At the same time, research will be concentrated far fewer projects than today.’
“We are going to refocuse our efforts into 20 to 30 big bets, instead of the 150 smaller ones we used to work on”, said Prith Banerjee.

The reason for the change of direction is simple: HP wants to be able to commercialize more of the work done at the Labs. And the company also wants to speed up the transfer of new technology from the Labs.

“It is the one who comes fastest with a new product to the market who wins,” said Mr. Banerjee.

As a way to speed up the tech-transfer process, the Lab is setting up a Technology Transfer Offfice. It will be responsible both for bringing product development from the Labs into HP’s business units, and for licensing agreements with other companies.
In the future, technology transfer at HP is also going to mean people transfer. The researchers behind a new technology will be put in a group with the business units engineers, working together to get it turned into new products fast. According to the company’s management, the reorganization is not a cost-cutting measure.

“This is one of the few places in the world where the R in R&D is still left. We got a great team in the Labs, a great leader in Prith,” said Mark Hurd, Hewlett Packard’s CEO.

The new direction doesn’t mean the end of all blue sky research at the labs. Quite the opposite. Said Mr. Banerjee, “We are allocating one third to basic exploratory work, which is more than we did before.”

Other measures taken by HP include a new practice of inviting venture capitalists to become entrepreneurs-in-residence at the Labs. This will give the venture firms and their portfolio companies easier access to the Labs’ work. The first to participate is Foundation Capital, a VC firm based in Menlo Park.

In a world where many large companies are ending centralized research altoghether, HP is trying to find a way to keep alive the traditon, but give it new relevance. There is one potential downside, though. When you bet on fewer, bigger projects you might ditch the wrong project. Banerjee’s “solution” is to form an internal review board, with people both from the research and business sides of the company, to evaluate all yes-or-no decisions on projects.