As the costs of global communication and coordination have plummeted, we have experienced a surge in the amount and quality of collaborative research conducted between businesses and universities. Leading technology and engineering companies have shifted inexorably to working with the finest scientific and engineering minds, which tend to be housed in university laboratories. At the same time companies have been winding down their own internalized, previously insular teams. In turn, academic researchers have sought out the best businesses to turn their most promising ideas into commercial realities.
Legacy national borders around new ideas and basic research have thus evaporated as research teams have grown more specialized, capable, and international. And we have all undoubtedly benefited from this.
Perhaps the most important role businesses make to research and development is by helping talented university researchers navigate the ‘valley of death’. The ‘valley of death’ is the point in the development journey where a great invention or innovation resulting from technologically focused research, needs to transform into something tangible that will be successful in the marketplace and with customers. The idea will need to accrue funds from venture capitalists and established businesses and produce returns on investment. It will need experienced business managers to market and sell the new idea into national and global markets. Florida State, as an example, holds one of the most lucrative technology licences in the world. It earned the university US$66 million in royalties in 2002 alone. The licence was with the pharmaceutical company Bristol Myers Squibb, and concerned a method for synthesising Taxol, the anti-cancer drug. Additionally, 5G telecommunications technologies encompass many bright ideas that may have stayed in research labs, if they hadn’t had the support of global innovation networks and companies like Huawei to make them commercially viable.
According to industry estimates, more than four out of five technologies developed globally never make it to the commercial world due to their inability to cross the ‘valley of death’. In 2015, for example, scientific journals published 1.2 million medical research papers, but only 396 potential drugs were submitted to U.S. regulators for permission to begin human testing.
The role of businesses here is clearly vital. And the more knowledgeable and experienced they are in their sector the better too. As the OECD notes, “R&D driven by the private sector tends to have better innovation outcomes” and argues for more encouragement of participation by “entrepreneurial enterprises and SMEs.”
The contribution that corporations make to basic and applied research has also become more relevant as governments continue to cut the amount of funding they make available to university research efforts. According to the American Association for the Advancement of Science, the 2017 budget proposal included a 17 percent reduction in funding for basic research.
The good news is that the private sector has been making up the shortfall (and then some). In particular, the ICT sector is providing unprecedented investment into innovations that nurture the technologies that will ignite the fourth industrial revolution. The major spenders of corporate R&D globally are represented by a mix of multinational companies but the biggest contribution comes from technology companies. Huawei is one of those companies in the top 25 according to Bloomberg.
Basic research is a long and arduous journey, with no guarantee of success. Businesses can also apply arguably the best risk management techniques to investment, essentially underwriting research on the promise of a breakthrough. They are thus well placed to absorb the costs of failure. Our collaboration with universities also gives college and postgraduate students the chance to receive training and hands-on experience. We provide this support with no expectation of direct commercial return.
Our flagship collaboration programme with universities, The Huawei Innovation Research Program (HIRP) continues to sponsor many innovation and research projects. This includes research in technical domains such as wireless, networks, storage, and devices. Its immense contribution has been widely recognised, and received a Business Model Transformation Award at the World Open Innovation Conference (WOIC) in 2017.
There is also overwhelming evidence that investment in basic research and bringing inventions and innovations to market has immense social spillovers. They are generally far in excess of any private benefits to individual firms. Reducing R&D funding without plugging the gap will only reduce total factor productivity growth. That will reduce the growth potential of the global economy while simultaneously reducing the possibilities of our children for better futures.
According to the National Science Foundation as a share of total cross-national articles published globally, US scientists and engineers published the most articles with Chinese partners. This is a hugely positive expansion of global innovation networks that in a short time span has greatly increased the overall sum of research collaborations. US firms also now spend more on R&D activities in China than in any other foreign country – and by a wide margin.
Transnational innovation networks or ecosystems continue to boost innovation outcomes for all participants. As one of America’s most famous innovators and industrialists, Henry Ford said best, “coming together is a beginning, staying together is progress, and working together is success’.
Download the Huawei 2018 Annual Report for more information about our commitment to R&D and building a fully connected, intelligent world.