"The innovation process always starts with copying and in Shenzhen they are copying systematically at a scale you can scarcely imagine. A student who copies Van Gogh relentlessly may not initially understand how Van Gogh undertook original works of art. After enough copying, that same student may grasp the underlying theories and extend them into new areas."
- China is often criticized for the copying as violating IP, but one could also argue that copying and adding new changes to the copy is the lifeblood of open-source innovation and the nature of decentralized systems as well as human biological evolution. A great book that explores these ideas is 'The Evolution of Everything' by Matt Ridley. I recommend it.
"much of the “Efficiency” America has traded for lower cost manufacturing has come at the cost of our ability to bring all of the key pieces together at home."
- There is likely much truth in this statement by Andy Grove and perhaps American companies and leaders should take pause. Labor cost arbitrage in foreign countries like China and Mexico might be like a balloon mortgage for America where the costs are low upfront for some years, but then the large bill comes later.
If it could be summed up in one sentence, it would be "Everything is a derivative work." Instead of trying to claim complete exclusivity, they implicitly realise that everything someone creates is always built upon the knowledge of others.
> everything someone creates is always built upon the knowledge of others
Right. Sure. These are the kinds of beliefs often verbalized by people who never risked their own time and money to solve hard problems and had to face the risk and reality of the Chinese (or others) stealing the results of that effort.
Here's the difference, the "R" in "R&D" is the most expensive part. The "D" is cheap. By stealing they get the "R" for free and can afford devastating predatory techniques to own the market.
We devoted ten years and millions of dollars to solving a very hard problem. I decided we would keep all of it a trade secret.
Why?
Because, that was the only way to make "D" very expensive. Stealing something when the cost is just as high as having to develop it often scares away a lot of thieves.
It's one thing if you are developing a new set of headphones that don't really have much in the way of technical innovation. It's quite another thing when you are solving a hard problem (which can be risky, very expensive and require a long and constant effort).
I'll just say it was a very hard problem in imaging. A solution involving the confluence of hardware, optics, software and real-time FPGA-based very high resolution image processing. We even had to go as far as to develop manufacturing techniques that involved assembling electronics in a vacuum chamber.
Given the application I can't say any more than that.
I think R cost is low, creating a poc is about 100th of the cost of a product (a proper product) but the risk of R is huge and therefore it's very hard to sustain and justify.
While that is often true in software it is very seldom true in hardware. Think hard drives. The first HDD with HAMR (using lasers to heat up the platter to make it easier to isolate and flip a bit) required many millions of dollars to figure out how to do it. And when they started, no one knew if it was possible. Once they knew it was possible, creating a factory to build them was simple.
Building a fab costs ~$8bn now, does Intel spend that in research? They report (like everyone) R&D, but I bet the majority is D. Delivering a product is very different from making a component (like a platter) - the safety testing, reliability engineering and all the other elements of development are expensive and labour intensive.
You are thinking "expensive" is equal to "more money". Expensive, in this context, means far more than money. For example, risk. Sometimes company-ending risk.
I said "R" is expensive because it is often packaged with uncertainty. You have no idea if something is going to work or if people will even be receptive to the product.
Take SpaceX's landing rockets as an example. Hard and very expensive research. Lots of details nobody will ever know about. Lots of failures before success. And then, even with success, you have to make it repeatable and reliable.
One the "R" is done, "D" or building and scaling is, in relative terms, cheap.
Sure, it can cost billions to tilt-up a factory to build hard drives. Yet, you have a product and you have a market. You have an opportunity. You didn't have any of that before.
Wright Brothers: Hard and expensive R&D requiring YEARS of dedication. Once everyone knew you could build such planes (and how to do it) the "D" was cheap because it was done.
Sikorsky and helicopters is another AMAZING example of that. Helicopters got launched because of the Sikorsky's hard work and the unbelievable involvement of none other than Sergei Rachmaninoff (as in the pianist and composer) taking a leap and investing in the "R" that allowed Sikorsky to complete his work [0].
"R" is very expensive, in more than financial terms, that's why the Chinese copy rather than innovate.
That we are allowing them to get away with it is, well, disturbing.
"I think R cost is low, creating a poc is about 100th of the cost of a product (a proper product) but the risk of R is huge and therefore it's very hard to sustain and justify."
Which I think you have provided some good supporting statements for. I must really be missing something here.. Not sure what though!
- China is often criticized for the copying as violating IP, but one could also argue that copying and adding new changes to the copy is the lifeblood of open-source innovation and the nature of decentralized systems as well as human biological evolution. A great book that explores these ideas is 'The Evolution of Everything' by Matt Ridley. I recommend it.
"much of the “Efficiency” America has traded for lower cost manufacturing has come at the cost of our ability to bring all of the key pieces together at home."
- There is likely much truth in this statement by Andy Grove and perhaps American companies and leaders should take pause. Labor cost arbitrage in foreign countries like China and Mexico might be like a balloon mortgage for America where the costs are low upfront for some years, but then the large bill comes later.