when logic demands flakinessWhen Ya

when logic demands flakiness
When Yahoo, the Internet company, set up its Research Labs last month, it handed control to Gary Flake, Yahoo's principal 5 scientist. He has the task of coming up with original ideas that might, just might, turn into new services. In one project, they programmed a computer to use
10 the Internet to answer questions
on a CD-Rom edition of Who
Wants to be a Millionaire? (It got
75 percent right).
On the face of it, this does
is not seem a targeted use of shareholders' money. Yet there is a cold financial logic to what Yahoo has done. After all, it is following in the path of Google,
го which has its own 'technology playground' called Google Labs, where it tries out new ideas. And it was the inventiveness of Google's founders, Sergey Brin
25 and Larry Page, that left behind bigger technology companies, including Microsoft.
Indeed, innovation and originality are highly valued by
30 the stockmarket. When Pixar, the computer animation studio that made Toy Story and Finding Nemo, walked away from talks with Walt Disney on a new
35 distribution contract, its shares rose. Disney's brand and its expertise in marketing and distribution were seen to matter less to the partnership
40 than Pixar's talents in computer graphics and entertaining story-telling.
Drug companies are also rated heavily on their 'pipelines' of new
45 drugs, which are being developed either in their own laboratories or at biotechnology companies with which they have partnerships. Sanofi-Synthelabo's
50 takeover of Aventis was prompted by weakness in the latter's shares due to doubts about its pipeline. The drugs industry as a whole is searching for ways to improve its
55 rate of discovery.
Although they are often lumped together, there is a distinction between research (or discovery, as it is called in Pharmaceuticals
6o companies) and development. A lot of big companies are good at the latter. They observe competitors to see which things are worth copying, and use
65 market research to add new
features to existing product lines.
Thus, consumer goods
companies are often skilled at
developing new types of chocolate
70 bar or household cleaner. Meanwhile, Microsoft has made its fortune from watching what others have done, and then coming up with its own version.
75 Bill Gates said that Google had 'kicked our butt' in online search, but Microsoft is now working extremely hard to match, and better, Google.