"Just as computer science emerged in the late 1940s, I believe services sciences will emerge as a discipline," says Paul M. Horn, senior vice president and director of research for IBM Corp., in an interview with Spectrum. Researchers at the forefront of this new discipline bring the rigors of scientific inquiry to bear on how different parts of a business function.

"We're really defining the periodic table for the underlying elements that make up all businesses," says Horn, who thinks such research could spark a $500 billion market. "Once you model

a company in terms of components, you can surgically reengineer components and change the IT systems that drive them quickly and reliably with a very significant return on investment."

Bell Labs, which years ago garnered six Nobel Prizes for discoveries ranging from the transistor to cosmic background radiation, is using a similar consulting model to rouse itself from the doldrums. Between 2001 and 2003, parent company Lucent Technologies' R and D spending dropped 57 percent from $3.5 billion to $1.5 billion, as sales slid 60 percent, from more than $21 billion to $8.5 billion.

Since 2000, the company has cut loose a boatload of researchers, some of whom went with spinoffs Avaya and Agere. According to former insiders, the head count for Bell Labs R and D dropped from about 30 000 employees at its peak in 1997 to 9500 today. Of those, only about 500 are considered basic research staff.

After four straight quarters of profit, the bleeding has been staunched and Bell Labs expects to return to normal recruiting. The company plans to hire at least 40 researchers next year, many of them for the new Bell Labs Research Center in Dublin, Ireland, which will be devoted exclusively to supply-chain-management research. There, scientists and engineers will investigate manufacturing and assembly operations. They'll also test methods of fine-tuning the software-intensive process by which firms purchase and distribute products and services from suppliers.

Such a lab would seem to demand researchers who can rechannel their thirst for esoteric knowledge, or who have no such inclination in the first place. Not so, says Jeffrey M. Jaffe, president of Bell Labs' Research and Advanced Technologies division. He maintains that his researchers are just as intellectually stimulated by today's research agenda as their Nobel Prize-winning colleagues of bygone days and, he hints, more motivated because they see their work solve real-world problems.

"Researchers are curious people," says Jaffe, who came to Bell Labs after a stint at IBM under research director Horn. "So when they see that our customers are spending less money than before, they want to understand why. They go out and talk to the customers. What are your problems today? Where do you think the future is going?"

While Some Companies can still pursue fundamental R and D breakthroughs, most are now relying on universities for them. Basic research paid for by the government and performed by academics has been a pillar of U.S. economic policy ever since Vannevar Bush instituted it in 1945. In his report "Science: The Endless Frontier," Bush, then director of the U.S. Office of Scientific Research and Development, declared that the federal government has a responsibility to fund basic science to maintain competitiveness.

The problem is that government R and D funding isn't exactly stable, subject as it is to the whims of politicians. Since the late 1960s, overall R and D spending in the United States has shifted from being two-thirds government-funded to being currently two-thirds industry-funded. This trend has had huge consequences both for the firms that depend on university researchers and for the researchers themselves.