EDIT: Being innovative doesn't mean "at all costs".
Two examples:
When I see news about Tesla, I have a positive reaction. They constantly release new technologies, open sourced their patents, and so on.
When I see a news piece about Uber, I think, "What'd they fuck up this time?".
News pieces about how Uber was attempting to encrypt/destroy data remotely in their Canadian office while a law enforcement raid was in progress......does not help their case.
https://news.ycombinator.com/item?id=9606773
However, other comments suggest that the lab wasn't true academia anyway, but an applications-only wing that is non-profit in name only.
However, salary for tenured professors is guaranteed regardless.
So, if you are a tenured professor, you can choose to do esoteric research that will not get a government grant, but you won't have any grad students.
It actually works out because the less practical, more theory oriented profs do not really need grad students. Whereas the more practical, application oriented profs need grad students to do all the work and they end up "setting up shop" like little companies---and get grants to pay for the students (mainly tuition, also a small stipend).
Not that I'm defending it, but it has a kind of internally consistent logic.