Industrial research is it outmoded?

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INDUSTRIAL

RESEARCH Is It Outmoded?

ithin the chemical and allied industries today, the question "Does industrial research pay?" is being asked more and more frequently. Security analysts and management alike are becoming increasingly dissatisfied with the poor return on the research dollar. This thinking is in sharp contrast to the situation a decade ago when the vigor and future of a chemical company were judged to a considerable degree by the size of its research budget. In those days, the company with a large research

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Mr. Barnes has engaged in research with several large companies and at present is organizing a new company.

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budget and a professed philosophy of faith in research was the favorite choice of investors. Today, many investors are seriously questioning the wisdom of large research budgets and in a great many instances can point to disappointing returns. Some critics have even suggested that the dollars appropriated for research could have been invested more profitably in other ways. In particular, the value of so-called basic research is being questioned. Some believe that this type of research should be left to the universities or to the government. This new philosophy has already affected industrial research programs. Some of the

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larger chemical companies have concluded that their research programs should be revamped. Emphasis is being placed on highly practical, end-product-oriented research. Several research exeeutives say, "We are directing our energies toward discovering the needs of our customers and then attempting to fill these needs." Basic research has either been stopped altogether or has been drastically eurtailed. PAST ATTITUDES

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This reaction is understandable. The cupboard for new products is indeed discouragingly bare in many companies. Quite obviously something is wrong and something must be done, but what? In attempting to answer this all-important question, I should like to begin by recalling the days when research was a glamorous word. A vigorous research program was essential if a company wished to present a progressive public image; if it chose to emphasize basic research and complete freedom for its research staff, it was even more progressive. In those days management did not delve very deeply into the philosophy behind its research program; everyone knew that research paid. In particular, management knew that investors knew that it paid. As a result, in many companies management tended to feel that it had fulfilled its obligation once a respectable sum had been appropriated for the research budget. There remained only the matter of ensuring that the public relations department made the most of this generous ~&n budget. Such was management's concept and understanding of research in many companies a decade ago. This "high point" in industrial research followed its spectacular success in a previous period, which started perhaps in the late 1920's. At that time, the technology in some industries was so far behind that even a minor improvement in a process could re-

sult in a significant contribution. Competition was slight, and in general industrial research was admittedly easier than now. Spurred on by success and implemented by a favorable tax structure, research departments sprang up in many companies. Borrowing heavily from the vast storehouse of fundamental knowledge, which had accumulated over the past century, these research units became eminently successful. Many new products appeared and some grew to spectacular sales volumes. The race was on. During the 1940's, every company that had not already established a research facility provided one. Competition became very keen, for every research department was expected to produee; this was taken for granted. By the middle 1950's, much of the obvious work had been done. The seemingly endless store of background knowledge, piled up for many years by the basic research carried out in universities and in many European laboratories, was nearly depleted. Fewer and fewer nuggets remained unearthed in this mad gold rush, fully comparable to the historic California and Yukon days.

INVENTION AND DISCOVERY

And so, inevitably, the cupboard became bare and questions arose. Industrial research is no longer living up to expectations. Management and the public alike are disappointed and demanding that something be done. Not surprisingly, this something takes the form of "let's get practical." But like many of today's problems-by no means limited to research-the real solution lies in full understanding. Perhaps the best way to gain this understanding is to start with the nontechnical executive's picture of research. He may confess right away that he does not have a very clear understanding, but when pressed he can show strong ideas of what is "logical"

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I N D U S T R I A L RESEARCH--IS

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OUTS,IODED~

as a research target and what is not. Therein lies much of the difficulty. As an example, when confronted with one of his scientists who is trying to justify a long-range research project, the executive may explain that supplying needed goods and services is the backbone of his business. And often he will make the devastating observation: "You don't even know what you are trying to inventl" The use of the word "invent" is a clue to the basic difficulty. Our ideas of research in this country, especially in the public's mind, have been influenced to a great extent by our inventive history. Everyone has read of the great inventions in our past-the cotton gin, locomotive, horseless carriage, and so forth. This history is primarily of a mechanical nature. And in the field of mechanics the old saying that "necessity is the mother of invention" probably has considerable meaning. To the lay public, the concepts of invention and research are synonymous. An inventor and a researcher are regarded as one and the same. An outstanding illustration of this is found in the patent literature where new chemical products are frequently referred to as "inventions." With this synonymous meaning it has been only natural to carry over the philosophy of mechanical invention to chemical research: unless research is conducted to fill an existing need, it is not practical. But the research chemist objects to this philosophy and resents being called an in-

ventor. A new concept must be introduced to explain this difference in viewpoint: it is the concept of discovery. Geographical discoveries by famous explorers are well understood by the lay public. The analogy needs to be drawn between the explorer and the researcher. It is a much closer relationship than between the inventor and the researcher, who actually have little in common. Sometimes the researcher can visualize a practical application for his discovery and in this sense is perhaps something of an inventor. The research scientist carries out experiments designed to discover how matter will behave under certain conditions, to help him understand what he has observed, or to prove or disprove a theory. Often something completely unexpected happens. When he completes his experiments, he may have established a new scientific fact, which may or may not have commercial significance. Perhaps it will be someone else who recognizes the commercial significance, if there is any. At any rate, this newly discovered "fact" was a fact all along, whether anyone knew it or not; it was one of nature's secrets. Hence, to the scientist, he has made a discovery, not an invention. The differenee is important. It explains why the scientist does not know and cannot tell you what he is going to discover. He truly does not know-just as you do not know what is around the curve in a road you have never driven along before. But you know something is there and that you can find out what it is by driving a little farther. Now', with this better understanding of research, let us look at the "practical" solution suggested as a cure for today's ailing industrial research laboratories with the aim of discovering how practical it is.

LESSONS FROM HISTORY

Perhaps the answer is best found in historythe history of the chemical industry. Was

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the need for a new plastic with superior electrical properties the reason for the "invention" of polyethylene? No, polyethylene was discovered (not invented) clogging the pipes in some fundamental research being carried out in IcI's Alkali Division. This research, incidentally, was not directed toward finding a new plastic; it was a study of the behavior of several gases, among them ethylene, under superhigh pressures. Was eellophane "invented" because of the need for a packaging film? No, the discovery of both rayon and cellophane came as the result of accidental spills of bottles of collodion. Rayon resulted from de Chardonnet's observation that filaments formed when he wiped up the spilled collodion. The idea for cellophane came to Hyatt when he noticed the dried film from the spilled collodion. Was Suearyl invented to satisfy a dietconscious public? No, Dr. Sveda was smoking a cigarette while working with the compound and noticed the sweet taste. Certainly a product like penicillin was urgently needed, but it was not invented for that reason. It was discovered by Alexander Fleming who noticed that bacteria did not grow in one culture plate, while it did in all the others. The list could go on and on, naming such important products as aspirin, Bakelite, DDT, Neoprene, nylon, Teflon, polyvinyl chloride, and silicones. None of these was invented to fill an existing need. They were not invented at all; they were discovered. To a very considerable degree, necessity has not been the mother of invention in the field of chemistry. Irrespective of whether the need existed, these products were discovered by the process of research, not invention. And research is stimulated by curiosity. The research investigator wants to find the answers to what are to him very puzzling observations. Who can say that the answer he finds will not prove to be of commercial value. Many have. The bold fact is that no one can tell ahead of time although some of us may have developed a kind of intuition as to the practicability of certain

fields of investigation. Should we cut out this kind of research because we cannot be sure it is going to be productive? For any dearthinking executive, the answer is "no"; to eliminate it would ensure an end to the kind of important new discoveries that research has given the chemical industry in past years.

GETTING RESEARCH BACK IN STEP REPLENISH THE HOPPER

The problem confronting us is of an entirely different nature. What is needed now in research within the chemical and allied industries is something akin to scientific tree farming. Having chopped into the vast forests of basic knowledge accumulated over the past hundred years or so, and thereby supporting a thriving research business, we now find the land practically denuded. We must start a much needed reforestation program and resign ourselves to a somewhat slower pace until equilibrium is established. Possibly the answer lies in smaller research budgets with a better balance between new-knowledge research and end-pr0duct research. Perhaps it is proper for the federal government to carry out part of this reforestation program. Some say this whole program should be left to the government. The objective of a research program is new products to keep up the profit margin, but if the government is the one to discover the nuggets they will be available to all. It is difficult to see the difference in profit margins between a brand new product that everyone has and the mature products of the industry today, which are in a profit squeeze because "everyone has them." (This situation has many other aspects beyond the scope of this discussion. For example, would a new product discovered by the government, and therefore available to all, ever be commercialized by anyone? Who would pay the high development costs?) Private industry should realize that the

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INDUSTRIAL RESEARCH--IS IT OUTINIODED. 9

first one to discover the nugget is in the best position to capitalize on it. To ensure a continuing development of high-profit proprietary products, private industry must carry out some of this kind of research itself. In fact, without basic research personnel on its staff, private industry would not be in a position to comprehend or take full advantage of government work in this area. IMAGINATION AND INTERCOIvIMUNICATION

While it might require less mental effort to gear your research to what the customer tells you he wants, it is not safe to rely on him for your creative thinking. As already observed, the customer did not create polyethylene, Teflon, or polyformaldehyde. Nor did the packaging industry demand a shrinkable film or the housewife clamor for a product like Saran-Wrap. This kind of creative thinking was generated by the company that later came to manufacture the product. But this does not mean that we should ignore the customer's needs and wants ("wants" are often more important commercially than needs). A vigorous market research effort should be carried out to learn everything possible about them. The study must go further than just making inquiries. If carried out with the proper imagination it can reveal things the customer should want, even if he does not realize it. In other words, the company's market research staff should do the creative thinking for the customer. Suitable market research, marketing research, or commercial development personnel should be assigned the task of covering every phase of industry that may hold potential interest for the company. Such intensive studies may uncover markets or potential markets for products that perhaps can be readily developed from known research information. When this kind of situation is found, an end-product-oriented development project should be initiated at once.

Top-notch research chemists, fresh from school, are up-to-date in their special field of

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science but not in industrial needs and wants. This kind of information must be brought to their attention. Liaison between commercial development departments and research personnel must be strong. Periodic lectures by various members of the commercial development department, or occasionally even the sales department, are a good idea. Most new products result from an observation of a unique property for which a commercial application is envisioned. This observation is most likely to be made by the research chemist who may be the only one in a position to make it. If he does not realize the unique property has commercial utility, a new product may be lost, so it is important that he know what is wanted in the field. CAREFUL APPLICATION TESTING

Too much is left to chance if the program stops here. Many of the desired properties cannot be detected by the human senses. Sucaryl was discovered because particles of dust in the air tasted sweet. If it had been a product with outstanding ultraviolet absorbing properties, it would have been missed. To get the maximum return from research, the discovery of valuable properties must not be left to chance. It may have been for any one of several reasons that a new chemical was made in the first place-to test a scientific theory or to attempt to fill a known need. Whatever the reason, the important thing is to test it after it has been made. This is where any practical utility will be discovered. A research chemist should never put a new product on the shelf without submitting it to the applications testing group; it should be a routine matter. Failure to do so may significantly lower the potential yield from the research effort. The applied research section should have a systematic screening program for all likely new products from research. An experienced applied research man can judge from the

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structural formula of the new compound whether it is worth testing and for what. For example, he will know whether the new material might have good electrical properties or whether there is no point in making this test. The list of important properties to be on the lookout for should be kept up-todate from information supplied by the commercial development department, which must work with the applied research group.

and appears profitable, then it/s within our field of interest. We can learn this new business as well as anyone." As I have said, he was very successful, and he found research productive.

ENCOUI~AGING FREE THINKING

Management has more to do with this matter of research productivity than it may realize. In the past, management felt it had discharged its responsibility for research when it appropriated a generous budget; those days are gone, and they are not coming back. Gone too are the days when research delivered a host of potential new products. Corporate planning in those days could be done simply by letting those new products vie with each other for the corporate investment dollar. The product with the best fit and highest profit potential won out. In research, as in many other areas, we are being forced to change from a land-of-plenty philosophy. We must now consider not only how best to look for new products, but also, and most important, what kind of new products we are looking for. If we are concerned about the productivity of research, then we had better be concerned about corporate planning. At first glance, it would seem that a corporate head who does not know where he wants to go is as bad as an inventor who does not know what he is trying to invent. If eanght in this trap, management might better turn to research for the discovery of the most suitable objectives rather than trying to invent them. What kind of new products should management be looking for? Should it look for new or cheaper raw materials or should it seek new uses for present products? Should it integrate forward or backward or both? To improve profits, perhaps it would be better to diversify. If so, into what areas? How close to the ultimate consumer should the company get? What areas should it specifi-

When applications testing has established that a unique property has been discovered, one of the more creative people in the laboratory may envisage how to utilize it as a new product and thus become its champion. Every successful new product has had its product champion, and most product champions have had rough going, at least in the early stages. Something is always wrong with every new product, and someone always delights in pointing it out. The product champion must overeome these criticisms and often he needs help. Research personnel should be reminded that their job is to discover what may be new and useful about a product and to find ways of eliminating or minimizing its obvious faults. To overemphasize the faults at the outset may crush a new product. When the potential new product is developed to the point where it can be presented to management, research productivity can be increased in another way. In deciding whether this new product is appropriate for the field of operations of the company, management should broaden the target a bit and be willing to consider making a product that was not preconceived as a company objective. It would not be the first time that the new business proved to be much better than the one sought after. In considering this matter of what was and was not within the areas of interest to his company, one eminently successful corporate head used to proclaim, "If it's an honest business, well protected by patents,

MANACEMENT'S JOB

CORPORATE PLANNING

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INDUSTRIAL RESEARCH--IS IT OUTlkiODED,~

eally avoid? Careful market research and analysis will help management answer these questions. It cannot answer them off the top of its head.

I N V E S T I N G I N I~ItOJECTS A N D M E N

Management may not realize that it is largely responsible for some research inefficiencies. For example, I know of several research projects in more than one company that were taken through the pilot plant stage at a cost of many millions of dollars. At this point, of course, management had to decide whether or not to invest the money in a fullscale plant. The answer was "no" because it was not in accord with the company's business objectives. This huge waste of research dollars was not the fault of the ned department. An examination of the questions concerning the nature of the business, which were raised when the decision finally had to be made, showed that the answers to these same questions were readily available when the project was in the research phase and when only a few hundred thousand dollars had been invested. Was the project so small at that time that it was not worthwhile for management to ask these questions when they should have been asked? Should management consider projects only when they reach t_he rail/ion dollar a year spending level? Of course, it is impractical for management to consider every project of, say, $10,000 or more in the research laboratories. Nor is it necessary. It needs only to spell out to the research staff the type of business it is interested in entering and the type it is not. A complete understanding of corporate objectives by the entire research staff is perhaps the most essential factor in improving research productivity. No research man wants to waste time on a project he knows will not be accepted by management. With this understanding, the research department can institute sound plans, recruit the right kind of personnel, set up the proper

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screening tests, and select appropriate ideas for further study. Even the reforestation program can be directed toward planting the right kind of trees if we just know what kind of trees management wants. The importance of a high-caliber staff deserves emphasis. Nothing could be more expensive than a researeher who can be had at a bargain salary. We can put a man in a snappy football suit and send him out on the field, but this does not ensure his winning any games. The cheapest research men are those of highest quality and therefore the most expensive salary-wise. A small staff of highly competent researchers can outproduce a staff of mediocre people three times its size and will cost less money. This seems to be obvious yet many companies skimp on salaries feeling that research is simply a matter of luck anyway. WEEDING

THE RESEARCH

GARDEN

With corporate objectives clearly spelled out, management will not need to keep frequent tabs on research to make sure all is going well. It should, however, provide for an annual review of the entire program. At this time, certain types of projects that somehow seem to creep into many industrial research laboratories may be revealed. There are several common types of research weeds. The "old shoe" project is one that has been on the books for several years and may no longer be as promising as when it was initiated. Management tends to grow used to these old shoes and perhaps does not question them as much as it does the brand new

ones.

The "me too" project is introduced as a quickie because the product has proved successful for someone else. For instance, is the laboratory now working on polyformaldehyde or synthetic leather? The research staff should have more originality than this. The "ham-and-eggs" project (which takes its name from the saying, "If we had some ham we could have ham and eggs-ff we

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had the eggs") begins with wishful thinking on the part of someone in an influential position. Without benefit of factual analysis he promotes Product X as a good business to be in and bases his belief on two false premises: "If we had "Product X' at the right price, we could develop a tremendous market," and "If we had a market of this size, we should be able to make Product X at a very low price." The "big dear" project is one that someone thinks would make a nice business if the product can be developed. It is soon apparent that the potential sales volume is low, and after running for x years the project has already piled up in research costs more than would be returned to the company by way of profits, even if the project were completely successful. A careful market study will quickly expose projects of this type. 99.

Such weeds can sap the vigor from the legitimate projects and should be removed as soon as identified. With the pressure on for better yields from the research dollar, we cannot afford such lax research management.

THE MOST practical solution to today's problems of research productivity is to achieve a better balance between end-product-oriented research and the longer range basic research that feeds it. Our basic difficulty is that the storehouse of fundamental knowledge has been depleted. It must be replenished. While this is being done the pace will be somewhat slower. Management's responsibility is great. It must recognize that corporate planning is a fact of corporate life. It must know where it wants to go, and even more important, the research staff must know. To this end it must see to it that imaginative market research is carried out not only to help crystallize its objectives but also to provide essential guidance to the la&D program. Good liaison among all groups is essential, and the whole area of communications should receive careful management attention. Industrial research is no longer an experiment: it is a mature business now. The time has come when we must be "scientific" about the way in which we carry it out so that once again it can become the incubator for new growth products that it used to be.

T h E present observer is inclined to view the American pattern of individual leadership as a great strength of this nation, but the passivityof the masses as a weakness. These two cultural traits o~ America have, in their historical development, been complementary. But individual activity and mass activity are not necessarily antagonistic principles. It is possible to envisage a future development where the masses in America participate more intensively in political activities of various sorts, but where, nevertheless, outstanding individuals are permitted to have wide space for their initiative according to the great American tradition.

--Gunnar Myrdal CHALLENGE TO AFFLUENCE

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