Marketing a scientific research organization

Marketing A Scientific Research Organization Daniel M. Slate Lothar G. Winter

The marketing concept has spread quickly in the business community in recent years. The application of this concept in scientific research organizations seemed incompatible with the goals and images of these institutions. Today, the nation's leading research organizations (for example, Los Alamos National Laboratory) are taking a closer look at the marketing concept. This is a case study ofthe Los Alamos National Laboratory. Throughout most of its existence, the Laboratory's product was of such urgent national defense need that marketing was not required. Recent changes in the administration of nuclear technology funding and in the historically supportive congressional structure may threaten the financial base and encourage the Laboratory to pursue funding from other federal departments or agencies. Because of its governmental dependency. Los Alamos cannot overtly advertise for additional work but must rely on contacts between its personnel and potential funding departments and agencies. These developments and restrictions may require Los Alamos to consider future marketing requirements and to become more market and client oriented . Address correspondence to: Professor Daniel M. Slate, 231 Graduate School of Management, The University of New Mexico , Alburquerque , New Mexico 87131 .

Industrial Marketing Management 12, 281-286 (1983) © Elsevier Science Publishing Co ., Inc., 1983 52 Vanderbilt Ave ., New York, New York 10017

INTRODUCTION

In recent years the marketing gospel has spread quite fast around the world business community , and countries like West Germany have closed the academic gap in marketing. However, the application of the marketing concept in the public and not-for-profit sectors of our economy has increased very slowly. For many scientific research organizations with world-wide reputations, marketing seemed to be a concept incompatible with their image. Nevertheless, even such an outstanding research organization like Los Alamos National Laboratory is now taking a closer look at the marketing concept. For many of the older scientists, the need for a marketing orientation has come as a shock. Wasn't it the Manhattan Project at Los Alamos, New Mexico , during WW II that saved this country in the race for atomic power by 90 days before the Germans could get control of it? Why should scientists of world-wide reputation be forced into the thoughts of a conceptual framework of marketing? Should their work not be value-free? Why should some practical use for society come out of the Laboratory 's work? This identity crisis is not only faced by Los Alamos but by many other scientific research organizations in this country and around the world. 281 OOI9-8501/83/S03 .00

Our paper will look at the Los Alamos National Laboratory as a case in point. We hope that other similar scientific research organizations will become aware of problems they may also encounter in this field and that the concept of marketing will become more acceptable to their organizations.

MARKETING AT LOS ALAM05-A GENERAL OVERVIEW The Los Alamos National Laboratory has existed since 1943 as one of two nuclear science research and development laboratories in charge of designing nuclear weapons for the US war reserve. Lawrence Livermore Laboratory in California is the other. Los Alamos is currently operated under US Department of Energy (DOE) contract with the University of California. The Laboratory's mission, other than nuclear weapons design , is to contribute to the solution of national energy problems. It is divided organizationally into three parts: one to support nuclear weapons development , the second to support all other technical work, and the third to support the administrative needs of the Laboratory . In weapons work, Los Alamos is part of a duopoly serving a monopsony , the federal government as represented through a single buying agency, the DOE Assistant Secretary for Defense Programs . As such, the demand for weapons design is controlled solely by the federal government, its policies , and finances . In nonweapons work, Los Alamos is generally part of an oligopoly serving a oligopsony , the various assistant secretaries within the DOE, Department of Defense (DOD) agencies, the Nuclear Regulatory Commission (NRC), and other government agencies. DANIEL M. SLATE is a professor of management at the Robert O. Anderson Graduate School of Management at the University of New Mexico. He received his Ph.D. at the University of Washington (Seattle) and did postdoctorate work at Stanford University (Palo Alto). Dr. Slate has been on the professional academic staffs of the University of Washington . Michigan State University. and the University of Illinois. LOTHAR G. WINTER studied at the University of Freiburg , Germany, and at the Wharton School of Commerce and Finance in Philadelphia, PA; he received his Ph.D. degree in international economics. Dr. Winter belongs to various professional assoc iations in Europe and the U.S., and is on the board of directors of American and European industrial organizations.

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Funding for the Laboratory facilities and programs has resulted chiefly from Congressional appropriations in response to DOE requests and lobbying by Los Alamos personnel. Growth has resulted mainly from the expanding role of the Laboratory into the technologic fields of laser fusion and energy . There are numerous threats and some opportunities facing the future of the Laboratory. Some of these environmental factors are a comprehensive nuclear test ban , the energy "crisis," loss of levelof-effort funding (imposition of zero-based budgeting for research), greater allowed diversity, and substantial loss of the Laboratory 's influence with Congress. Through most of its history, the Laboratory's product was in such urgent demand for national defense purposes that marketing was not required, thus, little concept of or organization for it exists . Nevertheless, Los Alamos has had marketing objectives to dominate at least one-half of the nuclear weapons design market, with designs in all segments, and to make technical first achievements in various non-weapons fields . The primary product of the Laboratory is information and knowledge derived from scientific experiments and calculations supported by forefront-expanding research in numerous technical fields. Although Los Alamos aggressively attempts to increase the users of its services , user sales, as such, have little meaning for a government-funded scientific research laboratory . Yet, continued financial support is dependent on funded achievements for various departments of central government because Los Alamos is not independently funded as are the other national laboratories. Support is primarily provided by the DOE, however, recent changes in the administration of nuclear technology funding and in the historically supportive congressional structure may threaten future support and encourage pursuit of funding from other federal departments. To increase public awareness , congress, and the federal departments , Los Alamos has expanded its publicity activities. Because of its governmental dependency, however, it is not allowed to advertise overtly in the solicitation of additional work. It must rely on personal contacts between Laboratory personnel and potential funding departments and agencies. These developments and restrictions may require significant consideration of future marketing requirements and organization. In view of the size of the Los Alamos National Laboratory, the following case example may seem particularly brief. The limited nature of marketing in a governmentsponsored scientific research laboratory makes an indepth analysis impossible, since many of the normal mar-

keting functions (including the existence of a specific marketing organization) do not exist. This does not preclude reviewing those aspects of the Laboratory that must supply a product to the outside world in return for the sustenance the organization requires, how the interactions and marketing takes place, the environment the organization operates in, and the threats and opportunities it faces in the future . It is unfortunate that the past and projected levels of effort cannot be revealed because it is considered for "official use only"; nonetheless, discussion of the general trends is included here .

THE LOS ALAMOS MARKETING SYSTEM The Concept of Marketing at Los Alamos The marketing concept, defined as the fundamental objective of the organization to be customer (or user) satisfaction , is somewhat recognized by the Laboratory . However, because it is more specifically defined as devoting all activities of the organization to identifying and then producing products to satisfy customer or user wants , it is often not recognized . Where the marketing concept is recognized, it often meets with opposition , being too pedestrian an objective for a scientific laboratory of Los Alamos' stature . This reaction is inherent in the trained attitudes of much of the Laboratory staff and has been encouraged by the hands-off past the Laboratory has enjoyed until very recently.

Los Alamos Marketing Objectives Basically, the marketing objective for weapons research is to attract as many "Phase Ill's" as possible, which has not changed for a number of years. (Phase III is the task of developing a weapons concept into a design

responsible for the full life of a weapon, which is about 20 years. These projects are the core of the weapons design business. Los Alamos has been very successful and presently has more Phase HIs than it may desire to have. The present and expected future of resources have made it difficult to research and develop new weapons technologies and the Laboratory runs the risk of being unable to propose new technologies when its competitor can. At this time, the goal is to acquire one Phase III project per year without reductions on the general level of Laboratory support. (To a certain extent, Los Alamos has no choice in what Phase IIIs it gets, when it gets them, and how many it is conducting at one time, since they are assigned by the DOE.) There have been no general marketing objectives for non-weapons work. Since 1970, individual staff members and staff groups have been allowed to make proposals and accept contracts to research almost any topic they desire, at times, to the extent of having Congressional Acts passed. They have been constrained only by the existing facilities; in some cases, new facilities have been built. However, other projects were not allowed to interfere with weapons work. In cases such as laser and laser-fusion research, seed money from the weapons program initiated programs that were eventually independently funded by DOE Assistant Secretaries other than the defense programs at DOE. In almost all Los Alamos programs, the actual product is information. This information may be the result of measurements made in sophisticated experiments employing complicated devices, or it may result from complicated calculations done on the Laboratory's extraordinary computers. The ability of Los Alamos to apply the extraordinary facilities that have been developed over the years and acquired for weapons development has been an unusual asset in attracting sci-

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suitable for manufacture.) Phase III projects exercise all aspects of the Laboratory's design capability and have lifetimes of about 3 years, although the Laboratory is

entific research interest for non-weapons problems. Also, for a number of years, the weapons funding has paid the total cost of the Laboratory's overhead, thus,

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contractual work could be priced considerably cheaper than many of their competitors. Objectives for marketing in the future will probably seek to stabilize support for the most promising programs. Reductions in weapons funding will, in turn, increase the overhead burden on all non-weapons projects making them less cost-competitive (Figure 1). The Los Alamos Marketing Organization With one possible exception, there is no organizational unit within Los Alamos that is clearly responsible for marketing the products or services offered, thus, a marketing system at Los Alamos is not overtly identifiable. Nevertheless, the nuclear weapons group of Los Alamos customers are clearly identifiable, and one organizational unit has primary responsibility for contact with these customers. That organizational unit is attached to the Director's Office and is called the Weapons Planning and Coordination Group. This unit interacts with the military services, coordinates the development of design concepts, and provides the most direct customer/Los Alamos interaction. The design and development work consists of about 40% of the Laboratory's total effort with

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the remaining weapons work (15%) being weaponsfunded research, still level-of-effort funded. The next most direct customer/Los Alamos interaction is between various Los Alamos organizations, groups and divisions, and the various Assistant Secretaries of the DOE. Prior to the creation of the DOE, there was some interaction with various subunits of both ERDA and the AEC. At that time, however, Los Alamos actually worked for only one ERDA or AEC subunit-the Division of Military Applications (DMA)--and in effect, the Laboratory "belonged" to DMA. Now, the Laboratory belongs to the whole DOE and must interact and satisfy a number of "customer" agencies. In this customer interaction, Los Alamos individuals, groups, and divisions submit proposals (Form 189) to do projects for the various DOE bureaus and agencies, which are reviewed and compared against proposals from other research organizations (competitors). If the projects are acceptable (and not stopped by political considerations), they are funded. The highly specialized technical nature of many of the proposals precludes too much competition, but Los Alamos is competing as it never had to compete before. This funding process is also used in interactions between the Laboratory and other government agencies, on the

municipal, state, and federal levels. These latter projects are called reimbursable projects, which account for about 15% of the Laboratory's effort. Other non-weapons work consists of about 30% of the total. Since the Laboratory is basically funded from federal taxes, the taxpayers, as represented through Congress and the executive branch of government, are also Los Alamos customers. Although interaction with Congress is often very direct, it is reserved for the Director and his legislative liaison officer (a position created only recently). Thus, the Laboratory has no single identifiable marketing system or organizational marketing branch, but depends heavily on contacts between the many organizational units, staff members, top management, and the various customers. The organizational level making the contact is dependent on the Laboratory-perceived importance of the customer. Los Alamos Marketing Information and Planning

Information on the weapons market is derived from several sources, guidance from the military and data from new technical developments, system studies performed in Los Alamos, strategic and tactical requirements, and changes in the political climate. An example of the latter is the development of methods that improve the security of nuclear weapons in response to increased concern with activities of well-organized terrorist groups. Market planning for weapons is seldom practiced, and then very informally. It consists of careful pursuit of advanced technologies that will provide greater options for a potential Los Alamos customer. In a sense, it is new product development, but without much cognizance that this is what is actually occurring. There is virtually no market planning for the nonweapons activities of Los Alamos; only that done intuitively by individuals, for those trained in marketing at Los Alamos are very rare, indeed. As for marketing information for the non-weapons activities, the information that filters into Los Alamos derives only from personal contact by the staff with potential sponsors. Los Alamos National Laboratory is beginning to recognize the importance of satisfying customer wants and uses. In the process of satisfying these needs, the building blocks of a total marketing system are being created and eventually will be staffed. Los Alamos now needs to formalize its marketing organization by creating a marketing information system and a marketing planning group to develop a Laboratory marketing plan. These steps will integrate the marketing

TABLE 1 Los Alamosmarketingenvironment Economic System

Competition Competition (for survival)

- Lawrence Livermore Laboratory -U.S.S.R. - Chinese People's Republic

Energy Crisis Technological pace and increasing cost of technology Inflationary impact on budget Socio-Cultural System Needs for national security -

real vs. unrealistic popular assumptions of Soviet benevolence

"Ban the Bombers" Pressure for disarmament Ecological movement Government System Energy Research and Development Agency Policies SALT Talks and other treaties Short-range budgeting Environmental Protection Agency Occupational Health and Safety Act Equal Employment Act Disclosure Act Long-range planning made more difficult because of political uncertainty Politically motivated concessions

mix, with more emphasis on publicity and a solution to problems of the sales force. Finally, Los Alamos must recognize the importance of marketing research. It must utilize its technical staff and computer hardware to develop models to predict environmental trends and future customer requirements (Table 1). SUMMARY AND CONCLUSION

In recent years, the modem marketing concept has spread from the private to the public sector. Many research examples have been provided for hospitals, churches, and universities, but very few studies have been addressed to our research laboratories and their difficulties in changing from an almost purely production-oriented to a more marketing-oriented company. Many people inside and outside of Los Alamos National Laboratory are not clear about its primary purpose, while others believe it has a definite mission, but cannot agree on what that is. This causes mixed efforts and confusion that can be detrimental to the morale and performance of Los Alamos personnel. For example, some say that their business is scientific research, while others believe that their business is energy or weapons. Los Alamos National Laboratory is frequently criticized in the first instance because it has never produced a Nobel prize winner, and in the second instance because it

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diverts its attention to matters other than energy or weapons. Scientists and engineers are confused when clients ask them to manage an industrial contract for a demonstration project, or when certain members pursue lowtechnology enterprises that compete directly with industry. On the other hand, many Los Alamos scientists believe they can define a mission for the laboratory that will incorporate its diverse activities and what most of them perceive to be their major contribution to society. The problem with defining their business as either scientific research or weapons or energy is that they are defining a product that must be sold rather than a problem that must be solved. This may not have an immediate impact on Los Alamos, but it could cause slow deterioration over the years. For example, the railroads are in trouble today because they thought they were in the railroad business instead of the transportation business. Hollywood was almost wiped out by television because they thought they were making movies instead of providing entertainment. Scientists and engineers at Los Alamos can easily see the dangers of instrumentation for instrumentation's sake, but they also ought to realize that these dangers apply to other products, such as weapons and energy and undirected research. Some Los Alamos scientists and engineers believe that their business is to apply advanced technology to national problems. This motivates the development of weapons to strengthen the nation's future defense posture. They are also addressing national problems in energy, health, and agriculture. In most instances, however, they have chosen a problem that they hope to solve by innovative application of advanced technology. This approach to advanced technology supplies the drive to scientific research, and in tum, must be directed along the appropriate lines. In the Los Alamos environment, scientific research exists as a part of a parent program. Originally, parent programs justify funding for the research by specifying either direct or spin-off benefits. If the scientific research is necessary to meet the goals of the parent program, then Los Alamos will be requested to do it as background to the application of advanced technology. On the other hand, if Los Alamos takes the position that scientific research exists for its own sake, then it must sell the idea. This whole concept is simply a distinction between "selling" (finding a customer for its product) and "marketing" (cultivating a patron for its talents). Marketing is probably the preferred way of establishing a more stable position for Los Alamos in meeting the changing needs of our society. Additionally, it is important to distinguish between

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goals-oriented programs and goals-oriented individuals. Good research programs enlist individuals who are motivated by research for its own sake. In some instances, the investigators need never be aware of the goals of the program that funds their work. For example, certain breakthroughs in the field of super heavy elements would probably redirect our nation's program toward national defense. In order to respond to such an event, Los Alamos would require a mechanism to quickly and accurately evaluate the significance of any apparent breakthrough in any emerging field. As an insurance policy, the Laboratory could maintain highly respected in-house experts in these emerging fields with international contacts (even though these experts may never contribute directly to the program of national defense). Clearly, Los Alamos may desire to fund research in super heavy elements even if the researchers themselves are interested in the field only as an end in itself. Therefore, it is not surprising that Los Alamos's best patron-oriented programs contain product-oriented individuals. Scientists and engineers at Los Alamos might want to stress the words "applying advanced technology to our nation's problems." The words science, technology, and applications indicate the type of problems they solve, and the word nation identifies the beneficiary. Only a small fraction of their past and present achievements at the laboratory do not support this mission statement and, therefore, it represents no departure from what they have been doing. Defining missions, objectives, and strategies could have short-, medium-, and long-term benefits. It could clear up some of the confusion and crossed purposes without impacting the immediate business at hand. One year from now, every stock clerk at Los Alamos might know its mission, whereas today, very few Division Leaders can say what it really is. Finally, in the next 5 to 10 years, everyone at Los Alamos might be able to direct their interest, energy, and enthusiasm toward the same objectives and start moving in the same direction.

REFERENCES I. Cox, W. E., Jr., Strategic Planning Systems and the Role of Marketing. American Marketing Association, Business Proceedings, Series 40: p. 209-211 (1977).

2. Advisory Group for Aerospace Research and Development, Neuilly-surSeine (France), Highlights. Corp. Source Codes: 056102000; 400043, Report No.: Agard-Highlights-82 p. 37 (March 1982). 3. Ryan, P. J., Futurism and Long-Range Strategic Planning: Applications to the Navy Strategic Study (Research rept.), Naval Academy Annapolis Md. Corp. Source Codes: 245600, Report No.: USNA-TSPR-49, p. 106 (May 1973).