Planning for innovation

Planning for Innovation H. B. Locke,* L. A. Wilson and K. Grossfield NRDC Long Term Planning Department

This article is basedon a presentation given by the authors to the Society for Long Range Planning and reprinted from the NRDC Bulletin. it is concerned with corporate planning in the NRDC and illustrates the philosophy and approach adopted in planning for innovation in an organization whose work is of a longerterm nature than most companies.

LANNlNG

IS AN ESSENTIAL BUSlNESS

TOOL

P

which has implications for production, marketing, financing and all the other components of management in industry. It is, however, not easy to define since, though it is concerned more with judgments than hard facts, it must be definite in recommendations if it is to be effective. Planning is much more than prediction and preparing the bases for future work. While attempts to foretell and even anticipate the future form an important part of the process. planning is really concerned with evaluating and recommending options for current action. whose results will materialize within the future environment suggested by forecasting. Planning, in this sense, is essential to any forward-looking organization, and particularly to NRDC, whose work is of a longer-term nature than that of most companies. Top management in NRDC therefore makes especial use of planning in reaching policy decisions, particularly having an in innovative situations,

*Brian Locke was Head of the Planning Department of the National Research Development Corporation, having previously been Manager of the Industrial Chemistry Group which he set going in 1965 and ran for 6 years. He is now Head of Special Projects of NRDC, and also a Director, and Chief Executive, of Combustion Systems Ltd (owned by NCB, British Petroleum and NRDC to develop fluidized combustion for heat and power generation with high efficiency and minimal atmospheric pollution.)

APRIL,

1974

important impact on the over many years ahead.

Corporation

NRDC was established 24 years ago in order to secure, in the public interest, the development and exploitation of inventions -an activity involving a long time scale. Much of the routine work therefore takes on the character of long-term planning. This work is shared between seven Executive Groups, each responsible for a specific area of industry and technology, supported by specialist departments providing services in patent, legal, financial and other matters. Eight years is often regarded as a typical period between the creation of an invention and its use on a commercial scale. Often, several years of development work may be needed in order to assess the likely commercial outcome from an invention, however worthwhile it may seem on scientific or social grounds. Illustrating this aspect, NRDC’s total investment to date of f51 million in projects, patents and administration has so far produced an income of some f30 million. If, however, the value of future income expected to arise from these past investments were added, the total would exceed expenditure by a substantial margin. Inventions come to NRDC from two main types of source. From one, where the research has been funded by government in its own establishments or in university laboratories, the patents are often assigned to the Corporation for development and licensing to industrial firms. The other main inventive source is industry itself, and NRDC is frequently asked to participate in development. In this case, it is usual for the company concerned to retain the rights and to undertake the manufacture and marketing, so that NRDC’s role is a supporting one in providing part of the finance for the joint project development programme, and recovering proportionately from the venture when successful. Private inventors also seek the support of NRDC for the furthering of their ideas,

but this is hardly an area where planning can be applied-it is a matter, rather, of reacting to proposals. At the same time, NRDC takes its own initiative in seeking developmental opportunities in the public interest, and this is one of the major functions of the Planning Department. The generation of new projects requires potential schemes to be crystallized out from diffuse situations where needs can be identified, or opportunities can be forseen, but where some particular co-ordinating or creative effort may be required. Corporate Panning. which is the other main task of the Planning Department, involves the establishment of objectives for the Corporation to attain as a whole through its Executive Groups. This has been done, in consultation with senior management, by the preparation of a 5year corporate plan, now in operation. Each of these two aspects of the work involves positive attempts to plan business on a long-term basis, and market forecasts and the evaluation of prospects are key factors in both these activities. THE GENERATION

OF PROJECTS

While NRDC maintains close contact with government laboratories, universities and research associations, it plays no organizing part in publicly-funded research. Its task is to develop and commercialize the inventions and innovations that emerge, The majority of the projects supported by NRDC have been proposed by the entrepreneur or the inventor because there was a need for financial assistance to share the risk and to enable the R & D work to be carried out at the pace required to meet the market. The Executive Groups assess such project proposals with a view to selecting those with a reasonable chance of success. The Groups also apply creative initiative to situations where the solutions to a known need may be apparent. In contrast, Planning Department tends to

19

involve itself in situations where. although a need may be apparent. there is no indication at first of the nature of the technical innovations required to satisfy that need.

This type of project generation can be a lengthy and difficult process. It requires. first, the isolation of a worthwhile situation and then the setting up of whatever simple organization of people most suits the occasion. Such a group would often include independent technical and commer cial experts, perhaps government or university representatives. and potential industrial partners with an interest in contributing in some way to the project under consideration. In practice this activity may proceed along some of the following lines: (a) Discussing situations which appear likely to throw up an opportunity for an industrial Compaq to propose a joint l’enture with NRDC. Starting points may arise from direct contact with people in industry, and in discussions of professional societies, and may also sometimes be found in the reports of companies themselves and by studying published statistics. Discussion with important sources of invention such as the research associations and liaison with organizations engaged in long-term planning are other routes to the identification of opportunities. (b) Bringing together groups of people with a common interest in a particular area of innovation. On such occasions, NRDC acts as a co-ordinator in organizing meetings or seminars. attended by experts from appropriate technologies. The catalytic action of reconciling different approaches and correlating issues is also important. As an example. a seminar on the practical application of solid state physics which NRDC held some years ago resulted in possibilities being highlighted. A number of these were then worked up into development projects, some successful and some still current. (c) Creating new situations from speciJic studies of future needs and problems. This type of activity can lead to projects initiated by NRDC which attract interest from individual companies at a later stage when issues have been clarified and some positive results achieved. It is a most challenging process, with a high risk of failure. The following case studies have been chosen to illustrate different ventures of these kinds.

20

EXAMPLES

OF

PAST

PROJECTS

area in which. some years ago. major growth was expected. Considerable research was being done with a view to long-term practical applications such as electrical superconductivity. NRDC brought together the relevant manufacturers to form a steering committee which considered the possible lines of advance and helped the overall development of cryogenic equipment in the U.K. Some technical success was achievedina joint project to develop helium refrigerators for use below 20°K. Much work. too, has been done directly in industry. Cryogenic

engineering

was

3n

An attempt to encourage the development of ultrasonic flow meters, however, was not successful. Alternative types of instrument became cheaper and more accurate. These two examples suggest some of the difficulties inherent in the sulection of subjects for the generation of speculative projects. The expenditure of money and effort is in itself, no guarantee that a commercially successful project will result. Experience with these and other ventures has shown how important it is for any project to have a champion who will personally provide the push and enthusiasm to reach a useful conclusion. He will usually need luck, too, as well as judgment. In the case of projects initiated by NRDC, this drive must come from within the Corporation. SOME

CURRENT

PROJECTS

Examples of research and development work co-ordinated and sometimes started by NRDC include: Fluidized Combustion The application of chemical engineering principles to the combustion of solid or liquid fuel in a fluidized bed of inert particles offers the possibility of minimizing the atmospheric pollution caused by large power stations. while at the same time improving efficiency and lowering costs. The important departure from previous work in other parts of the world was to combine the high volume efficiency of heat release with the high rates of heat transfer obtainable when water/steam tubes were immersed within the fluidized bed so that combustion temperatures are below those likely to melt or volatilize ash consistuents that cause fouling and corrosion of boiler tubes or gas turbine blades. This makes it possible for the combustion to be carried out under pressure, leading to considerable cycle design flexibility and opportunity for higher generating efficiency. In addi-

tion. fuel sulphur can be retained by limestone or dolomite in the bed. so eliminatinEc the need for Rue gas washing. even when atmospheric pollution control is

strict. Fluidized combustion should therefore be particularly useful in parts of the world where fuels have a high sulphur or ash content. for example in the U.S.A. A considerable portfoiio of patents and industrial know-how had been built up by the National Coal Board. who asked NRDC to provide the initiative for continuing development and commercial application. This responsibility was accepted by the Corporation and the possibilities were explored with industrial companies and government bodies, both at home and abroad. British Petroleum Ltd.. too. had done good work in the area. both directly and via contracts and thev welcomed the idea of a central co-ordination of development and commercialization. Development work is now going ahead at several centres, under the auspices of a new company-Combustion Systems Ltd.set up jointly by NRDC, NCB and British Petroleum. Commercial progress is being made in parallel with technological advance, and work is being done both for and with government and public organisations in several countries abroad, particularly involving high pressure combustion in combined steam/air gas turbine power generation cycles. Figure 1 illustrates part of the development facility at BCURA Ltd. at Leatherhead, Surrey, which has the only large-scale pilot fluidized pressurised combustor in the world. Aids for the Elderly The growth in public concern about caring for old people seemed likely to lead to a considerable increase in the level of government expenditure for this purpose through the Department of Health and Social Security. In parallel, a study of insurance and pension funds had revealed that, for various reasons, the purchasing power of the elderly could be expected to increase substantially. It seemed logical to consider what the development needs might amount to. The needs of the elderly and of the disabled were discussed with many organizations and with medical and nursing staff. social workers and others. Two specific needs were identified, namely a requirement for toilets or commodes suitable for people who are partly disabled, and a need for a calling device to be carried or worn by people who may be immobilised by a fail and so be unable to reach light warning systems or bell push alarms.

LONG RANGE PLANNING

calling receiver used widely in hospitals and industry. The wearer, when in trouble, presses a button on a miniature radio transmitter carried on the wrist or in a pocket and the emitted signals alert a warden in a coded manner identifying the person involved. The aim here is to supply a device which is sufficiently light and compact to be carried at all times and reliable enough to ensure that false alarms do not occur. The allocation of transmitting frequencies has to be agreed with the Ministry of Posts and Telecommunications and prototypes are being made for pilot trials in actual service next year. Formed Coke

Another Planning Department activity in the energy field concerns the development of a process for forming coke, suitable for use in blast furnaces, from non-coking coals. This is becoming necessary because of the scarcity of the types of coal from which coke has traditionally been produced. A large industrial organ ization had worked up a process for thermally treating particulate materials, and had accumulated many years of largescale operating experience. More recently, a chemical engineering contractor had joined forces over the adaptation of the

Figure 1. Ftuidised oomburrtion.

Detailed analysis of mobile toilets then available on the market confirmed the need for an improved design, but indicated future sales problems in that the primary purchasers were local authorities and hospitals. These potential buyers were approached to guide the development of novel equipment along the lines which would be of most value to them. A Steering Committee was formed with the co-operatidn (including financial contribution) of two charitable organisations as well as NRDC and with the participation of the Department of Health and Social Security. Designs were commissioned and models made and tested, one of which is shown in Figure 2. Now that the prototype equipment has been successfully developed, the DHSS has undertaken to pay all the costs of the construction of further models and for evaluation trials which are an essential preliminary to the placing of bulk orders. Meanwhile, negotiations are proceeding with potential manufacturers. Equipment to meet the second need is not yet so far advanced, but good progress is now being made with the help and expertise of the National Corporation for the Care of Old People and with valuable support by the DHSS. ,4 device is being deveioped which is the reverse of the

APRIL,

1974

Figure

2. Aids

for

the

elderly.

21

process to the carbonisation of pelletised ioal and trials on a small pilot unit had seemed promising. A development company has been set up, supported by these two companies and NRDC, to continue the work with commercial objectives in mind. The marketing issues are complex, as coke is onfv one of many factors in the blast furnack operating regime and there are competing processes, although none that is truly commercial. Discussions with the steel

industry have. however? prepared the way for future co-operation, including market triais. The development work seems most promising and, if successful, should lead to commercialization throughout the world. Figure 3 shows examples of the product now being made in pilot quantities. SOME AREAS’ UNDER CONSIDERATION

These are certain areas of activity in which significant developments are likely

to occur during the next 5 years. for such

reasons as shortage of raw materials. shift (usually increases) in purchasing power, or changes in legisl.ation. Having selected such an area, Planning Department studies the existing situation and shares in the forward thinking of companies and organizations already involved, sometimes employing the help of expert consultants. If a future need can be foreseen, the satisfaction of which would be in the public interest, then the exercise

Figure 3. Devsioping “Formed coke”

22

LONG RANGE PLANNING

up which aims to establish

seems to be steadily increasing year.

APRIL,

1974

a unique

year by Figure

4. The

vehicle

interchange

point

23

?t seems likely that all these trends wiil lead to a situation where economic and other pressures will enforce quite drastic changes because any considerable expansion of present methods of goods movement can scarcely be conceived. Such changes will almost certainly need the evolution and application of new technology. NRDC is putting forward one possible system known as the Vehicle interchange Point, which is now under active discussion with the distribution industry. This is conceived as a form of transfer depot where goods arriving in large vehicles from various manufacturers can be sorted quickly and consolidated into unit loads for delivery by suitably designed local delivery vehicles to the individual retail outlets within a town centre. The resulting effect on vehicle movements in the town is illustrated in Figure 4. At the same time, the costs of operating commercial road vehicles are rising sharply. These costs include running costs, standing charges, maintenance and the consequential cost of down time, and the technique of whole life costing is being increasingly adopted by operators. NRDC is therefore exploring, with both users and manufacturers, possible ways of reducing the amount of down-time and the cost of effecting repairs. One of the approaches under consideration is the application, at the vehicle design stage, of ‘rapid-strip’ principles which would aim to improve the accessibility of those components or assemblies which require frequent attention or replacement. Another way being studied to reduce whole-life costs is the development of improved instrumentation both to provide a rapid indication of faults in service and to help the workshop inspector in the diagnosis of troubles and specification of maintenance work to be done. Needs of Handicapped Psople Although the need is usually obvious in individual cases, this area has been neglected in the past, probably because the market appeared to be too small to be of interest to manufacturers. However, as a result of bringing together the appropriate parties, and providing the necessary initiative, it seems likely that co-ordinated demands will prove sufficient to be economic. Planning Department expects that the projects already started will lead on to a range of developments which will make life easier for the old and the infirm. These developments include extensions of present projects; commodes are being developed for private homes as well as hospitals, WC seats for the infirm are being evaluated and work is proceeding

24

on the miniaturisation of emergency call aids. In addition, new ventures are being proposed to develop special seat belts for children, particularly handicapped children and to devise means to assist elderly people to get in and out of cars. The aim will be to provide items of equipment designed to enable people who have some physical disability due to age, disease or accident to live at home rather than enter hospital or some similar institution. Independence requires some measure of mobility, and it is likely that there will be scope for improvement in personal transport.

adopt the practice of Corporation Pianning and, in recent years, techniques have been evolved which are applicable to most types of corporate organization. The first step in the preparation of ;I corporate plan is to define the basic objectives of the organization, and then to propose targets for the future which can be measured in quantitative terms. The objectives of NRDC are defined by Acts of Partiament (the Development of’ Inventions Act 1948 and subsequent amendments). The preparation of target figures

THE SELECTlON

As the business of NRDC is concerned with inventions resulting from research carried out in many different places, there are special difficulties in forecasting. The future of the Corporation is, however. influenced in part by actions taken as a result of looking ahead and implementing the recommendations contained in the Corporate Plan. The current Plan covers the 5-year period to March 1978. specifically providing for up-dating and extentions at regular intervals. In preparing the introductory chapters, a review was first made of the primary and secondary objectives of the Corporation ; this was followed by an analysis of the current position, including an assessment of the external challenges and opportunities presented by the general economic situation, as well as of the strengths and weaknesses of the organization itself. Individual plans were then drawn up by the Managers of the seven Executive Groups and of the Planning Department, setting targets in terms of income and expenditure and making proposals as to how these might be achieved in the different areas of business and technology. The aim here was to maintain the level of business activity that seemed both desirable and appropriate, and at the same time to make provision for the fruition of developments currently only in early stages. At this point the target figures were compared with forecasts, which are estimates of future results on the basis of past trends and current knowledge but assuming that no new actions are undertaken. There is always a gap between what is desired and what is expected and planning includes an attempt to eliminate this gap by proposing new strategies and initiatives. The targets should therefore provide challenge, while being capable of being reached. The plan sets out guide lines for the development of detailid plans of action. Monitoring procedures are also proposed.

OF NEW AREAS FOR lNVEST1GATION

Various methods are employed to define areas in which future needs and problems are expected to become important, ranging from the ‘flash of inspiration’ to the methodical study of statistics. Contact is also maintained with forward-thinking organizations, both at home and overseas. Use is made of different ways of thinking ahead and marshalling concepts and ideas. These include the Delphi technique, ‘needs research’ and also morphological analysis which, in this case, involves considering in turn all the various factors resulting in a need for innovation in relation to specific fields of activity. Tabulated on a matrix, this can suggest particular lines for development and each of these is then considered in relation to the different ways in which NRDC can initiate action. Anareaforstudyisnotconsideredinisolation but contact is made with people who can contribute suggestions from a basis of knowledge and experience. These can lead on to the definition of a problem and ultimately either to realization that other solutions to the problem are being worked upon elsewhere, or to proposals for possible solutions in which NRDC should usefully take some part. Some of the areas under investigation have included energy, mineral and other resources, new problems likely to be met in industry, pollution and the environment, changes in volume of production or consumption, high price imports, new sources of potential technology, potential exports, leisure, and social needs missed out by the welfare state. In each case the needs OF development have been considered in relation to the possible need for financial involvement, and the possible role for NRDC. CORPORATE

PLANNlNG

Industrial companies have found it essential to their survival and growth to

requires the study of financial considerations, including past records and current commitments.

LONG RANGE

PLANNiNG

This process requires a regular reassessment of both targets and forecasts, as well as a constant awareness of the business and economic situation. NRDC maintains continuing liaison with government departments and with industry, and the Planning Department studies national and international economic statistics, including data from the EEC and elsewhere, so that the Corporation’s activities can be seen and maintained in proper perspective.

to review at regular intervals both the financial performance and the work programme in the specific areas. This financial discipline is particularly essential to the business of NRDC, whose activities involve both revenue accounting and investment as major tools in technological development. To keep the NRDC Corporate Plan changing up-to-date in a constantly situation, arrangements have been made to review the content from time to time, and incorporate amendments as experience is gained. In the development of inventions, 5 vears is a relatively short time scale, but the intention is to maintain a dynamic document which always looks this far ahead in some detail, and beyond 5 years in general principles. The plan is intended to be a practical up-to-date document that is useful to those who contribute to it. Tabie

1.

Some

Major new opportunities-e.g. Major spending areas-e.g.

SUMMARY

Planning work, as described above, is carried out in NRDC by a small team which looks across and beyond the somewhat artificial boundaries of the academic disciplines and categories of existing industry. The services of specialists are called upon when required, whether in engineering, science, statistics, market research, or

Directions

underwater

of

Planning

Thinking

technology

agriculture

Major areas .for new iegisiation-e.g.

environmental

pollution

Situations where a large need may not have been apparent-e.g. New scientific possibilities-e.g. General technological

advance-e.g.

Short supplies, expanding Alternatives coats

holography

to important

Social problems requiring action-e.g.

APRIL,

1974

new high-property

markets-substitution-e.g. but declining

resources-e.g. crime

aids for the disabled

applications composite

materials

synthetic diamonds farmed-coke

from non-coking

whatever other expertise may be required in a particular case. The examples of development projects have one thing in common-each situation involves NRDC initiative in some way. The resulting ventures are additional to the very many licensing and development situations across the whole span of industry and technology that arise from proposals made to NRDC and which are handled by the Executive Groups in the ordinary course of their work. The value of this planning approach is that such a wide-ranging survey of future needs and problems can, and does. uncover opportunities for the generation of projects at an early stage so that, after a development interval, the industrial needs can begin to be met. Schemes can be tentatively put together from vague. diffusg and uncertain beginnings and later, when the issues have been made clear, may be handed over as routine items of business to the Executive Groups of the Corporation. In holding this responsibliity for new projects, at least in their early stages, as well as for the Corporate Plan. Planning Department retains a valuable contact with real development situations. This provides a sense of realism derived from today’s decision-making to temper the enthusiasm for the opportunities of tomorrow. It is very important for planners of vision to have their feet on the ground. 1