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If we maintain U.S. R&D leadership, both government support & industry practices need to be reconsidered

Boothroyd Dewhurst : 28 September, 2006  (Company News)
The experts warn: If maintaining U.S. R&D leadership is the goal, then both government support and industry practices need to be reconsidered. They contend that federal funding of basic research is slipping even as industry turns from basic to applied research. Further, they say industry has tilted too far toward equating R&D success more with product development than with optimizing the innovation process. In this, the first part of a four-part series, Recapturing R&D Leadership, IW explores the scope of the challenges facing U.S. manufacturers.
A running, and important, theme revealed from data and trends throughout the report 'is that the support of research and development runs the risk of being viewed as an expense and a luxury, rather than an investment, and one that can be shelved until more funds are available,' says Battelle's Jules Duga, a senior research leader and forecast co-author with R&D Magazine.

The major issue is that Federal support of R&D is not growing rapidly. Indeed funding can be viewed as being essentially flat, says Battelle's Carl Kohrt, president and CEO. 'And historically the industrial funding rate has been higher, 7.5% as opposed to the predicted 3.5%,' he adds.

Taken together, those predicted declines are more than incremental shortfalls across the scope of R&D, notes Kohrt. The significance: 'While Federal funding of R&D, basic research, is declining, industry is shifting its reduced R&D allocation from basic research to primarily applied product development. That delays the new disruptive technologies needed to drive future industrial, [which, in turn] translates into a diminished industrial future as the emergence of new disruptive technology development platforms is delayed.'

In addition, Kohrt says the need for basic research has taken on added significance as the excitement of fundamental discovery shifts to the interfaces among scientific disciplines. As an example, he cites the confluence of computational science, biological science and the physical sciences. 'Those three will come together in the area of systems biology, an area where a huge number of basic advances will be made,' asserts Kohrt. 'In the last century, it was mostly physical sciences and later on computational, but biology was basically an observational science.'

Kohrt predicts: 'This century will see biology become a quantitative and predictive science. Lab equipment investments will grow. Instead of a lab's typical benchtop apparatus, experiments will tend to require big, expensive equipment such as synchrotron light sources.' He notes that Brookhaven National Laboratory's synchrotron is being considered for a costly upgrade to further nanoscience research. Another example is the completion of a $1.4 billion neutron source project in Oakridge, Tenn., adds Kohrt. 'It will be able to look at an atomic level in ways that were never conceived of ten years ago.'

Built and supported by government funding, these costly scientific tools are intended to help advance interdisciplinary research efforts of companies, universities and individual researchers. Kohrt emphasizes that future advances in interdisciplinary science will increasingly depend on a growing government role in basic research. No company, on its own, would ever be able to afford the necessary scientific equipment, he asserts.

Kohrt argues that an increasing government role (in basic research) is made even more imperative by the business model pressures on the R&D decisions made by established multinational firms. (Kohrt once served as the chief technology officer at Kodak.) 'These marketers typically have a strong historical connection with a brand or an industry in which they compete,' says Kohrt. As a result, they have an increased tendency to spend more and more resources on innovative extensions of existing product lines. At most, creative ideas are only applied within a field that they self-define. 'The tendency is . . . you have wonderful technology . . . you know it can be used for other things, but it's got to be used for the thing that you're making money on, now.'

Increasingly, says Kohrt, companies are working more on product development, more near-term innovations and less on the basic discovery step. 'They now expect to get that from government, universities and networked collaborators in the Procter & Gamble style.' At the industrial level, Kohrt says R&D practices 'have been reduced to a commoditization of existing knowledge and technology through global collaboration.' He makes the point that the old days of corporate basic research have dwindled since a peak in the early 80s. 'Back then,' he reminisces, 'Kodak had research facilities on four continents.' (Today Kodak has R&D facilities in Rochester, N.Y. and Cambridge, England, says Rochester-based spokesman David Kassnoff.)

Kohrt sees industry's sharpened focus on applied development as a long-term trend. It does raise questions, notes Battelle's Rich Adams, senior vice president. 'For example, where will the new disruptive technological developments come from?' He answers, 'startups,' and raises another question: Will older U.S. companies continue to be less defined by new discoveries than startups?

Adams notes that some disruptive technology still reaches the marketplace despite industry's applied research emphasis. As evidence, he points to the increasing complexity of today's commercial products. 'Products that were successful 20 or 30 years ago tended to be substantially simpler in terms of concept, design, and the manufacturing process.' His point: Today's product complexity is related to the new interdisciplinary nature of product development.

'Today's emphasis on short-term results will bring more technology evolution rather than revolution, says Eaton Corp.'s Sohan Uppal, vice president, technology, Fluid Power Group, Eden Prairie, Minn. 'So while we're taking fewer chances, we may be missing bigger opportunities.'
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