Industrial R&D – Historical Analysis & Perspective.

A D Damodaran.

Use of empirical and/or organised scientific-engineering knowledge to augment productivity forms the core essence of Industrial R&D. Being so, evolution of the concept and definition of Industrial R&D has always been a non-linear process, in a way coinciding with the Industrial Revolution in the West and still assuming new challenges and opportunities. Whereas in the early periods of the IR, enlighened and secretly held empiricism alone contributed to technology growth, with the totally exclusive theories attributed to Francis Bacon and Adam Smith continuing to be debated in History of Technology academia, later efforts were channeled whever possible possible towards ‘enlisting science’ in the task. In all such technology additions arose concurrently issues connected with appropriate legal methods to protect such ‘industrially useful inventions’, resulting in the concept of patents and patenting practices through limited legal monopoly to the inventor as an incentive to develop new and more efficient products and processes. Originally invented by the Italians and more or less brought to perfection by the British, patents described "Novel and Inventive R&D results of possible Industrial Use", in turn also entitled for limited (intangible) property rights monopoly protection, which late President Abraham Lincoln, himself an inventor with a patent granted by the US government (!), enthusiastically encouraged with "patents providing fuel to the inventive fire of the Inventor". Such a correlation between the patent protection and invention/innovation of new products and processes became increasingly relevant , as mentioned above, with the onset of the Industrial Revolution In other words, ‘enlisting science’ for increase of industrial productivity created its own new demands on the system and in turn also new opportunities.

According to the Fontana history of Technology, the beginning of "Industrial R&D" is attributed to the invention of mauveine dye by the great chemist W H Perkin in 1856. By 1851 the dyestuffs industry was a highly efficient commercial, although craft-based, business. Using recipes passed on from master to apprentice and kepr secret within individual firms, master dyers could produce a wide range of excellent and reasonably fast colours. However in 1856 the discovery of the first aniline dye, mauveine, by an 18 years old chemist W H Perkin, a student of Prof A W Hoffmann, at the Royal College of Chemistry in London changed the whole concept and image of Industrial R&D itself. Encouraged by a favourable report from a firm of dyers and backed by his father and brother and also supported by a valid patent, young Perkin launched out as a manufacturer of the new dye stuff, the first of a long series of aniline dyes, made a large fortune and retired to a life of liesurely research at the advanced age of 38. There were a number of valid and interesting circumstances surrounding Perkin’s discovery and his exploitation of it. He was fortunate in that the market for his ‘mauveine’ , the huge British textle industry, had am impressive record of willingness to innovate and had already shown that it readily accepted the new dyestuffs provided they met the technical requirements and satisfied the customers. He was also fortunate that his evident gifts as an entreprenaur were supported by his talents as a chemical engineer to design and make the plant to manufacture the new dye and also his father and brother willing to back him up in his enterprise.The significance of Perkin’s discovery and its exploitation goes beyond the success story of a Victorian innovator. Thanks to the direct link between the aniline dye industry and the scientific research on which it was based was to lead, in the following decades, to the first industrial research laboratories – in a way the synergic consummation of the three sides of the Education-Research-Industry Triangle, in turn giving rise to a new science-based industrial product and, in that sense, the beginning of the Industrial R&D Era in the country which also gave birth to Capitalism, parliamentary democracy and the systematised Patents Law.

Though modern industries and Industrial R&D were, in a way, born in UK, they developed firmer roots in Germany much faster, thanks to expansion of universities and technical colleges as well as the founding of specialist institutions, including those by industries such as the laboratories of the dyestuffs firms combined together to form towards the end of the First World War the Interessen Gemeinschaft Farbenindustrie or "IG farben". During that period, Science magazine wrote,to quote again from the Fontana History of Technology, "Germany is rapidly moving towards industrial supremacy inEurope. If england is losing in manufacture and commerce, as many claim, it is because of English comservatism and the failure to utilize to the fullest extent the lessons taught by science".

Most interestingly, it was to such a resurgent Germany that newly established US industrial ventures like Du Pont looked for guidance and insiration for organizing Industrial R&D in their own campuses.

In prefacing a major treatise on "Science and Corporate Strategy – Du Pont R&D 1902 – 1980", by David A. Hounshell and John Kenley Smith Jr. written under the series Studies in Economic History and Policy : The United States in theTwentieth Century, the editors qualifies the purpose as follows "Scholars, public officials, and businessmen alike have long struggled to understand the sources of technological progress in America’s twentieth century economy…Techhnological innovations have been making a vital contribution to economic growth in this country since the early years of this century…Unfortunately our knowledge of the process of technological change – especially in the modern corporation corporation and its extensive R&D facilities – remains only rudimentary. As yet we know very little about the precise relationships between S&T and between corporate strructure and the ability to innovate". Hence the origin of the book as an outgrowth of an idea of the Corporations Chairman and CEO Edward G. Jefferson as a contribution to the US historical scholarship. In essence, understanding the issues of Industrial R&D itself remains a matter of serious study in all sense of the word, much of which in turn also becoming nation- and period-specific. Even a cursory reading of this monograph would highlight the great challenges through which those veterans had to traverse to once for all establish a vibrant and viable industrial R&D base integral with their corporate-commercial programs. Stating that " Founding research laboratories in 1902 and 1903 was probably the easiest decision Du Pont's leaders ever made regarding research and development. What followed were all of the difficult issues regarding the management of industrial research", some of the problems faced by the veteran have been summarized by the authors as below:

a. Should research be organized in a centrally managed unit or along decentralized manufacturing lines of business?

b. Or should both avenues be pursued ?

c. If both approaches were pursued simultaneously, how should the central research organization relate to the decentralized research organizations?

d. How much should the company spend on research (was 1% of sales and 3% of earnings "enough" in early years ? Was $484 million or 3.6% of sales and 68% of earnings "too much" in 1980 ? )

e. How should managers allocate their research dollars - toward short-term work in support of established businesses or toward longer-term objectives to develop entirely new products and businesses?

f. What is an ideal program to pursue along this allocation spectrum?

g. How is the productivity of research or its return on investment measured?

h. Should laboratory researchers aim to produce high-caliber scientific work or is some lesser form of science good enough given corporate objectives?

i. Once costly research projects are initiated, how do research managers and corporate executives know when to either abandon or strengthen a particular project ?

These were the issues Du Pont managers faced from the beginning of the company's research and development programs; they address the same problems today".

The Monograph is a valuable guide for all who are seriously interested in Industrial R&D Management.

Encouraged by the New IPR Regime, a number of well-known MNCs have established serious R&D Units in India. According to reports, Indian units of many large US technology companies like CISCO Systems, GE, Intel, IBM and Texas Instruments, HP, etc have filed over 1000 patents in USPTO.

With little proven experience or expertise in the field, the Indian corporate sector is still by and large fighting shy, save some exceptions like DRF, Ranbaxy, etc in the drugs sector. Obviously they will have to face under the New IPR Regime even more serious and innumerable challenges.