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.