India has graduated from the status of a "developing country" to being a "developed country" through successful implementation of her Five-Year plans since Independence and giving top priority to industrialization programmes, globalization and inviting foreign investment in core sectors here which were initially restricted to the government-owned public sector undertakings. India has acquired a status among the countries which dictate terms. The latest nuclear tests have brought India into global focus as a country to be reckoned with.
For any industry to survive the tough competition, tight financial crunch, fast developing new technologies, it becomes imperative to keep pace with the latest in equipment, process technology, newer products and their marketing strategies. Every industry needs to invest in research and development programmes to stay in business and prosper. This activity has become as important as production and sales-marketing. Earlier this was neglected because it was considered a liability on the industry as it needed only expenditures without tangible income. But now it has found its place in the company policies and gets a definite allocation for its uninterrupted working.
A scientist who has always believed that R&D laboratory is the most important part of the industry is surprised to discover what executives in other departments think of it -that work which goes on in laboratories lacks clear objectives, that schedules are never kept, and that budgets are always overspent.
This scientist looks upon production, sales, accounts as simple and routine occupations in which no special ability to do anything creative is required nor any training is necessary and they remain content to earn a living.
Both sides quote examples to support their cases and continue to do so as long as different types of work done in industrial laboratories are not clearly distinguished. Companies spend crores of rupees on research for a medicine, which when ready and tested effective, can earn the company tens or hundreds of times the money spent on its development. The recent example of Viagra, the impotency drug introduced by Pfizer, is such an example.
In the real sense, the terms research, development, and design are completely different types of activities. But we do not make these distinctions and call all work as research and development. The criteria upon which they should be undertaken, the nature of their objectives and the way in which they should be managed, have little in common. A clear understanding of these differences is essential for the efficient use of the technical staff and facilities, without which even the contributions they make to the prosperity of the industry are unlikely to be appreciated. The fact that everything that happens in a laboratory is so often described as R&D is indicative of the widespread failure to make these essential distinctions.
Many people use the term "basic research" and "applied research" for the activities described here as "research" and "development". Still others make the distinctions as "basic", "directed", "applied" (project) and "applied" (operative) research. Some call them "advanced development" and "product development", the activities known to others as "development" and "design". The names are not important, but it is essential that the distinctions should be clearly made out.
Basic Research: is an attempt to advance the frontiers of human knowledge. It is carried out on an immense scale today in colleges, universities, institutes, government establishments, and industry, and even by individuals. The motives of the men who do it are as diverse as the places in which they work. Some are driven by curiosity, others by hope of fame and distinction, some seek for stepping stones for their careers and others have a sincere hope that their efforts will benefit humanity.
In the past it has taken often many years for the effect of a discovery to make itself felt in industry. Faraday and Clerk-Maxwell established the laws of electro-magnetic induction half a century before they any use of them was made. Edison had to wait twenty-five years before his telephone became a laboratory toy.
The sulphonamide drugs were in universal use within three years of their discovery. Aspirin as a pain killer drug has been in use for over a century, but its value as a drug for heart problems and even diabetes is recognized very recently. The problem to be solved is how to achieve the maximum advantage of research without delay or omission, taking into account the fact that hardly any great discovery has been made by a man working on a budget or to a programme. They have sprung from the genius of men seeking to extend human knowledge for the sheer joy that this has given them, and in most cases it has fallen to others to turn their work to practical account. This is the essential nature of basic research.
Applied research: Applied research is the necessary successor to basic research. What nature offers to the basic research man, he seeks to codify, classify and understand it. It is very seldom in a form in which any practical use can be made of it. A simple example might be that of a new alloy which appears to have a better strength-to-weight ratio than other known materials. So long as the scientist continues to seek for other alloys with interesting properties, he is doing basic research, but if a decision is made to examine the possibilities of exploiting the new material, the work becomes applied research. Thus, the difference between basic and applied research is that in the former the scientist does not know what he is going to find, and he only knows the direction in which he is looking, while in the latter he knows what he wants, and he is trying to find out how near he can get to it.
Development: When the applied research programme of measurement and variation on the original process has been carried out, a first assessment can be made. The conclusion is seldom clear cut, but if it shows a reasonable probability that further development work will produce something that can be the basis of new or improved products, a decision on the next step must be taken. This can be extremely difficult, and commercial and production departments must play their parts in it. Estimates have to be made of the cost of the proposed development, the cost of the products to which it will lead, and the price for which they will be sold. It is understood that design, manufacturing and marketing efforts will be available when they are needed.
Design: After development comes design. This takes known techniques and materials, including those newly developed, and uses them to prepare all the information that a production department will need. Such activity must be distinguished from development, just as clearly as development is distinguished from research. Although it calls for creative efforts, it cannot be allowed the latitude that the uncertainties of research and development require, it moves from clear premises to a definite objective and good management ensures that it moves at the right speed along the most economical path.
The skill of the designer will be shown in the elegance of his product and by the compromises which he strikes between conflicting requirements, but he must operate within clearly defied limits and to a rigid time schedule. No new knowledge is gained in the course of the design project, it is based entirely upon facts and figures known before the work starts. Therefore, there should be no cause for changes on the way and they should be allowed only to correct mistakes in the original specification or target, or for other exceptional reasons.
Cooperative Effort: The development staff should assist the production and sales or marketing departments in the basics of the product, as either of these may find parts of a design that could be improved by further development and may ask that this should be carried out. They may also find mistakes or omissions that have to be put right, both of which are reasonable requests and should be given high priority, but these should be clearly distinguished.
The responsibility for changes must be accepted by the department that asks for them, and that for correcting mistakes by the one that made them. Although this sort of assistance to other departments is a proper activity for development staff, they must be careful not to become an easily available source of help. Development is concerned with the next generation of products, they must not be sacrificed in the interests of the present one. If production dpartment cannot make, or sales department cannot sale the products that their colleagues have developed and designed, there is a weak link somewhere in the chain and the solution is to repair or replace it, not to strengthen it by weakening another one.
It is easy to classify activities in the abstract, but in real life things do not always fall neatly into these categories. In many industries customers place orders which contain both development and design work as well as production. A manager who has a clear understanding of the distinctions will not go far wrong. Border-line cases should give no trouble.
Flexibility: The secret of good administration is to stick firmly to rules in normal circumstances but to disregard them when an emergency arises. There are times when research development and design staff should all be ready to turn their hands to production, selling, testing, inspection, and even to clearing blocked roads with pick and shovels. Variety is a great stimulant. Good administrations keep each department to their proper tasks for most of the time and switch them freely when genuine emergencies arise.
Let us now examine how various countries spend on R&D, and how it affects the company profits or national economy.
In general, the countries with the more advanced economies spend a smaller proportion of their total on research and a larger one on development. USA spends 12 percent on basic research and almost double of it on applied research, but 65 per cent on development.
In Western Europe it is rare for a company that employs less than a 1,000 people to have any appreciable R&D effort, in USA the critical number is closer to 5,000. Taking this it can be said that if an American company has a research laboratory at all it usually has five times the staff and ten times the expenditure of an equivalent European one.
In the USA total effort exceeds that in the rest of the Western World and a very large part of it is supported by the tax-payer and devoted to aircraft, space and electronics industries. Most of the work is carried out by private companies and it has given them an immense technical lead over those in other countries. In cases in which governments have put in large sums of money into particular areas (like France and UK) highly competitive products have emerged. The passenger aircraft and the nuclear reactor are the examples.
In the more traditional industries, the US effort measured in terms of men rather than money is not particularly large, and their competitive strength has been due to efficient production rather than to any technical superiority.
The UK is often said to spend too much on research and too little on development, but in fact the relative amounts are much the same as in other countries. It is also said that the Japanese are poor originators and depend upon copying imported products. In fact, the number of people engaged on industrial research and development in Japan is larger than in Western Countries outside the space and defence areas. It is possible that the low level of expenditure in these areas in Germany and Japan has been a factor in their competitive strength in the traditional industries.
In general, a high R&D expenditure goes with a strong economy, but there are exceptions. Canada spends a very small amount and most of that goes into defence, but it is a highly prosperous country. By contrast, the UK with an exceptionally high level of expenditure has a poor record of economic growth. Since the high standard of living which the western world enjoys today is based upon the scientific and technical advances of the last century it may appear there must be a link between R&D expenditure and economic growth, but it does not seem to be a straightforward one.
R&D and Corporate and National Prosperity: Every piece of work done in an industrial laboratory must be aimed at the eventual manufacture of a product, even if it cannot at first be closely defined. This intention depends upon the nature of the ultimate product and upon whether it is intended to benefit a particular company only or the national economy as a whole. In general, a high level of technical effort is accompanied by a prosperous and expanding economy. A really novel product that finds a ready market is of obvious advantage to the company that produces it. Until competitors match it, sales can be made at a price that will recover the investment in work and plant, and bring a good profit too. By the time that it meets competition the initial production difficulties will have been overcome and it will be possible to cut the price to a point that the newcomers will find difficult to match. Only if the market is big enough and expanding fast enough to support several suppliers will anybody else be tempted to enter it. In either case the man first in the field can expect a good reward.
The effect upon the national economy is more complex. Provided the novelty and appeal are general and not just local, there will be export opportunities. If the country of origin has a balance of payments deficit these will be of immediate value. If it has a surplus, the new export will only increase the difficulty of recovering existing overseas debts. The benefit to the home economy will be mainly that of increased choice for the consumer. Unless there is surplus purchasing power the new product will cause a reduction in sales of established ones and may even lead to under employment of resources. At times when economic chance or deliberate financial policy is restricting purchasing power, this is going to increase manufacturing costs. So that the effect of the new development may, in extreme cases, even be harmful. The best technical effort can be frustrated by market and credit conditions.
An improvement in the quality or cost of an established product is an advantage provided there is sufficient demand for it. In an expanding economy this may usually happen, but in a static or contracting one it is uncertain. This phenomenon is called positive feedback. In a healthy environment most R&D is well rewarded, but in a sick one it is quite possible that even the most deserving projects prove unprofitable.
The improvement of established process is always of benefit to a company and to the nation too. If the change is big enough to be measured, if must pay off sooner or later. The result is a genuine increase in wealth, the same amount of material and effort produces more or better goods. The effect upon the export situation is equally good. Either the product becomes more competitive or it brings in more foreign currency.
There is only one way in which the advantage can be lost. If the improvements reduce the amount of effort required to produce a certain output, it is sometime felt by trade union leaders that this should be handled by requiring the same number of men to put out less effort for the same reward. It is open to any community to take the benefits of technical advances in more leisure, lighter work, or greater prosperity, but the first two can be dangerous. An expanding economy is only possible if an ever-decreasing number of workers produce the same or a greater output from the established industries and there is a constant flow of mend mode redundant by technical progress into the new industries that are being created. Any effort to keep up the level of manpower in the old ones is an effort to prevent economic expansion. In the short term it may save individuals from the embarrassment and even hardship that redeployment causes, but in the long term it must deprive men of a rising standard of living. Here too there is a feedback effect. If the men who are responsible for technical innovation see their efforts frustrated, their creative urges will wither.
This is a challenge to those who manage industry. If every advancement benefits the workers, the shareholder, and the consumer, if workers accept redeployment, and measures are taken to make it painless, the process can continue indefinitely. If any one group tries to seize all the benefits for itself, regardless of its effect upon the others, the real benefits will disappear.
Research, development and design are an essential basis for the prosperity of a company or of a nation. If they are treated in isolation, they prove sterile. They must be integrated into the whole business with skill and care that call for the highest qualities of management. However well they are handled technically, ill judged commercial or financial policies can cast away the rewards that they offer. The best that individual companies can do will flourish only if national policies are favourable to make this possible.
--- The author is a Consultant Chemist and based in Mumbai