Opportunities for Technology Development

Pages21-23
Date01 September 1986
DOIhttps://doi.org/10.1108/eb057456
Published date01 September 1986
AuthorDouglas E. Olesen
Subject MatterEconomics,Information & knowledge management,Management science & operations
Opportunities for
Technology
Development*
by Douglas E. Olesen
Executive Vice President and Chief
Operating Officer, Battelle Memorial
Institute, Ohio
Introduction
I will be taking a broader look at a variety of modes for
con-
ducting R and D. I am convinced that there has never been
a greater need than now in the United States for industrial
research,
and, fortunately, there are many approaches and
combinations of options that companies can use to get the
best return on their R and D investments.
The organisation that I represent, Battelle, has a staff of more
than 7,700 scientists, engineers and supporting specialists,
and is the world's largest independent contract research and
technology development organisation. Each year, at our four
major research centres in the US and Europe, we have well
over 4,000 contract research studies in progress. These are
funded by over 2,000 companies and government agencies
in about 40 countries.
Some of our work is of the problem-solving
kind,
and, with
that research, typically a company or government agency
will come to us with a problem it has identified that needs
to be solved. Our work is not, however, limited to problem
solving.
Often, members of our staff will recognise an op-
portunity to use research to improve a product or process,
or to create an entirely new one.
In 1985, we performed $102 million of work for industry
throughout the world. I should add that we operate in a very
competitive market. We compete with private industrial
research laboratories, with other independent research
organisations like Battelle, to some extent with universities,
and with a variety of organisations that are supported by
combinations of public and private funds. Thus, it is very
important that we know who is doing what kinds of
research,
where and why.
Now, I want to make some general observations about
Research and Development in the US, the technology to
which it leads and the importance of that technology.
I am sure you recognise that technology or high
technology, as everyone now likes to say is the driving
force of industry and business. It can make companies
and it can break companies whole industries for that mat-
ter. For many people, I believe that they equate technological
advances and challenges with such fast-moving areas as
electronics, communications, information technology and
biotechnology. Certainly, these are very important areas to
watch,
but I think we should also be aware of other areas
of technology, such as mechanical design, materials
technology and chemical processing. These are not
regarded as high technology, but they do, however, often
apply high technology to industry's needs, and they may
well be most important.
There is no doubt in my mind that if we are to keep America
at the forefront of technology, companies and industries of
all types need to make significant and wise investments in
R and D. This is certainly not the exclusive responsibility of
high-tech companies and industries. If anything, it is pro-
bably more of a challenge for traditional industries who face
the most immediate threats from new technology.
Fortunately, at this time, there is ample evidence that the
US is substantially increasing its support of R and D, and
that its rate of effort compares favourably, by most
measures, with other leading nations in technology. When
we look at America's total spending for
R
and D as a percen-
tage of its gross national product, we see that spending has
been on the upswing during the 1980s. And since there was
virtually no growth through the 1970s, this upturn is all the
more impressive. The percentage of gross national product
now being spent on R and D is about 2.7 per cent.
All very good, you may say, but how does this compare, for
example, with Japan generally regarded as our strongest
competitor? On the basis of the latest figures we have, we
have a slight edge. But I must remind you that Japan's ex-
penditures include very little for defence R and D. And just
to dispel any feelings of complacency, I should also tell you
that Japan's Prime Minister Nakasone has set a goal of
achieving,
by 1995, an R and D investment level of 3.5 per
cent. If that goal is met, it will certainly heat up the com-
petition in the world of R and D.
There are other numbers as well that indicate that there is
growing support for R and D in the US. It is particularly
heartening to see that much of it is coming from the private
sector. For the past six years including the recession years
R and D spending by US industry has averaged a real
increase of at least 4.5 per cent a year, that is, after taking
inflation into account. As a result of this upsurge in spen-
ding,
private sector support of R and D has, in the last
several years, surpassed that of the Federal Government and
is expected to account for 49.8 per cent of the $11.6 billion
that will be spent this year. Government funds will make up
46.7 per cent of the
total,
with the remainder coming from
universities and non-profit organisations.
Our investment in R and D,
then,
is growing, and that is a
very encouraging
sign.
But staying at the forefront of
technology is not just a matter of how much money we
spend.
It is as much a matter of how we spend our money
and how we use the results of R and D. Something we need
to keep in mind constantly is that the purpose of R and D
is to obtain profitable results, and that if those results are
not achieved, the cycle of further investments in R and D
cannot be sustained. Here, the responsibility rests almost
entirely with private industry individual companies, large
and small. It is industry that supports the total innovation
*This article was first presented by the author as
a
speech at the Abrasive
Engineering Society's 1986 Annual Conference and Exhibit, Cincinnati,
Ohio,
on 15 April 1986.
IMDS SEPTEMBER/OCTOBER 1986 21

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