Two years ago, I was the opening keynote speaker for the 14th Annual Portfolio Management for New Products & Services Conference in Fort Lauderdale, an event sponsored by the Product Development and Management Association.
In the blog entry I wrote at the time (The Hollowing Out of Big Corporate R&D), I noted that “I spoke to the broad theme of ‘innovating faster,’ but also challenged the crowd to think about how the “source of innovative ideas” has changed.”
It was a pretty interesting conference — it was right after the financial crisis of 2008, and there were quite a few folks in the room — long time R&D professionals — who had just been let go. Others were seeing their budgets cutback; many more were in a state of absolute shock and uncertainty as the economy was still contracting. It seemed as if the entire room was in a state of shock. I spent a good part of my time working to help them understand there were deep, transformative changes occuring in how “big” R&D was conducted, and if they were to survive, they would have to adapt to these realities. Those point are covered in the blog post.
While undertaking some research in the last few weeks for upcoming keynotes, I’ve come across a few interesting articles that have an R&D spin, and which can help to put into perspective the many ways in which R&D is evolving:
Two sides to nanotechnology – huge opportunities, but all offshore?
From the article Nanontechnology: We can rebuild matter atom by atom, The Observer, 2 January 2011
- “New ways of making solar cells very cheaply on a very large scale offer us the best hope we have for providing low-carbon energy on a big enough scale to satisfy the needs of a growing world population aspiring to the prosperity we’re used to in the developed world.”
- “Given the huge resources being directed towards nanotechnology in China and its neighbours, this may also be the first major technology of the modern era that is predominantly developed outside the US and Europe.”
Nanotechnology is clearly going to change our world and is probably the hottest area in R&D right now (aside from genomics). And yet, many of the solutions that emerge might not emerge within traditional first-world countries!
America universities continue to lead in patents over India
The title of the article says it all, but read the details (“Less than 1% of India’s GDP goes into scientific R&D, 19 December 2010, The Economic Times”)
- “Every year, American universities obtain an average of 4,000 patents, whereas Indian institutions fail to get past even the 100 mark“
Why is this so? Because the R&D communityn in India is so small! Consider this quote from the same article:
- “TC James, a former official of the department of industrial policy & promotion in the Union Industries ministry. James says that the “cutting-edge” researches in our country are restricted largely to IITs, IIMs, AIIMS and Tata Institute of Fundamental Research. “But these institutions cater to merely one percent of our student population.”
Clearly, the momentum must be on the Indian side, would it not, as more of the population modernizes and gets involved in R&D activities?
R&D Momentum in China continues
An interesting article , “China’s hi-tech industrial zones take lead in industrial innovation, 3 January 2011, Xinhua’s China Economic Information Service”
- “China’s 56 leading hi-tech industrial zones have led the country’s industrial innovation, playing an important role in the nation’s social and economic development, a government statement said Saturday. The statement came from the Ministry of Science and Technology’s Torch High Technology Industrial Development Center.”
- “The statement summarized the achievements of the 56 state-level hi-tech industrial zones, which are home to over 50 percent of China’s hi-tech firms and provide employment to over 8 million people. With over 700 research centers and laboratories, research and development expenditure was more than one-third of the national R&D budgets at the zones.”
- “Some 16,020 patents were granted to zone-based firms, accounting for nearly 50 percent of all patents registered to enterprises in 2009.”
- “Half a tonne of standard coal energy-equivalent was consumed for every 10,000 yuan of GDP output in the zones, less than half the national level. Numbers for land-use efficiency, investment density and input-output ratios were also high in the zones.”
So the trends at work here? Clearly China has a lot of room to grow with pure R&D, just as with India. And not only that, there’s not just pure R&D innovation, but also innovation in other critical areas involving energy and community.
The trend of taking on an even bigger role in pure R&D is confirmed by the Monitor group (China entices scientists to return, 18 November 2010, The Wall Street Journal Asia)
- “After eight years working in the U.S. at the National Institutes of Health, a major federal research center, cell biologist Li Yu decided in 2008 it was time to return to his native China and became a professor here at Tsinghua University.
- Dr. Yu is one of some 80,000 Western-trained Chinese scientists who have returned to China to work in academia or industry since the mid-1980s. In a report published Wednesday, the Monitor Group, a consultancy, predicts the return will accelerate over the next decade, and says the trend, coupled with an outpouring of investment by the Chinese government and private industry, will help China become a leader in research discovery in the pharmaceutical and health-care industry by 2020.
- China is already the third-largest pharmaceutical market and is expected to grow by 25% to more than $50 billion in sales in 2011, according to drug-industry tracker IMS Health. But until recently, the West was the source of innovation in the industry.
- “I think the big call to arms . . . is that the world is going to change, and China is going to be on many levels the leader, including life science innovation,” says George Baeder, head of Monitor Group’s life sciences practice in Asia and an author of the report.
But new business models will quickly change R&D
But don’t write off the industrialized world, yet, though, since the essence of the business model for R&D is quickly changing. Everyone has heard of Kickstart, right? If you haven’t, you’d better check it out.
- “One year in, Kickstarter has already raised between $15 million and $20 million for projects, according to Chen. The recipients range from the prosaic (start-up costs to product a camera mount for iPhones) to the semiabsurd (funding a life-sized “Mouse Trap” game on a tour across the United States).” Creative idea? Kickstarter connects artists with online funding, 15 December 2010, The Christian Science Monitor
I recently participated in the funding of the TikTok watch kit ; the initiative raised almost $1 million in an extremely short period of time. Global cooperative R&D conduits could be a big thing into the future….
GE continues to invest heavily in innovation – maybe others will follow
Even as new business models are pursued, some research power-houses are renewing their focus on real R&D to generate profit, rather than through the manipulation of funny money. Here’s an article that talks about the role of GE’s Global Research center in Niskayuna, New York (from GE relies on its ‘geeks’ to drive innovate and generate profits, 13 December 2010, Daily Telegraph)
- “The worst financial crisis since the Great Depression increased the stakes for a centre that, though it has changed location once since it began life in 1900, was America’s first and remains its biggest industrial research laboratory. During the recent boom, GE Capital, the company’s financial division, gorged itself on consumer lending and real-estate assets, taking centre stage in a company whose early years were built around the guiding light of Thomas Edison.”
- “GE wants the division, whose woes cost GE its AAA rating, eventually to account for just 30pc of revenue. “The one piece of good news from the downturn for GE is that it was a bit of shock treatment,” said Shannon O’Callaghan, an analyst at Nomura. “It allowed them to reset.” If the crisis helped give GE a renewed focus on high-quality innovation and product development, experts say that has useful echoes for the whole of America.
What’s encouraging is the broad base of research that is being conducted
- “Deng’s and Gerdes’s are a snapshot of the dizzying range of research pursued. There’s a team working on software designed to allow pilots to land using 10pc less fuel; a few corridors away there’s a lab dedicated to the development of so-called “smart” appliances that consumers can programme to come on only when energy is at its cheapest.”
Maybe other global powerhouses will get back to a commitment to pure innovation.
And maybe it’s not just new business models and a refocusing on pure innovation that will “bring innovation back,” but a recognition that it needs to be done faster. In the article Hiring seen in NASA hookup Partnership could bring thousands of jobs to Colorado, 14 December 2010, Denver Post, it is noted that a joint project between NASA and the Colorado Association for Manufacturing and Technology:
- “This program seeks to engage Coloradans to work together to accelerate bringing new technologies to market in 18 months rather than the current norm of five or more years and to create 10,000 new jobs in the next five years,’ said Elaine Thorndike, chief executive of the manufacturing association.”
Agility, flexibility, and a change to how things are done – that’s innovation, and so there is innovation occurring with the process of innovation.
Clearly there continues to be a lot of rapid change and upheaval in the world of R&D that is having a big impact in the innovation engines of organizations around the world. Keep on top of this rapid change and learn from it in order to stay ahead!