From the Top
R&D's Rocky Road: Why a New Alternative is Essential

by Dick Topping, director of Appliance Research, TIAX, LLC

In my May column, I talked about the "innovation crisis" that has hit many technology-based industries.

After attending the International Appliance Technical Conference, I commented on what I saw as the appliance industry's increasing focus on short-term returns. By curtailing R&D investment, the industry is opening the door wider to international competitors and new, smaller, more nimble domestic competitors that are poised to quickly gobble up market share.

The response I received from that article was positive. I had hit a nerve. And the situation appears to be getting worse. Since writing the article, I've heard that some companies have not only stopped short- and long-term R&D investment, but they're not even investing in capital improvements. Also, as Professor Rebecca Henderson of MIT's Sloan School recently pointed out at a meeting I attended, many companies are even ill-equipped to encourage their entrepreneurial staff internally to bring innovations quickly and successfully to market.

While my article pointed out the crisis the industry is facing, it offered no ray of hope as to what the industry can do now to combat this period of ultraconservative investment. I hope to remedy this here.

So what's an OEM to do when business demands force a focus on short-term projects and existing products versus future growth and innovation? How can OEMs combat the increased pressure on technological innovators to be "relevant and timely" (i.e., non-innovative)?

What's needed now are new models for bringing ideas to market. TIAX recently surveyed top executives of companies in industries ranging from commercial and residential systems to healthcare and consumer packaged goods. We found that most agreed strongly that: 1.) innovations from universities, national labs, startups, and R&D labs typically require substantial development to prepare them for market; 2.) most organizations have plenty of new ideas, but have a problem in rapidly implementing them as new products; 3.) it's more difficult for new technologies to get to market today than it was 3 years ago; and 4.) building R&D capabilities to tackle new challenges is risky and takes a significant amount of time.

Again, most of this is not surprising, but an important point is that it's not just the appliance industry that's in trouble. It's the American innovation process—the world's past model of achievement and success—that needs fixing; truly creative (and courageous) approaches will be needed to restore growth and prosperity for our future generations.

With R&D spending sharply reduced, many companies have turned increasingly to universities, research hospitals, and other sources of innovation to pick up the slack. That's why U.S. locations like Ann Arbor, Palo Alto, Research Triangle Park, and Cambridge have thriving technology-related businesses springing up next to the institutions producing the innovators. However, this is not a complete solution because there is often a "gap" between the innovation process and commercialization that neither the research community nor industry is well-appointed to handle.

Another approach is to co-locate and share facilities with a university or hospital. Under this model, staff from the university and industry partners can work together on innovative technologies to enhance prospects for successful commercialization. But not all prototypes or hypothetical models can be successfully translated into manufactured products. Keeping research cost effective, relevant, and timely is a must.

Unfortunately, as industry further cuts R&D and searches for innovation from outside sources, it can weaken even its ability to quantify the risks and benefits of new technologies. If a company identifies a technology possibly worth the risk of investment, it may not have adequate knowledge of and experience with enabling surround technologies to achieve successful commercialization due to the cutbacks in "non-core" technical areas.

That's why I believe that industry will turn increasingly toward technology facilitators—companies such as Battelle, Sarnoff, and TIAX—that have proven track records of transforming ideas into successful products. These companies can provide help anywhere along the path, from conceptualization to commercialization, and bring the important perspective of lessons learned from many different industries.

In any case, the demand for top-line growth will never diminish. Working with external sources will become increasingly important to implement innovation. Our industry has to overcome a culture much more comfortable responding to the competitor next door than viewing him as a potential collaborator against a less defined, but more significant future business threat.

Our challenge is to implement a new industry business model—effective, collaborative partnerships for rapid, innovative product development.

Dick Topping Dick Topping is director of Appliance Research at TIAX LLC (www.tiax.biz). He can be reached by phone at 617/498-6058, by fax at 617/498-7206, or e-mail at topping.r@tiax.biz. From the Top appears bimonthly in APPLIANCE Engineer®.