Managers at Work: What Does the CEO Want?

"Many leaders of industry are growing uncasy about the soaring bills they are paying for research and development," began a January 1965 Fortune article titled "Harnessing the R. and D. Monster." Top managements, writer Hubert Kay continued, "are increasingly asking: Are we running R. and D. as efficiently as we could? Are we really getting our money's worth?" The thrust of Kay's report, as well as others that had been appearing since the mid-1950s, was that the United States was not getting its money's worth from R&D, that the glamor days of unfettered industrial research were over. Kay quoted Monsanto's board chairman Charles Allen Thomas ("a chemist and the dean of U.S. industry's scientist-executives") as telling an industry meeting that the productivity of U.S. R&D "has fallen off, whether you measure it on a man-hour basis or on a dollar basis." Warned Thomas: "The nation's R. and D. is now stumbling in a plethora of projects, sinking in a sea of money, and is being built on a quicksand of changing objectives." As if this weren't enough, Monsanto research executives told Kay they believed most of the money U.S. industry spent on R&D was being wasted. Management concern was generally growing, Kay continued, and "a number of companies are cutting and reorganizing their R. and D. staffs, and scrutinizing research budgets more carefully." A quarter of a century later, top management is still scrutinizing. And scientists and engineers, who in 1965 were characterized as "one of the most disgruntled groups on industry's payroll," are still trying to fathom what top management wants from R&D. One such attempt was made recently by the Industrial Research Institute and the Center for Innovation Management Studies at Lehigh University. Designed "to examine the need for greater R&D leadership within industrial corporations," the study involved interviews with CEOs of sonic 20 lRI member companies. Five of the interviews were conducted by Alan Kantrow, of McKinsey & Company, and the remainder by participants in IRI Innovation Research Groups. The IRGs, as they are called, are seminars in which active research by the R&D manager-participants plays a prominent role. In this case, R&D leadership within the corporation was the overall seminar theme, and the participants' research required interviewing their own CEOs. A key question to be asked: "What can R&D do to be more effective in stimulating and managing innovation within your firm?" One thing the responses reveal is that despite all the questioning today we have come a long way from 1960, when management guru Peter Drucker could pose the rhetorical question: "How many companies are spending millions on fashionable apparatus -- e.g., a cryogenic chamber -- without even asking whether this beautiful machine will ever be used for anything as sordid as commercially useful results?" A Higher Comfort Level McKinsey's Kantrow summarized the five initial interviews he conducted as follows: "First and foremost, I was struck by how much of what all the executives said relfected an underlying desire for a higher level of comfort with the strategic direction of -- and the value contributed by technology in their businesses. There was no expectation of quantifying these matters to a nicety or of settling them on a purely numerical basis. But there was a strong wish for a readily accessible yet sophisticated means of determining whether things were pretty much on course. "These difficulties take on heightened importance given the lack of a complete, supple, and shared language for defining exactly -- and in what degree -- technology is important to each individual business. In framing these distinctions, as in monitoring a company's general technological performance, there is demonstrable value in being able to rely -- but not too far -- on a handy see of metrics." Kantrow elicited explicit concerns for: * "Improved competitive benchmarks -- both to provide help in responding to the inevitable 'How Am I Doing? …