Trusting Outsiders to Do Your Research: How Does Industry Learn to Do It?

Top R&D leadership recognizes that leveraging external resources is critical. A Du Pont veteran explains why--and how. OVERVIEW: Success in the global marketplace requires restructuring and rethinking of all aspects of business management, including, in the case of technology-based companies, how technology itself is acquired and improved. Because new technology development is often so risky in either cost or time to the marketplace, and is available from so many eternal sources, it is vital that companies learn how to tap into these eternal sources as effectively as they have managed their own internal R&D organizations for so long. These eternal sources include partnerships with other companies, universities and research institutes, and various government laboratories and development facilities around the world. American companies would seem to have a unique opportunity at this time in history, as our great university and government laboratory systems are being driven by similar global pressures to team up with us in new and more effective ways. While obtaining technology from the outside is not unusual behavior for American industry, the idea of having someone on the outside do your most critical research does seem unusual for most of us. I think the same thing is true for many other cultures, although many of our European competitors have been entrusting external institutions and universities with augmentation of their internal research for decades. It seems strange that U.S. companies have done so little of this, considering our magnificent university system. But examination of recent history, over the past 50 years, shows this to be the case. The reasons are fairly clear: U.S. companies were either afraid to get involved with outsiders or saw no need to do so. David A. Hounshell, co-author of Science and Corporate Strategy, the history of Du Pont R&D from 1902 to 1980 (Cambridge University Press, 1988), contends that the fear factor came from the historically vigorous enforcement of antitrust law. He also points out that we had no real need for outside research, because after both world wars the United States was in pretty good shape compared to the rest of the world. Our main need was to exploit the rich technology and marketing positions we possessed. Chemistry was making rapid progress, man-made polymers were coming into their own, pharmaceuticals and electronics were gathering momentum, and so forth. Worldwide competition was not calling the tune because other countries were not competitive. Rather, the tune was being called by the great worldwide marketplace and the U.S. was at that time the major contender, with plenty of opportunities to apply its skills and to grow in profitability. Industry's main interest in the universities was for the scientists and engineers they graduated. Technology was transferred from universities mainly through the people we hired. Government labs were no factor at all. Their chief task was to serve the defense arm of the government. Hounshell predicts that industry will now more and more return to the practices of the early days of the Industrial Revolution and acquire more of its technology externally. His thesis is that this is actually more normal--that the behavior of the last 50 years was abnormal. We will have to see whether Hounshell is right about this, but for now, at least, the direction he speaks of is certainly correct. My own company, Du Pont, is beginning to take outsourcing very seriously, although we are still novices in this activity and I am personally not sure how much of this Du Pont will actually end up doing over the next several years. As all of my industry experience has been with Du Pont, I shall devote the remainder of this article to how things are progressing in a company that certainly personifies the do-it-yourself research mentality. The main questions I shall cover are: Why do it? …