Commentary - Sir William Castell
Chief Executive, Amersham plc
R&D in the new global economy
Knowledge-based industries
Europe’s economies can no longer compete on the basis of their historic and traditional manufacturing industries. The most important economic challenge is to encourage economic activity out of traditional industries — most of which depend on size and economies of scale for their competitiveness — and into those industries that are knowledge-based. The dash to ‘knowledge driven’ economies is underway and it has deep meaning for business requiring a shift in the business mindset. It is not merely about strengthening the science base — it is fundamental to commerce, affecting all sectors from banking to pharmaceuticals, IT to leisure, insurance to diagnostics.
We have all become familiar with terms such as knowledge-based industries, digital economies, globalisation and intellectual capital, though we may be less familiar with the implications that follow. They are indeed profound, not only for the way we must manage, but also for the very nature of the products we must develop for emerging technology-driven markets where the product is the medium by which knowledge-intensive industries deliver the fruits of their intellectual capital.
R&D in the knowledge economy
Another classic and significant feature of the knowledge economy affects the nature and frequency of decisions on R&D. With increasing market share the more products your company develops and produces, the greater the potential to deliver yet more. The return on capital employed is increased as new products expand market horizons into new areas.
My own company, Amersham, is a classic example of a knowledge-intensive organisation to which all these issues apply. The migration of genetics into commerce is an example of just such an emerging knowledge-based industry. We are dealing with a globally networked ecology, feeding off discoveries and developments in molecular biology, genomics, computational sciences, physics and microrobotics. As this ecology develops and generates new products that meet emerging market needs, it becomes a wealth generating economy, with a thriving network of universities, companies, hospitals, researchers and many others capitalising on new discoveries and technologies to deliver knowledge-based products and services.
As the nature of products has changed so too has the way they are developed. Typically technologies on which they are based are characterised by complementarities, ie, innovations hardly ever function in isolation: they depend on the simultaneous availability of complementary technologies. Today’s R&D must seek, find and fuse disparate technologies emanating from the global science base. For these reasons, R&D is complex and uncertain, but in a rapidly changing world the lifeblood of research is uncertainty and it is the R&D function that translates that uncertainty into commercial opportunity.
The R&D global network
Perhaps R&D is not the most meaningful description of the activity which takes place in business. Commercialisation of science and technology might be better. The confusion here is between the description of function and process. R&D’s function is to create options for new products and processes, while the process of R&D involves a network that spreads far beyond the confines of the company.
That companies appreciate the scope and real role of their R&D is vital, especially when, as for Amersham, it merits a significant percentage of sales. Our company’s R&D is a distributed global function that is part of an ecology feeding off developments in all branches of science and technology. Our success derives not just from our own scientists but also the careful harnessing of others, particularly in academia where we have been able to nurture and develop blue sky science to deliver real products with real uses and real value. Our R&D managers’ task of maintaining the delicate balance between opportunity, uncertainty, reward and risk is now more challenging than ever.
