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IV UTILIZATION AND INDUSTRY The recommendations in this section are concerned primarily with scientists and engineers employed by private corporations but engaged in research and development, with emphasis on that half of the group whose work is paid for by the federal government. They are heavily concentrated in two industriesâin aircraft and missiles, and in electrical equipment and communications. These two industries together received $5.4 billion of the $6.7 billion that the government spent in 1962 for research and development performed by private industry. As Figure VII shows, the two industries accounted for 58 per cent of all funds, both private and federal, invested in industrial research and development. FIGURE VII DISTRIBUTION OF FUNDS FOR PERFORMANCE OF RESEARCH AND DEVELOPMENT IN INDUSTRY, 1962 FEDERAL FUNDS AIRCRAFT AND MISSILES 36% ELECTRICAL EQUIPMENT AND COMMUNICATIONS 22% V CHEMICALS MACHINERY AND ALLIED 8% PRODUCTS , 10% OTHER INDUSTRIES MOTOR 1?% VEHICLES 58% OF TOTAL FUNDS Based on Reviews of Data on Research and Development, National Science Foundation, #40, September 1963 AND OTHER TRANSPORTATION EQUIPMENT 7% * Report of Industrial Panel 1 by Augustus Kinzel deals with this sector. Its conclusions are contained on pages 135-136.
IMPROVING THE MANAGEMENT OF RESEARCH Corporate managers should identify their most promising scientists and engineers, and take action to enable them to fully develop and apply their competence. While the federal government, through its financial support and contracting practices, sets many of the conditions under which industrial scientists and engineers work, the firms that employ them retain the basic responsibility for using them well. Each company employing large numbers of scientists and engineers has its complement of highly talented individuals, some of whom are able and eager to originate and carry forward large programs or projects, others of whom could make their greatest contribution in specialties or disciplines not directly bearing upon projects. Unless these individuals, and the groups they form, are recognized and enabled to exercise their special capabilities, both the firm and the individuals lose valuable oppor- tunities. Some companies do search out and actively support their outstanding people. Others, however, tend to treat their scientists and engineers as a more or less homogeneous pool, to be drawn upon without due regard to qualitative differences. It is important for managers to recognize that scientists and engineers vary greatly, and that their work- ing conditions should be correspondingly varied. In virtually every phase of the work of scientists and engineers, good utilization also requires the availability of adequate numbers of well-trained technicians. Since the problem of technicians is under study by the President's Science Advisory Committee, it is not dealt with in detail by this Committee. Industry is doing much to improve the train- ing and use of technicians, but, as has been pointed out by the National Science Foundation, there is a growing conviction that a major effort is required to meet the need for technicians. Additional programs and facilities will be necessary. Technicians are important not only to assist and thus improve the utilization of scientists and engineers, but also to contribute to the progress of all sectors of the economy. Corporate managers should strive to provide a climate for creativity and productivity of highly qualified scientists and engineers in keeping with their great potential value to their firms. Increasingly, corporate success in research and development will require that management personnel and research and development per- sonnel achieve a better understanding of each other's problems, ob- jectives, and capabilities. Among the measures to be considered by managements in increasing 24
the effectiveness of research and development work are more extensive and appropriately organized supporting services; more effective efforts to keep scientists and engineers apprised of objectives, plans, business conditions, and other matters relevant to selecting or directing their own efforts; and greater involvement of scientists and engineers in man- agerial decisions that affect them. The desire of scientists and engineers for professional achievement, if it is combined with understanding of corporate objectives and problems and augmented by proper manage- ment incentives and stringent, continuing, selection processes, can miti- gate the need for a great many administrative controls that, traditionally applied, tend to frustrate consistently high-quality professional perform- ance. THE KEY ROLE OF MANAGEMENT A key to the success of a system-development "project" team is the quality of its central core of technical and ad- ministrative talent. This group should be given authority consistent with its objectives. The effectiveness of a project team appears to depend very largely upon the abilities of the few men who form its nucleus or core. As shown in the case studies of Titan II and the Naval Tactical Data System that were prepared for the Committee, the technical and administrative management of the system-development process at both government and industry levels was performed by a handful of key individuals. It would have been difficult to predict on the basis of their age or education that these individuals would be successful managers. The early identification, development, and assignment of men capable of playing key roles in the technical direction of big projects is one of the most important responsibilities of top management in com- panies engaged in large-scale research and development. Another is the proper meshing of projects into the functionally organized parent companies or divisions, including the manner in which scientists and engineers are assigned to and from project teams. Industry, government, and the universities all share a re- sponsibility to train and develop more managers and project engineers who combine thorough understanding of the technology they manage with mastery of the art of leadership. 25
Large system developments require a combination of engineering skill and management coordination that is not commonly encountered. To an extent seldom required in other industrial undertakings, project managers are called upon to coordinate the activities of many technical groups, each of which is working on a problem whose solutionâor non- solutionâmay vitally affect the work of other groups. The nation needs more managers who understand the interdependence of technical and managerial decisions, and are equipped to appreciate the technical as well as managerial issues in system development. Companies that use scientific and engineering manpower should actively seek ways to help their high-talent man- power augment and replenish their professional capabilities. Industry should provide opportunities and encouragement for its scientists and engineers to keep abreast of new developments in their professional specialties, and in some cases to enter new fields. Steps that may be taken to that end include provision of free time for basic research, leaves of absence for the purposes of broadening and updating knowledge, and subsidization of retraining in universities. In this age of sweeping scientific discovery and rapid technological change, highly talented manpower must undergo continuous self-renewal if it is to maintain its creative potential. Some activities of scientists and engineers in industry tend to build, rather than deplete, their capabilities. For the most part, however, obsolescence is an occupational hazard against which the individual must guard; his corporation, or other organization, should provide attractive opportunities for education and development. Certainly employing institutions that use up high- talent manpower on narrowly focused tasks, without providing for the replenishment and expansion of skill and knowledge, are shirking a vital responsibility. It is important that industrial management be as much concerned with building the capacities of people as with assigning them to productive tasks. Although many companies do invest substantially in professional improvement of scientists and engineers, more would find it profitable to do so. Utilization of scientists and engineers in industry could be further improved if there were more systematic study of the art and science of research management. With industry taking the lead, private foundations, industry, and government should provide more stimulus and funds for this purpose. The Committee recommends intensive study of the experience of modern corporations that are heavily 26
committed to research and innovation, or whose chief business is re- search and development rather than production. The Committee believes that more definitive understanding regard- ing the innovative utilization of scientific and engineering talent is re- quired. Current doctrine in this area is not comparable with the body of doctrine available for financial or production management. The Committee concurs in the following observation stated in a study made for its use: "After a generation of intuitive platitudes con- cerning leadership, supervision and benign personnel practice, such broad areas as creativity, motivation, group dynamics, organizational behavior, and interpersonal communications remain today in the fore- front of research in the social, behavioral, and management sciences."* IS THERE A WASTE OF TALENT? The Committee recognizes the existence of some waste of scientific and engineering talents inherent in practices such as "goldplating," "brochuremanship," and "stockpiling" of manpower. This waste, in the Committee's view, can best be minimized by improved management in both government and industry along the lines suggested in this report, and does not demand a fundamental overhauling of gov- ernment procurement methods or the imposition of extreme controls over contractors. Executives of companies deeply involved in the defense and space programs must contend with special problems. For example, their freedom to make management decisions often are curtailed to an exces- sive degree by the close monitoring of their internal operations exercised by government project officers. (There is hope that increasing reliance on incentives will minimize the need for detailed government supervision, but so far there has been little change.) Also, the volume of business done by individual firms may fluctuate violently, and managers often must try to maintain the integrity and capabilities of their organizations in the face of abrupt, though perhaps temporary, shifts in the amount of work they have on hand. These and other related characteristics of the space and defense industries have led to certain practices widely seen as abuses. To cushion the impact of anticipated cutbacks, a contractor may engage in "gold- * Lawton M. Hartman, "Industrial Practice Affecting the Utilization of Scientific and Engi- neering Manpower." pp. 137-142, this report. 27
plating," that is, stretching out a production or development contract by introducing extensive design modifications.* A company may also keep more scientists and engineers on its payroll than the fulfillment of its current contracts requires, a practice known as "stockpiling" and aimed at making it easier to obtain and man new projects. Competition for new government contracts is also on occasion characterized by "bro- churemanship," or the use of excessively elaborate and costly sales techniques. Although the Committee recognizes that "goldplating," "brochure- manship," and "stockpiling" undoubtedly exist, it believes that to over- emphasize their incidence would be a mistake, and it urges caution in deciding the point at which these practices are disproportionate to real requirements of the situation, and thus excessive. The Titan II and Naval Tactical Data System case studies, previously referred to, showed no positive evidence of such excesses. In one instance, a major re-design effort by the contractor materially improved the performance of a sub- system. Some might have regarded this effort as "goldplating," but the government clearly benefited from it. Practices among contractors such as "stockpiling" or "goldplating" might be further curtailed by stricter controls, but the Committee be- lieves the imposition of such controls would do more harm than good. "Goldplating" by contractors could be eliminated, for instance, if the government flatly refused to tolerate specification changes in the per- formance of contracts. Needless changes would thereby be avoided, but so would well-thought-out changes that might markedly improve system effectiveness or reduce costs. "Stockpiling," when not excessive, permits a company that is permanently committed to government-sponsored developmental work to keep some of its skilled teams of scientists and engineers at work anticipating future trends, considering possibilities raised by the changing state of the art, and writing preliminary pro- posals to stimulate the imagination of the civilian and military officials who are the company's principal customers. In the Committee's opinion, the best means of minimizing abuses in the government's major procurement programsâand hence of mini- mizing the accompanying waste of scientific and engineering manpower âare the development of incentives to make the objectives of contractors and the government more congruent, and a steady improvement in the quality of the government and industrial teams that direct and partici- pate in large research and development projects. It is their joint re- sponsibility to reconcile the need for reasonable controls with the need for a considerable degree of autonomy in the performance of work. * "Goldplating" is sometimes used to describe any over-specification not worth its cost. This kind of goldplating is clearly the responsibility of the government's own contracting agencies. It can best be eliminated through better design ana specifications. 28
STIMULATING INNOVATION Coordinated action by industry and government is needed to stimulate more research and development in areas of the economy where the rate of innovation has been relatively slow. Figure VIII shows the wide range of major industries in the United States in which only limited funds are used for research and develop- ment. FIGURE VIII FUNDS FOR RESEARCH AND DEVELOPMENT PERFORMANCE AS PERCENTAGE OF NET SALES IN MANUFACTURING COMPANIES, 1960 12% 24% I I AIRCRAFT AND MISSILES ELECTRICAL EQUIPMENT AND COMMUNICATION PROFESSIONAL AND SCIENTIFIC INSTRUMENTS MACHINERY CHEMICALS AND ALLIED PRODUCTS MOTOR VEHICLES AND OTHER TRANSPORTATION EQUIPMENT RUBBER PRODUCTS FABRICATED METAL PRODUCTS PETROLEUM REFINING AND EXTRACTION j^^B COMPANY-FINANCED PRIMARY METALS [] PAPER AND ALLIED PRODUCTS (] LUMBER, WOOD PRODUCTS, AND FURNITURE [] TEXTILES AND APPAREL [] FOOD AND KINDRED PRODUCTS [] OTHER MANUFACTURING INDUSTRIES j | AVERAGE ALL INDUSTRIES Based on "Research and Development in Industry" 1960, National Science Foundation, January 1963.
It is mainly to scientists and engineers in industry-financed re- search and development that we look for technological advances in the broad "civilian" sector of the economy. However, advanced research supported by private funds is concentrated mainly in a few industries in which a few large and stable firms are pre-eminent. While research in these industries has yielded a rich harvest of new and better goods and servicesâand cheaper ways of producing old onesâprogress has been relatively slow in other industries. Government requirements for scientists and engineers do not appear to have been a prime factor; rather, the lag stems largely from the difficulty of making the necessary arrangements. In construction, for example, the problems include local building codes, labor practices, and the small-company pattern of the industry. To facilitate research and innovation in such industries, the federal government should stimulate and support initiative shown by industrial and labor groups and communities in developing new arrangements that will open the way to more intensive application of research and technical knowledge. In addition, in the interest of accelerating the rate of innovation in these industries, more research should be under- taken under the joint auspices of government and industry. Proposals that have been made for the sponsorship of such research should be re-examined with a view to making them more acceptable to Congress and to the business community. 30
