Meet Your Competition: Data from the IRI R&D Survey

Abstract

True or False? 1. more company's department depends on the business units for its funding, the less it is likely to get. 2. Only few exceptional companies can boast that 25 percent of their current sales come from products that didn't exist five years earlier. 3. trend away from basic research toward more product development and technical service, first detected in the late 1980s, is reversing. 4. Small companies spend proportionally more on than big companies. All four statements are false, according to an analysis of the Industrial Research Institute's first annual survey. IRI survey, conducted in cooperation with the Center for Innovation Management Studies (CIMS) at Lehigh University, has been designed to acquire quantitative data on the source and allocation of funds at the business segment level of the firm. In most cases, the business segments are members of specific industries defined at the 4-digit SIC level (see box, next page). is the first time that such detailed information has become available, according to CIMS director Alden S. Bean. The previous studies that CIMS has carried out in conjunction with the IRI have asked either for opinions about trends or for qualitative information from which we were able to compute some quantitative data. We have never before asked for quantitative information directly, and we have never gotten quantitative data by business Bean explains. Adds Gary E. McGraw, vice president for development at Eastman Chemical Co., Kingsport, Tennessee, This is the kind of data that will allow myself and other research directors to respond meaningfully when our CEOs ask how the firm's expenditures--and the results they are getting from these expenditures--compare with those of competitors. Although similar data have been collected before, explains McGraw, now we can compare actual business segments, which is much more meaningful to us. McGraw chairs the IRI's Research-on-Research (RoR) committee, which began designing the survey in 1991 specifically to provide executives with information to constructive dialogue with their top general managers. WHAT CEOs WANT need for such dialogue has been clear since 1989, when McKinsey Co. management consultants undertook study to determine what CEOs expected of their organizations. study revealed growing desire among CEOs for information about the strategic direction of--and the value contributed by--technology in the business (1-3). One CEO summed up the problem by citing the need for suitable measures of current productivity and of 'output'. He called for developing a common language with which and corporate management can communicate. new survey begins to provide the grounds for such common language. Developed and tested over two-year period by 30 IRI member company representatives on the RoR committee, it relied heavily on the IRI Finance Directors' Network to make sure that terms like R&D support were defined so that results could be compared across firms. survey questionnaire was mailed to 253 U.S. member companies in March 1993. It requested quantitative data about the source and allocation of funds at three levels: the firm level, the business segment level for one or more segments, and within the corporate or largest laboratory of the firm. survey also requested information about performance or outcomes at the firm and business segment level. What follows is summary of the findings, based on preliminary analysis by Bean and CIMS associate Roger L. Whiteley. CIMS administers the survey under IRI guidance and serves as the repository for the survey data in order to protect objectivity and confidentiality, Bean explains. SURVEY RESPONDENTS Firm-level data were received from 73 firms that also provided data on 138 business segments and 59 laboratories. …