Does Consortium Research Belong in My Business Strategy?
- Myron Gottlieb (Gas Research Inst.)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- June 1994
- Document Type
- Journal Paper
- 531 - 534
- 1994. Society of Petroleum Engineers
- 5.8.3 Coal Seam Gas, 5.4.2 Gas Injection Methods, 4.6 Natural Gas, 7.10 Capital Budgeting and Project Selection, 4.1.4 Gas Processing, 6.1.5 Human Resources, Competence and Training, 4.2 Pipelines, Flowlines and Risers, 4.2.2 Pipeline Transient Behavior, 3.2.3 Hydraulic Fracturing Design, Implementation and Optimisation
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Distinguished Author Series
We are seeing a revolution in the way that R&D affects the strategicplans of businesses and governments. Business and government leaders areacutely aware that the future belongs to those who can capture the benefits ofrapidly advancing technology. Yet for many companies, the cost of developingand commercializing advanced technology is becoming prohibitive. While thecomplexity and risk of developing advanced technology are escalating, the timecycle for successful market introduction is shrinking. To manage corporatecosts, more private organizations are downsizing their R&D functions.Concurrently, there is an increasing need for technological contributions tocurrent business problems and new business opportunities.
These marketplace forces have spurred the growth of collaborative researchamong corporations, including the establishment of consortium researchorganizations. This paper addresses some of the most important issuesassociated with consortium research. Why is collaborative research soattractive today to business and government leaders? What are the downsides?What should one expect from successful consortium research?
In the last 50 years, technological innovation has created a world vastlydifferent from that of the World War II generation. Then, owning a televisionset was rare, and those who did received only a few live black-and-whiteprograms over a limited broadcasting schedule. Now, it is common to haveseveral color televisions per household, each receiving 24-hour broadcasts ofscores of programs through cable technology. The family doctor who used to makehouse calls armed with only medical training, simple medications, and fewdiagnostic tools has segued into a complex medical industry in which organtransplants are routine and sophisticated diagnostic equipment challenges ourfinancial resources.
The pace of technology advances must be maintained to meet worldwideexpectations
of an increasing standard of living. However, technology innovation itselfhas become more complex, more costly, and riskier from a business perspective.One way that organizations are responding to these challenges is bycollaboratively supporting research through consortia.
Early consortia in the U.S. were generally liaisons established betweengovernment and academia to pursue a vital national objective, such as nationaldefense or improved health care. Similarly, the early consortia in the privatesector were liaisons between industry and academia. Their efforts were directedprimarily at fundamental research that did not affect the near-term businessprospects of the corporation.
The scientific results from this precompetitive R&D were considered anindustry-wide resource. Individual corporations were challenged to convert thebasic research results into their competitive advantage. Corporationsmaintained adequate R&D staff and funding to capitalize on the publicresults and to conduct independent research to improve their competitiveedge.
In the face of increasing business pressures and with the advent of federalregulations that allow the formation of consortia without violating antitrustregulations, industries recently created "stand-alone" consortiumresearch organizations. These consortia range from loose alliances, such as atemporary R&D sponsor pool with research directed at a specific issue, tothe more formal and enduring relationship, represented by an industry R&Dinstitute. Table 1 lists several types of consortia. Each model providesindustry with a unique and flexible mechanism to achieve its businessgoals.
Successful industry R&D institutes include the Electric Power ResearchInst. (EPRI) for the electric power industry, Sem-atech for the semiconductorindustry, Bellcore for the communications industry, and the Gas Research Inst.(GRI) for the natural gas industry. Because these organizations representdifferent industries, they have different supporter needs. Consequently, thephilosophy and mission of these R&D institutes vary considerably.
For example, a highly competitive industry like the computer industry wouldtend to support fundamental (precompetitive) research cooperatively. Thecompanies anticipate that their own corporate R&D functions will make moreeffective (i.e., profitable) use of the scientific research results than othercosponsors.
In contrast, a completely regulated industry would more likely supportconsortia that both develop and deploy advanced technologies to maintainindustry competitiveness, perhaps against foreign encroachment (imports) or adomestic competing industry. Thus, the nature of a particular consortium, itsoperating characteristics, and its sponsors' expectations will depend, not onlyon the type of consortium, but also on the industry it serves.
Even so, much can be learned about R&D consortia in general by examiningthe characteristics of a specific consortium. For this reason (and because ofpersonal experience), I use GRI here as a focal point for discussing both theadvantages and difficulties encountered in conducting consortium-basedresearch.
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