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Dark Clouds, But Bright Outlook for R&D

Fri, 12/14/2012 - 11:27am
Tim Studt

Changes in the R&D environment are driving research managers to look at different ways to support and grow their organizations.

In conjunction with R&D Magazine's 50th Anniversary of the R&D 100 Awards program, the editors of R&D Magazine held their annual Research Executives' Roundtable in Orlando, Fla., on November 1, 2012. Research Executives from the U.S. Department of Energy (DOE), NASA, academia, industry, and non-profit organizations participated in the discussion, which targeted collaborations, technology trends, intellectual property, and research funding.

Mickey McCabe, University of Dayton Research InstituteCollaborative R&D
"Collaboration and building teams is the way of the future for conducting R&D," says Edward Daniels, deputy associate laboratory director for energy engineering and systems analysis at Argonne National Laboratory, Ill. "We're fast moving away from the structure in the past where single independent researchers pursued their own research. We're going to see less of that in the future."

Government researchers also find that it's essential that they have industrial partners to help guide their research and move the technology to commercial reality. "We're not only working with one industrial partner, but rather with the entire supply chain," says Ray Lugo, director of NASA Glenn Research Center in Cleveland. "As a technology or area of research is developed, we're able to prevent technology roadblocks, and quickly transition the technologies."

"I think that the power of a collaboration is in picking the right partners," says Mickey McCabe, VP for Research and Executive Director of the Research Institute at the University of Dayton, Ohio. "When we do that, we're looking for something specific that revolves around a technology idea or the research project. And, we're looking at not just brains, but money because collaboration means that you're going to have to share to gain. Hardly any of us can afford the cost of R&D today as it is, so, by collaborating, you can spread that cost a little bit. By picking the right industrial partner, you have a built-in mechanism to transition your technology."

Of course, some collaborations require the protection of an organization's intellectual property (IP), especially in industrial situations. "Since it's important for us to keep our IP confidential, most of the research is done in our laboratories behind closed doors," says Alla Sergueeva, director of bulk materials development at NanoSteel Co., with headquarters in Providence, R.I. "When we've successfully created a new material in the lab and are ready to begin the next phase of development before introducing it, this is when we consider partnerships and collaborations with outside companies."

Technological advances
Looking at the whole range of technologies that have been and are being developed, the panel was asked what were the key technologies introduced over the past 10 years that helped improve the R&D at their organizations. "Everybody has computation at the top of that list," says Argonne's Daniels. "The continuous innovation we've seen in computational horsepower is revolutionizing the approach that we take in discovery science and also in applied R&D."

Walter Downing, Southwest Research Institute"Integrated product teams (IPTs) have been fantastic and, of course, they've been around for a while," says the University of Dayton's McCabe. "But their power is that you can pick people from different disciplines to solve a complicated technological problem. We routinely employ IPTs to approach multidisciplinary work. The other thing I think that's really starting to have an effect is open innovation and working in the Cloud. Getting people involved that want to tune into the internet and make a contribution and have an intelligent discussion can bring new approaches and ideas to your challenge."

"When I was considering this question, the thing that struck me was that I was hard-pressed to name a technology that was truly introduced within the past 10 years," says Walt Downing, EVP at Southwest Research Institute (SwRI), San Antonio, Texas. "The ones that kept dominating my thoughts were those that had improved to such a point that they became actually practical and ubiquitous in our research. These include advances in modeling simulation and rapid prototyping, which greatly accelerate our R&D processes in terms of coming to conclusions."

The current state of economics is also changing the R&D technological environment.

"We're getting away from this idea that you can only develop new technologies in multimillion dollar programs," says NASA's Lugo. "We've gone to a fairly restrictive seedling fund model, where we give a researcher a certain amount of labor hours so they have laboratory time. They have a little bit of money to buy equipment, tools, or materials. We then force them to at least show that their idea or their hypothesis works before we make the big investments. I think that what could change technology evolution and innovation in general is the fact that we can do a lot with just a little bit of money."

Wish list
Looking at the panel and their organizations, they were asked what they would like to have that would benefit their organizations. The consensus of the group is that they'd like more—more money, more partnerships, more research space, more time, and more efficient ways to process the large amount of data they work with.

"We need to develop more partnerships and consortiums," says Bill Peter, head of the material processing and manufacturing group at Oak Ridge National Laboratory (ORNL), Oak Ridge, Tenn. "As a government lab, we're often called upon to work in precompetitive R&D and this could be a great opportunity for the nation to have large impacts across multiple companies. But, it can also pose problems since many companies have proprietary interests in mind that usually don't fit together with the other companies’ interests. A consortium approach can provide a better consensus for R&D."

"We certainly need improvements in knowledge capture and sharing in a more efficient and effective manner," says SwRI's Downing. "We seem to have a lot of tools in terms of just calculating information, but actually making effective use of them is still difficult, particularly as the amount of information continues to rise."

Argonne's Daniels agreed with Oak Ridge's Peter's comment on the need to develop partnerships and consortiums to pursue research. "Historically, what we’ve done is we've tried to identify a key partner," says Daniels. "We're moving beyond that where we have to put together coalitions or consortiums that span the complete supply chain. I think this is imperative because we have issues with regard to sustaining the industrial commons."

William Peter, Oak Ridge National LaboratoryNanoSteel's Sergueeva identified more common research issues that are frequently seen in R&D Magazine reader surveys—that of the need for more space, more equipment, and more people. "These are very typical requests for any research team," she says. "In particular for me, the first thing on my wish list is more time. Our company is developing and moving very fast."

NASA's Lugo also noted the practical value of increased monies to support his researchers. "There are times when we are probably not advanced in new technology or getting the results we want because we don’t have the money to put into those basic things," he says. "That would be one of the things that would help improve the R&D process across at least the government and FFRDCs (Federally Funded R&D Centers) and probably university laboratories. Properly deployed, increased funds would help."

R&D globalization
The globalization of R&D continues to be an important issue and how U.S. governments, academia, and industry deal with it has become an important concern for these R&D organizations.

The University of Dayton's Research Institute does quite a bit of work with international partners, according to McCabe. "We have collaborations with Russia, France, Germany, and China, and we just recently opened a University of Dayton China Institute in the Suzhou Industrial Park," he says. "We'd like to do more, but with a significant amount of work being funded by the Department of Defense, we must be very careful in what we do and how we do it. We must ensure that we're honoring export control guidelines, ITAR, EAR, and whatever else is out there."

Government researchers are a bit more international than one might think for an FFRDC, according to Argonne's Daniels. "Our relationships cover Asia, Europe, and the Middle East, but also span discovery, development, and to a little lesser extent, the commercialization since we're funded by DOE, the primary focus on our commercialization activities is to support domestic business."

Researchers at NanoSteel work to be as global as possible. "We're developing a lot of materials for different companies and different industries," says Sergueeva. "We're developing hard banding materials for oil and gas companies and numerous other products that are used around the world. We're dealing with producers, designers, and users all over the world. Our geography includes the U.S., South America, Mexico, Canada, Europe, Japan, China, Korea, and India."

ORNL considers itself an extremely global organization. "We have citizens of more than 70 countries represented on our staff," says Peter. "Many of the companies we work with are international. As we continue to move into a global economy and more manufacturing jobs have moved overseas, we see more developments and technologies initiated outside the U.S. This is interesting because we're an FFRDC and we want to see the positive impacts in the U.S. Recently, however we're spending more time working with foreign companies to further develop their technologies for re-entry into the U.S. to create jobs and opportunity; the 'reshoring' of technology."

Southwest Research Institute's staff is similarly quite international. "Our organization is more global with respect to its staff than it is to the amount of business that we perform," says Downing. "And we've found that having international staff members does facilitate our ability to do work in other countries, because they have a desire to make those trips. Approximately 10% of our research revenue comes from international clients, not including U.S. subsidiaries of foreign companies. We’ve relied on a variety of approaches to do that. In Europe, we found teaming and service arrangements with organizations in Europe tend to work best for us."

IP risk
Ray Lugo, NASA Glenn Research CenterWhile many of these organizations work to increase their international partnerships and collaborations, there are IP security issues that they need to address.

"All organizations need to be pragmatic and flexible in how they deal with their IP," says Dave Myers, VP engineering and technology at RTI International, Research Triangle Park, N.C. "If you attempt to be rigid about it, you're doomed to not be very successful. Flexibility means you need more sophisticated, legal support. The need to handle IP expertly is becoming a larger need all the time because the issues seem to get more complex."

The problem with this point is that the question is fundamentally flawed, according to Myers. The question presumes that development of technology and profiting from IP is a win or lose proposition and it really should be a win-win situation. Viewing the development process as win/lose, can cause an organization to be overly possessive of IP and not work with others to enable the technology to reach its full potential.

"As a private company, we're sensitive to protecting our IP," says NanoSteel's Sergueeva. "It's a complicated task because we don't have much time between developing a new material and introducing it. Significant changes in IP laws last year helped us because they gave us an opportunity to file provisional patents ahead of final completion of material development and before the final patent filing. Also, both sides benefit from working under a nondisclosure agreement which allows both to protect their IP while working effectively together."

Oak Ridge researchers are comfortable with how they handle their IP. "Often, IP negotiations prior to research can delay the initiation of a project," says Peter. "However, up-front IP agreements are the best manner in which to negate future problems. ORNL has accelerated the time it takes to go through this process. In one competitive area of research, ORNL completed four CRADAs (Cooperative R&D Agreements) in less than three months with four separate industrial partners."

By virtue of the Bayh-Dole Act, universities can lay claim to IP that's accrued from using federal funds for R&D. "About 10 years ago, we changed that because it didn't work," says McCabe. "When a business comes to us to do a joint research project, we look at who's bringing the IP. If the company has the original idea, ideas about how to develop it, and they're bringing the money, they should own the IP. If we're bringing a lot of IP, it's a different negotiation. But it's not about the university owning everything anymore because if you do that, you shut out the opportunity to get your technology into the marketplace."

Rules and regulations
As the world becomes more sophisticated, government and professional society rules and regulations have become more complex and take considerable time and expense to satisfy.

Alla Sergueeva, NanoSteel Co."For government contractors, good compliance practices are a ticket to play, and doing it well is a matter of survival," says RTI's Myers. "A more comprehensive approach to compliance across all of the federal funding agencies would certainly streamline compliance and make it easier for us to be compliant in a cost-effective way. The Department of Energy's cost sharing rules are a particular example where at least 20% cost sharing is required in all projects, more on demonstration scale projects, is a significant limitation. We considered exiting this business, but its an important technical area for our institution. We hired several people whose full-time jobs are finding industrial cost-share partners which add technical capabilities, insights, and help meet the cost-share requirements."

Individual conflict of interest, organizational conflict of interest, EPA, EAR, ITAR, military critical technologies list, IRB, animal care and use, RCR, and Office of Management and Budget are just some of the things that R&D organizations have to deal with on a daily basis. "Compliance is there and we have to deal with it," says Dayton's McCabe. "It's not just adding a person or two; you often have to create new departments to make sure that you're not in violation. It was easier when these weren't in place, but now there's no choice if you receive federal money."

Government laboratories are not immune. "We’re subject to all the rules that have been laid out, as well as state and local regulations with regard to how we operate our facility," says Argonne's Daniels. "The implication with the multitude of regulations is that one needs to be as sophisticated as possible relative to ensuring that you're in compliance."

Another view was voiced by Oak Ridge's Peter. "An issue we get into is disseminating R&D to as many industrial partners as possible to enable large impacts to industry," he says. "Cost-sharing can be beneficial in identifying industrial partners in a fair manner, but it can also limit the number of companies that benefit. In many cases, we should identify opportunities to develop R&D areas that may be precompetitive; areas where many U.S. companies could benefit."

Funding environment
We would be remiss in today's economy if we failed to bring up the question of discussing the environment for funding R&D.

David Myers, RTI International"We enjoyed double digit growth this year and expect to see similar performance next year," says RTI's Myers. "Beyond FY 2013 it gets interesting. Like other organizations, we're looking to enhance the size of our client base and we’ve had some success there over the last five years. We're also looking internationally for growth opportunities. It's clear that we could be facing a pretty tough federal funding picture in FY 2014 and beyond."

Flat is the new up and down is the new flat, according to NASA's Lugo. "We've been fortunate, and have a flat budget," he says. "But, within that budget, we still have increases in personnel costs and inflation. That results in a 5 to 6% annual erosion in our buying power. I don't see changes to that in the foreseeable future. That's why we're focused on commercializing technology. We want to see if we can do something to increase our external funding stream which would allow us to increase the number of people working on some of these technical problems."

"Argonne has enjoyed modest growth over the past five years," says Argonne's Daniels. "To a great extent, that's because we're continuously developing new research opportunities to support growth. We've been proactive in developing business relationships with industrial partners who support our research."

After several years of significant growth, the research funding at Southwest Research Institute from 2011 to 2012 was essentially flat, and they're projecting that to continue into 2013. "We've seen tremendous growth in energy-related research, both conventional and nonconventional," says SwRI's Downing. "We benefit from being in Texas for a lot of the growth in the use of natural gas, not only shale-type natural gas, but also offshore gas in the Gulf of Mexico."

Wrapping up the discussion, the editors asked the panel for the "Wow" technologies they developed. While NASA mentioned discoveries through their space program that offer clever and elegant solutions, ORNL mentioned how additive manufacturing can have a huge impact on both manufacturing and R&D. Myers mentioned plant microbiomics' impacts on drought tolerance and sustainable agriculture in a changing environment, and McCabe focused on self-assembly of molecules and stem cells.

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