Linking science and innovation
Innovation needs technology to lead science, and product development to lead research
Popular belief says scientific research leads to discoveries, these discoveries enable the development of new technology, and this new technology feeds into production and the market. This mental model, the linear model of innovation, is attractively simple, but dangerously simplistic. Scientific research actually has a very limited role in industrial innovation.
Technology aims to expand the realm of practical human possibility. Science aims to attain an enhanced understanding of nature. The distinction is not so much in what is done but why. Utility is at the heart of technology, or engineering. Knowledge may result from a new development, but that’s not the purpose of technology. A scientist aims at generating new ideas or knowledge. Utility may result from a scientific discovery, but that’s not the purpose of science. Similarly, research aims at generating new knowledge. Development aims at developing a new product or service. Clarity about these concepts can save firms much wasted work and public research much wasted effort.
The role of research in industrial innovation: Steve Kline, professor of mechanical engineering at Stanford, advanced a chain-linked model of innovation (see figure )to replace the simplistic linear model. There are a few things to note. Innovation starts and ends with the market, and designing and testing is the core development activity. Knowledge — both technological and scientific — plays a key role not as a trigger for innovation, but as a repository one draws on during the innovation process to help solve problems. And research is what you do when the existing stock of knowledge is not enough to solve the problem. Generating new knowledge is needed when everything else has failed.
Indeed, far from being the dominant source of industrial innovation, new research matters to industrial innovation in just two exceptional cases. Advancement in certain fields, like biotechnology and semiconductors, has a close connection with scientific research. And scientific research has a broader role as one of “technology’s wellsprings” — to reinvigorate technical progress in a particular field. This “reinvigoration” typically takes the form of a new technological paradigm for industry — the cloud taking over from in-house servers, say, or the jet engine from the propeller. Scientific research is critical to technical advances in science-based industries and to the innovation of new technological paradigms. For the great bulk of the world’s R&D effort that takes place in hundreds of thousands of firms worldwide, Science (capital S) as an organised research effort doesn’t matter; science (small s) — excellently educated students — does.
R&D in firms begins with learning from other firms, progresses to improving existing products through development, and only then comes to research as an activity aimed at generating new knowledge. In-house research, aimed at producing new knowledge, is a prerequisite for using the output of the public research system. So public scientific research is justified when firms are adequately advanced to invest substantially in research in addition to development. Public scientific research can then serve as a well-spring for industrial innovation.
Kenneth Arrow and Richard Nelson made the economic argument six decades ago for public subsidy of scientific research. Society, they argued, would under-invest in research because the benefits would not be apparent enough, as research outcomes are inherently uncertain, or appropriable enough, as the benefits of a new discovery may flow as much to others as to the investor. The fact that the results of research are both uncertain and imperfectly appropriable continues to justify state funding.
In 2019, the last year for which I have official data, the Indian government funded roughly 63 per cent of the national R&D ($18 billion). About 7 per cent happens in our universities. Fifty six per cent happens in autonomous government R&D laboratories. I have written recently about the public technological research we do for defence (“Rethinking innovation in defence”, Business Standard, April 26, 2022). Approximately 10 per cent is publicly funded scientific research aimed explicitly at industry in the Council of Scientific and Industrial Research, the Ministries of Science and Technology, Earth Sciences, and Electronics and Information Technology, and the Department of Biotechnology. By locating our publicly-funded research primarily in autonomous laboratories instead of industry and the higher education system, we miss a huge opportunity. (In a further article, I will deal with the reform of these agencies.) The message is clear: The case for publicly funding scientific research is compelling. But this research must be done within the higher education system, and not in autonomous laboratories, for it to be fruitful. Why?
Talent is the key output of public research: Many think that research universities are great sources for new scientific understanding. They are. Stanford is seen as a definitive contributor to Silicon Valley and its technology giants. The university deserves this reputation, but in my view it is not Stanford’s research output that should get the credit. Let me be crass: If the world had never seen the benefit of any of Stanford’s research output in the 125 years of its existence, it might be marginally worse off. But research is not the key output of this exemplar of research output. The key output is students. The number of great companies founded by Stanford students — Hewlett-packard, Varian, Google, Yahoo, Uber, Twitter, Apple, and hundreds more — have contributed more to the economy than all of Stanford’s brilliant discoveries. And the contributions of hundreds of thousands of graduates over the years to the economy, science, literature and every field is a multiple of what these giant companies contribute. The same is true of every great university.
We have a few examples of combining worldclass research with teaching. The Indian Institute of Science in Bengaluru particularly stands out. But the Institute of Chemical Technology in Mumbai, better known by its old name of, the University Department of Chemical Technology or UDCT, is our most noteworthy example. The UDCT, founded in 1933, has long prided itself on its research. But consider the contribution it has made through its alumni. Here’s a quick list: Mukesh Ambani (Reliance), Anji Reddy (Dr Reddy's Laboratories), Madhukar Parekh (Pidilite Industries), K K Gharda (Gharda Chemicals), Ashwin Dani (Asian Paints), Nilesh Gupta (Lupin), Ramesh Mashelkar (Director of NCL and DG of CSIR), N Sekhsaria (Ambuja Cements) and M M Sharma (who himself later led UDCT and established its worldwide reputation).
Ever since Wilhelm von Humboldt defined the founding principles of the world’s first research university, the University of Berlin, in the early 1800s, the purpose of a research university has been the search for knowledge. And we must add that that knowledge particularly benefits humanity when it walks out of the university’s door in the heads of its students. That is why research must be done in the higher education sector. Doing it in autonomous laboratories deprives society of this prime benefit. As Gerhard Casper, president-emeritus of Stanford University, succinctly put it in a speech in Delhi, “Outstandingly educated students are still the most meaningful contribution that university-led research can make to knowledge transfer.” ndforbes@forbesmarshall.com . The writer is Co-chairman Forbes Marshall, Past President CII, Chairman of Centre for Technology Innovation and Economic Research and Ananta Aspen Centre. His book, The Struggle and the Promise, was recently published by Harpercollins