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GETTING TO 'EUREKA!'Researchers are tracking how breakthroughs are made'What I do is go out and try to grab lightning every day.'' That's Terry J. Fadem's description of the never-ending search for tomorrow's breakthroughs at DuPont Co., where Fadem heads new business development. But it's equally apt for similar efforts at other companies. Coming up with radical innovations--in contrast to the make-the-widget-better approach that dominates research and development--is an elusive process that can span decades. In 1956, Frank Lloyd Wright designed a mile-high skyscraper, and ever since, elevator makers have struggled to find a way to lift people to the top and make such tall buildings feasible. At long last, Otis Elevator Co. is about to unveil a prototype that it believes will transform Wright's vision into steel and concrete. Taking four decades to create a fundamental innovation is a bit unusual, although 15 to 25 years is common, according to researchers at Rensselaer Polytechnic Institute. Worried that management techniques honed by U.S. companies in response to global competition might be stifling breakthroughs, RPI three years ago persuaded the Alfred P. Sloan Foundation to fund a study of radical innovation--meaning ''new-to-the-world'' features, a five-to-tenfold performance boost, or a 50% reduction in costs. ''If you worship at the throne of the voice of the customer,'' you'll get only incremental advances, not brand-new ideas, says Joseph G. Morone, president of Bentley College since March and previously dean of RPI's Lally School of Management & Technology. While incremental improvements are essential to competitiveness, it's the big breakthroughs that lay the foundations for new markets and future growth. Critics used to lament that U.S. industry was good at breakthroughs but terrible at follow-throughs--turning inventions into products and improving them constantly. Now, they sing a different tune. ''American companies are doing a great job of developing better products,'' says Gina C. O'Connor, an assistant marketing professor at RPI. ''But there's been very little improvement in radical, or 'discontinuous,' innovation.'' UNDER WRAPS. Hoping to change that, Morone got the Industrial Research Institute to join the innovation study. The iri tracked down some member companies willing to lift the cloak of secrecy on current R&D projects so RPI's researchers could glean ''real-time insights'' instead of relying on memories of past R&D programs. The companies include Polaroid, Nortel, General Motors, and Analog Devices. The researchers regularly visit 12 ongoing projects at 10 companies. Data on an additional 15 efforts are collected via questionnaires. Most projects are still under tight wraps, but they include a new silicon-germanium semiconductor material at IBM, General Electric's digital X-ray system, and Otis Elevator's Odyssey system, which paradoxically solves the tall-building problem by moving sideways as well as up and down (drawing, page 72; an animated version can be found at www.businessweek.com). At the iri's recent annual meeting, Morone and crew offered some preliminary ideas about managing breakthrough R&D. For starters, expect a topsy-turvy process. Take ge's digital X-ray technology, which replaces film with computerized imaging. ge kicked off the research in 1975 in its aerospace business. The project vacillated through five stop-and-go metamorphoses, with researchers sometimes aiming at industrial jobs and other times, medical applications. In the late 1980s, the effort went catatonic. Enter Lewis S. ''Lonnie'' Edelheit, who took over in 1993 as ge's R&D chief. With the Internet starting to take root and promising easy online medical consultations, Edelheit figured digital X-rays were just the ticket. He revived the concept, and ''that changed the fate of the project,'' Morone notes. ge Medical Systems shipped its first digital X-ray machines last summer. It's a familiar pattern, RPI has found. Big breakthroughs generally evolve from projects that get repeatedly axed and restored. The end result emerges gradually, piece-by-piece from a trial-and-error process that Morone terms ''probe and learn.'' Failure is certain without staunch backing from at least one dogged champion, and ''typically you have to have multiple champions at different levels in the organization,'' says Mark P. Rice, assistant dean of RPI's Center for Entrepreneurship. The process is so complex and uncertain--lucky discoveries or accidents often send the work off in new directions--that ''what you end up with is rarely what you started with,'' says Morone. Still, Morone and team insist that companies can plan radical innovations, within broad guidelines, as long as they foster a breakthrough culture. Indeed, 23 of the 27 projects under study seem to be conforming nicely to the companies' strategic plans, and 21 were targeted from the outset. For example, the turning point for Otis Elevator stemmed from a last-ditch effort by Chairman Jean-Pierre Van Rooy and Joseph Bittar, vice-president for product strategy. They both spent a weekend on the problem. Van Rooy came up empty, but Bittar announced he might have the answer. His idea was to eliminate the lift cable, which can't stretch for much more than 130 stories without breaking under its own weight, and put multiple cabs on a single vertical track--with horizontal turnouts that allow cabs moving in opposite directions to pass each other. MOBILE ROOMS. Then the horizontal jogs got extended, and Odyssey evolved into a people-mover system that can even dash between buildings, picking up commuters in a nearby garage and depositing them at their office door. Or it could shuttle emergency rooms around a hospital, so patients get treated faster. And in regular high-rise buildings, Odyssey will halve the amount of room needed by elevators--now as much as 20% of taller structures--and thus produce more rentable space. In contrast to Otis' top-down push, IBM's development of silicon-germanium semiconductors was a bottom-up effort. Bernard S. Meyerson, one of IBM's 45 research fellows, just wouldn't allow it to get swept under the rug. Since 1982, he has wheeled and dealed to keep the project alive, cajoling a succession of managers to continue its shoestring budget. The team never had more than a handful of researchers, and for a while dwindled to one. Sometimes, the tugging got rather ugly. Meyerson says he was just conforming to the admonitions of a former IBM president: ''If a senior executive hasn't screamed at you lately for grossly exceeding your authority, you're probably not doing your job.'' Ultimately, Meyerson's stubborness won out, if only because he outlasted his detractors--most of them retired. And he has been hammering on silicon germanium for so long, he jests, ''that a lot of people now in executive management grew up knowing I believe this product works.'' Research stars such as Meyerson, says RPI's Rice, ''have a different vision of their company and their industry. In probably a supernormal way, they're able to see where the really big breakthroughs need to happen 10 years from now.'' As there's no pat recipe for stimulating ordinary researchers to become Meyersons, R&D managers are trying out different approaches, says Rice. DuPont's Fadem runs a fairly structured operation, keeping a half-dozen potential bombshells in various stages of evolution. IBM prefers more informality, prodding researchers to form small groups and spend some amount of time on ''extracurricular'' efforts--fellows in particular are given much latitude. Some guidelines seem clear, though. One is that breakthrough projects need to be sheltered from normal business pressures. Such research is too risky and too long-term to survive otherwise. ''Managers have to understand that bean-counter measures are meaningless,'' says RPI's O'Connor. And an ''incubator'' that is at least culturally, if not physically, distinct is necessary, adds Morone, because ''making discontinuous innovations is not a natural act.'' Many times, in fact, the research goal is to cannibalize an existing business unit. Another key is encouraging a free flow of ideas, both inside the company and out. In every case studied, ''informal networking plays a huge role,'' says Morone, as does frequent participation in industry events. ''The most successful researchers have very wide-ranging networks of people they plug into all the time,'' adds Rice. This is so crucial, he warns, that companies should be cautious when downsizing R&D. If junior people with extensive networks are lost, it can severely hamper a company's research for years. Morone's conclusion? The process of innovating big is profoundly different from that for incremental developments, so conventional management techniques won't work. Yet it can be nurtured and guided by setting soft goals, by evaluating progress with a shrewd eye toward long-range strategy and changes in the outside world, and by creating a climate that encourages bold thinking. The fact that all of the companies being watched are still managing to pull it off suggests American industry hasn't lost its breakthrough edge. But the final results won't be in until around 2005, when the projects launched in the late 1980s get tested in the market.
By Otis Port in New York and John Carey in Washington RELATED ITEMS
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Updated Oct. 30, 1997 by bwwebmaster
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