The What and the How – takeaways from a conversation between CTOs

Corporate R&D departments provide a vital function, but what they do--and how they do it--is changing.

In years past at ABB Customer World (held this time in Houston, March 13-16), there would be a session dedicated to a report-out from the company’s Chief Technology Officer on where the company’s development efforts were focused and where technology was headed. This time, we did something different.

ABB CTO Bazmi Hussain was joined onstage by his counterparts from three major industrial companies for a wide-ranging panel discussion led by ABB Senior Principal Scientist, Mir Mousavi. The panelists included Terry Oliver from Bonneville Power Administration, Luiz Mello from Vale, and Ahmed Hashmi from BP. The discussion covered a lot of ground, but there were two meta-takeaways (if that’s a thing) around changes in what R&D departments are doing and how they are doing it.

With regard to the “what,” BPA’s Oliver noted a trend that is becoming more visible every day, namely the reverse migration of technology from consumer markets to industrial ones. Where once new technology was first developed in industrial applications and later imported to consumer products, now we see the opposite. That has a few implications, starting with cost.

“Least-cost has traditionally been the approach,” said Oliver referring to the business imperative to save money, “but no more. The iPhone is obviously not the least-cost option.”

Using such technology in an industrial setting may not be cost-effective, but there is also the fact that not all consumer tech is ready to take on industrial requirements. As Bazmi Hussain observed, the consequences of signal failure in industry is high compared to consumer applications. Consider the impact of a dropped cell phone call compared to a misreported pressure reading in a chemical facility.

Industrial R&D teams, then, must tread carefully when implementing consumer-derived technology (e.g., by running more pilot programs) to ensure that it can meet the requirements for what it is proposed to do.

Another challenge for the research and development community lies in software.

“The drive for operational efficiency has been going on for some time and now hardware has caught up to the vision we’ve had,” said BP’s Hashmi. But despite advances in how software is used, he noted that the process of making software is still too slow.

“We need to automate software development to make sense of data faster,” he said.

That leads us to the question of how R&D organizations operate, and there was broad agreement among the panelists that the R&D ecosystem is changing. Two trends emerged:

• More partners. In addition to customers, suppliers and academics, companies are now working more and more with industry peers (e.g., ABB’s alliance with Microsoft on digital)
• More speed. R&D groups are working with startups, either outside the corporate family or inside it, to “fail fast and fail cheap” as they move to a more iterative development model.

All of the leaders on the panel agreed that collaboration is essential. BPA’s Oliver noted that every single project his team takes on is a partnership with someone. BP’s Hashmi specifically called out the importance of R&D groups working closely with the business.

“If I am not in tune with the needs of the business, I’m not doing my job,” he said. “I must be able to translate those needs to my team.” All of BP’s research is conducted in agreement with business units, evidence that Hashmi practices what he preaches.

“There is no ivory tower,” he said. Hashmi was also quick to add that part of R&D’s role is to prod the business.

“Some things we think the business should do, but is not currently asking for,” he said. Pushing on that particular envelope is part of the R&D role as he sees it. ABB’s Husain agreed, citing ABB’s effort to commercialize electric robots in the early 1970s as an example.

As the session wound down, the question of who will fund primary research came up. Government agencies used to perform much of this kind of work—projects with no specific commercial application—but shrinking budgets have curtailed what governments can do.

BPA’s Oliver responded by noting that the need for such research has not gone away, and that if government, universities or other institutions don’t do it, “maybe there’s an obligation for us to keep it from disappearing.”

Given how innovation tends to build on itself, it remains to be seen how reduced government funding for primary research will impact industrial R&D going forward.