'Reinventing' Industrial Basic Research

Exxon judges that its new planning, tracking and stewardship system for basic research is leading to a significant, measurable increase in commercial impact. OVERVIEW: Currently, much is being said and written about the decline of longer-range RD 2) a business-driven approach that articulates targeted science advances in clear technical terms; and 3) a seamless link to ongoing applied development research activities via integrated planning, execution and stewardship systems. Both anecdotal and quantitative feedback indicate that the desired increase in commercial impact is being achieved. The basics of the oil and gas business are such that technology is a powerful and important ingredient in business success. First of all, it is a capital-intensive business. For example, Exxon's capital and exploration expenditures totaled $9 billion in 1995, and current assets on the books amount to over $90 billion, equivalent to about $1.1 million per employee. This per-capita investment is a high number by any standard, and it reflects the widespread utilization of high-tech, expensive equipment by a work force that is relatively modest for a company of Exxon's stature. Revenue per employee is nearly $1.5 million. These assets are deployed in a variety of operations, beginning with the search for oil and gas resources, followed by production and transportation to manufacturing and treating facilities, where the raw materials are processed into a wide array of petroleum and petrochemical products. The products are, in turn, marketed to individual consumers and industrial customers in diverse markets around the world. The influential fingerprint of technology can be detected readily throughout the entire chain of operations. Secondly, the business presents a broad spectrum of technology needs and opportunities. The products made and marketed range from high-volume commodities to high-margin specialty products. Likewise, the scale of manufacturing operations encompasses small batch plants as well as refineries processing hundreds of thousands of barrels of oil per day and petrochemical plants capable of producing a billion pounds of polyolefins per year. Lead times may range from several weeks or months to respond to an immediate competitive threat, to decades for an upstream project involving a multi-billion-dollar investment in a remote location or harsh environment. Technology advances developed in-house or acquired from others can include modest improvements to existing technologies as well as step-out processes and products. Lastly, the business venue is global and has been for over 100 years. Proprietary Technology Advantage Given these characteristics, it is not surprising that Exxon management over the years has consistently viewed proprietary technology advantage as a key business strategy. In line with this strategy, technology and engineering activities have grown in size and scope, and today Exxon has substantial technology units in all major segments of its business: the upstream (oil and gas exploration and production); the downstream (refining and petroleum products), and petrochemicals. Over the years, Exxon researchers and engineers have pioneered a broad range of major technology advances in each area, including such developments as reservoir simulation models and 3-D seismic in the upstream; fluid catalytic cracking and fuel economy engine oils in the downstream, and butyl rubber and Exxpol plastics and elastomers in petrochemicals. …