Discovery Research Re-Emerges in DuPont

The company is reallocating resources to long-range research, increasing its emphasis on growth opportunities and on breakthroughs that support current businesses. OVERVIEW: Alternative corporate strategies of growth and of consolidation result in a changing focus for research and development. Over the past 70 years, the DuPont Company has passed through four recurring cycles, each lasting 15-20 years. Within each cycle, the emphasis shifts from a period of discovery research to a later period of consolidation. It is the interplay between these phases that has shaped today's DuPont Company. The cause for this regularity in the cycles remains a puzzle. If history repeats itself, a new cycle is beginning and DuPont is on the verge of another burst of discovery research. Observers have noted that basic technological innovations seem to occur in "bursts" or clusters in cycles of approximately 50 years, spurred by investor demand for new growth opportunities (1,2). Each "burst" is followed by a "long economic and investment wave," a period during which further discoveries and inventions are made extending and applying the new technology (3). We have observed similar but shorter innovation patterns within DuPont (4). Since 1927, four cyclical periods, each between 15 and 20 years in length, have been identified. Within each, the emphasis shifts from a period of discovery, during which new products and related new businesses are created and expanded, to a period of consolidation, during which core manufacturing-based businesses are restructured to achieve efficiencies. During the consolidation phase, scale-up of investments and commercialization of new opportunities are focused but limited, and major cost controls are implemented in order to put new and current businesses on firm foundations. Figure 1 shows the cycles and the R&D focus in each period. It is the dramatic interplay between periods of growth, expansion and creation, and subsequent periods of consolidation and cost control, that has shaped today's DuPont Company. The current business structure resulting from these forces is shown in Figure 2. The bursts of productive discovery research have shown that good science can be translated into potential wealth, while the consolidation periods have demonstrated that this wealth can be captured and sustained. The 17-Year Cycle Many might wish that both growth and cost control can be done at the same time. Indeed, our experience indicates that these efforts are not always mutually exclusive. However, one of the two major corporate strategies appears to have predominated in each period. We can take our lessons from this history. A typical 17-year cycle might be characterized in the following way (See Figure 3): Years 1-3: There is dismay at a perceived shortage of good ideas. Studies are made of research to see if it can be made more productive. Various avenues for growth are explored. Employees in leadership positions have excellent skills in consolidation and cost control, but less experience in growing and developing new businesses. Years 3-5: New ideas, including some previously held in abeyance, are brought forward. Discovery research flourishes, and new acquisitions in technology-based businesses are made. The groundwork for new opportunities is laid. Years 5-7: Investments are made in the results of discovery research, and in new ventures and businesses. New venture managers learn to grow new businesses. Years 7-9: Concerns are expressed that not all developments can be funded and that some new ventures have become a financial drain. Those now in leadership positions have not had significant experience in making difficult cost-cutting decisions. Years 9-12: Funding is constrained for new developments. For R&D, the emphasis is on tailoring and improving current products and manufacturing processes. New-venture managers find other assignments or leave the company. …