R&D From Both Sides Now

Tom Price is blogging live from the American Association for the Advancement of Science's public policy conference for Miller-McCune.com.
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This is the second of two postings from the AAAS conference today. To see the first post, click here.

When it comes to deciding whether to fund a research project, business seems to have an easier job than government.

Business executives can compare the expected cost of a project with the income it might earn by making new or improved products possible. But what do government executives compare?

Speaking during the American Association for the Advancement of Science's public policy conference today, Susan Butts, a Dow Chemical Company executive, described how businesses typically decide where to spend their research money.

Businesses fund research into technology that has the best chance for market success and can produce the greatest return through sales volume or profit margin, said Butts, who is Dow's senior director of external science and technology programs.

She described the decision-making process as a risk-reward comparison. Possible rewards include new products, improved market position, competitive advantage, increased sales and higher profitability. Only 1 in 10 research projects succeeds, so the winners need to be profitable enough to pay for the losers, she said.

Even good science can fail commercially, she warned. The technology may not be reproducible or won't scale up from the laboratory to the production facility. It may encounter cost or quality problems in manufacturing, or there may be insufficient market demand.

"You have science that rocks," she explained, "but nobody wants to buy it."

The federal government tends to make research decisions based on "expert judgment" of a project's likely worth, which is a good way to make public policy decisions, said Department of Energy executive William Valdez. But the president, Congress and public would like to see harder data explaining the return they're getting on the $172 billion allocated to federally supported research and development this year, he added.

Valdez and Julia Lane of the National Science Foundation co-chair a government-wide task force that's trying to come up with better measuring sticks.

The government doesn't fund research to make a profit but to boost the economy, advance medicine, strengthen national defense or accomplish many other goals. Valdez and Lane's group — called the Interagency Task Group on Science of Science Policy — is trying to determine how to compare costs and benefits in those areas.

How many jobs did a specific research project create? How much did a specific grant contribute to an invention? How do you measure the value of public good?

To do that, Lane said, the group is trying to "understand the innovation process and the scientific process. How do ideas get created? How do ideas get transmitted?"

"What is the national innovation infrastructure," Valdez added.

To do so, the group has commissioned research of its own. Some subjects: measuring innovation, measuring scientific progress and identifying patents and jobs produced by specific grants, for instance.

"What we're trying to describe are complex, heterogeneous processes," Lane said.

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