What makes a good investment in R&D?

Oil IT Journal editor Neil McNaughton hears the pleas for more spending on R&D but wonders what makes a good R&D investment. He checks out different R&D funding models to conclude that successful R&D can be achieved by industry driven consortia, or in the entrepreneurs garage! On the other hand, transnational taxpayer-funded R&D may not always be good value for money.

A frequent plea one hears at the tradeshows and in the press is for more spending on research and development (R&D). R&D, like motherhood and apple pie is assumed to be an unequivocal good—the more you spend, the better your industry and economy will perform. Such entreaties are usually received with the same enthusiastic acquiescence, but are rarely followed by any action. This is probably because it is easier to ‘entreat’ than to find the funds. Even if you have found some money—how do you decide where to allocate it?


The truth is that R&D projects may or may not be money well spent. For publicly-funded R&D, adjudicating projects may be outside of the political paymaster’s competency. There is also natural tendency of the researcher to, well, research! Have you ever seen a research report that didn’t conclude that more work—and therefore more funding—was necessary?


Making any sensible analysis—let alone recommendations—of research funding is fraught with difficulty. Different countries have very different ways of organizing and funding research. R&D performed in the commercial world may or may not be included in the statistics. What is classified in company reports as ‘R&D’ may or may not really be research. Reporting may be driven by considerations of taxation rather than transparency!

Halcyon days

I don’t know whether these pontifications come from observation of a changing world or whether they are the fruit of a lifetime of taxpaying. My own recollection of university days is of an elite few who ‘stayed on’ to do research as a kind of staging post before moving on to industry. This view of research was confirmed in Steve Lohr’s book GO TO (see our review on page 9 of this issue). Lohr describes MIT’s Artificial Intelligence lab as being a place where a hands-off approach (little research on AI was actually done!) led to ‘academic freedom, technological optimism and an anti-establishment culture’.

Consortia of one?

The best R&D—the most spectacularly successful—probably derives from a ‘consortia’ of one. One thinks of the almost mythical successes of IT pioneers like Vince Cerf’s who dreamed up TCP/IP in his garage. Or Tim Berners-Lee’s single handed invention of HTML and the World-Wide Web.


Such freewheeling R&D contrasts with my own limited experience of EU-funded research. Erstwhile EU R&D supremo Edith Cresson’s alleged funding of ‘research’ performed by her dentist could be considered a worst-case of R&D ROI! But Cresson’s activity and the resignation of the Commission in 1997 may have served to mask a different issue—the quality of EU R&D.

Social engineering

EU funded research has a hidden agenda of social engineering attached to the qualification process. More important than a good idea is having the right folks on board. Various more or less obscure criteria are applied to R&D grant applications. The most obvious condition is that grants are in general made to cross-country groupings rather than to single organizations. Various other ‘engineered’ criteria will put funds in the way of projects that are near commercialization, or not, that can show commercial potential and so on.


The end result of the complex regulations can be to create, not focused projects with clear objectives, but a hodgepodge of specification-driven verbiage. The lack of objectives can mean that the universities, research organizations and other consortium members go about their business more or less as usual, untroubled by any real obligation to cooperate. The funding cake can be carved up and shared out. The end result can be a herd of cats!


Industry-driven consortia may or may not fall into this trap. The follow-up of direct investment in research is in inverse proportion to its proximity to the point of application. But the ‘consortia’ preferred by industry are generally groups of oil companies funding a single vendor development. I suspect that this is a more successful model than the multiple R&D organization consortia preferred by the EU.


A good example of focused R&D is Total’s offshore Angolan Girassol field. This project is of a complexity and scope that is reminiscent of the Apollo mission and will be receiving the OTC’s Distinguished Achievement award next month. Production from Girassol, like other cutting-edge engineering projects, required a kind of ‘just in time’ R&D. Work on the riser was commissioned, researched and developed to a very tight schedule. No time for hanging around waiting for inspiration as it were.


I suspect that much of the R&D that has disappeared from the radar screen is actually alive and well—but has been moved so near to production that we don’t recognize it for what it is. The amazing evolution of seismic acquisition and processing technology over the last couple of decades market is paradoxical proof that R&D is still very much alive and well—even though the sector itself has been in serious difficulty for a decade.

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