TECHNOLOGY, BUSINESS AND THE MARKET

LECTURE 2: SCIENCE, R&D and TECHNOLOGICAL DEVELOPMENT

LECTURE OBJECTIVES

To examine the linkages between science, R&D and technological development and
to note in passing some insights derived from the philosophy of science.

‘It works in practice but will it work in theory?’

1. Introduction

‘Those breakthrough products of past decades – the earliest silicon solar cells, for
example, which were invented at Bell Labs in the 1950s and now reside in a filing
cabinet in a forlorn warehouse in central New Jersey – seem barely functional by
today’s standards. So rapid is the evolutionary development of technological ideas
that the journey from state-of-the-art to artefact can occur in a mere few years.’ – Jon
Gertner

In Lecture 1 we noted the evolution of a specifically ‘scientific’ mind set and placed
this in a particular set of historical circumstances. In this lecture we will trace the
linkages between scientific endeavour, ‘applied science’ and technological progress
through the mediation of commercially sponsored R&D. First, however, it is useful to
appreciate that the idea of science itself is far from being uncontested.

2. The philosophy of science – the Popper/Kuhn debate

‘The principal task of philosophy of science is to analyse the methods of enquiry

used in the various sciences….to question assumptions that scientists take for
granted….questions about how science should proceed, what methods of enquiry it
should use, how much confidence we should place in those methods, whether there
are limits to scientific knowledge and so on… The issues that interest philosophers
of science are not merely philosophical; on the contrary, they have engaged some of
the greatest scientists of all.’ (Okasha, 2002, p.12)

Science is sometimes perceived as neutral and value free; dispassionate, rational

and disengaged from contextual matters; concerned only with progress and the
search for ‘truth’. However, even brief reflection will reveal that science is certainly
not free from the context in which it is set and that scientists are no less creatures of
their particular environment than practitioners in the humanities. Similarly, those
aspects of scientific output that impact on the development of technology and the
subsequent evolution of products and services are by no means neutral. Instead,
they are subject to numerous external influences - not least the pursuit of strategic
and economic advantage and the vagaries of the market. Before moving on to
examine the ways in which applied science, R&D and technological development are
linked, it is useful to notice the claims of two of the most influential philosophers of
science viz. Karl Popper (1902-1994) and Thomas Kuhn (1922-1996).

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Popper was responsible for the establishment of the philosophy of science as a
distinct subject in its own right. He sought to distinguish between the claims of what
he termed ‘pseudo-science’ – such as Marxism and Freudianism – and ‘hard’
science as exemplified by Einstein’s theory of general relativity. The key issue in
Popper’s view was what he termed falsifiability. According to Popper, Marxism and
Freudianism shared the same defect – neither set of theoretical propositions were
capable of rigorous testing and possible refutation. Instead they were ‘slippery’ and
amenable to being ‘adjusted’ to any set of circumstances in order to sustain the
theory. In contrast, Einstein’s theory was couched in terms that were patently
amenable to testing. Popper’s two central texts are The Logic of Scientific Discovery
(1934) and a collection of essays Conjectures and Refutations: the Growth of
Scientific Knowledge (1963) but he also contributed to the sphere of political theory
with books such as The Open Society and its Enemies (1946). In defending the
‘open society’ against the incursions of totalitarianism, Popper argued for a liberal
order in which, consistent with Mill’s On Liberty, various ideas could contend in a sort
of ‘intellectual marketplace’. In Popper’s view scientists should produce theories that
are readily amenable to refutation; science progresses through the constant process
of error elimination as the frontiers of knowledge are pushed forward in an ‘unending
quest’ for truth. He termed his approach critical rationalism. For Popper, the
‘problem of induction’ became the key to an understanding scientific progress,
always striving to go beyond our present understanding of the world by constantly
challenging the prevailing orthodoxy. As he put it:-

‘Progress consisted of moving towards theories which tell us more and more –
theories of ever greater content. But the more a theory says the more it excludes or
forbids, and the greater are the opportunities for falsifying it. So a theory with greater
content is one which can be more severely tested. This consideration led to a theory
in which scientific progress turned out not to consist in the accumulation of
observations but in the overthrow of less good theories and their replacement by
better ones, in particular by theories of greater content. Thus there was competition
between theories – a kind of Darwinian struggle for survival.’ (Popper, 1974/2002, p.
88)

Whether Popper was successful in showing that there is a clear ‘demarcation’

between what he termed ‘pseudo-science’ and ‘true science’ is problematic.
However, this issue is beyond the scope of this lecture. Popper faced a different
challenge in the form of Thomas Kuhn’s The Structure of Scientific Revolutions, the
first edition of which appeared in 1962. Popper’s work gave the impression that
scientists are involved in a process of conjecture and refutation, searching for ever
greater levels of explanatory capacity in a sort of linear progression. Kuhn
challenged this by suggesting that, for most of the time, scientists engage in what he
termed normal science conditioned by what he termed a prevailing paradigm.
According to Okasha

‘A paradigm consists of two main components: firstly, a set of fundamental

theoretical assumptions that all members of a scientific community accept at a given
time; secondly, a set of ‘exemplars’ or particular scientific problems that have been
solved by means of those theoretical assumptions, and that appear in textbooks of
the discipline in question. But a paradigm is more than a theory…In short, a
paradigm is a whole scientific outlook – a constellation of shared assumptions,

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beliefs, and values that unite a scientific community and allow normal science to take
place.’ (Okasha, 2002, p. 81)

Far from seeking to refute the prevailing paradigm, normal science tends to reinforce
it, being largely involved in what Kuhn describes as puzzle-solving - ‘normal science
is a highly conservative activity – its practitioners are not trying to make any earth-
shattering discoveries, but rather just to develop and extend the existing paradigm’.
According to Kuhn, radical change only occurs when numerous anomalies occur
which cannot be explained by the prevailing paradigm. Eventually confidence in the
paradigm is exhausted and normal science grinds to a halt. At this point alternatives
to the old paradigm are proposed, one of which will ultimately prevail and the
scientific community will eventually convert to the new paradigm, thereby completing
a scientific revolution. As Kuhn describes the process:

‘At the start a new candidate for a paradigm may have few supporters
…Nevertheless, if they are competent, they will improve it , explore its possibilities,
and show what it would be like to belong to the community guided by it. And as it
goes on, if the paradigm destined to win its fight, the number and strength of the
persuasive arguments in its favour will increase. More scientists will then be
converted, and the exploration of the new paradigm will go on. Gradually the
number of experiments, instruments, articles, and books based on the paradigm will
multiply…convinced of the new view’s fruitfulness (more scientists) will adopt the
new mode of practicing normal science, until only a few elderly hold-outs remain.’
(Kuhn, 1962/1996, p. 159)

The Popper/Kuhn debate sheds light on the nature of scientific endeavour, although
there is ultimately no way to determine which view is correct. Perhaps Paul
Feyerabend comes closest to the ‘truth’. As he puts it, there is not a single way ‘of
knowing science; there are many such ways….science itself has conflicting parts
with different strategies, results, metaphysical embroideries. It is a collage, not a
system’ (Feyerabend,1995, p.143). Some years ago Fritjof Capra, in exploring
parallels between modern physics and Eastern mysticism claimed that Western
science has been more or less captured by a mechanistic, analytic, materialistic,
reductionist paradigm which has ‘been beneficial and detrimental at the same
time…extremely successful in the development of classical physics and
technology…but having many adverse consequences for our civilisation’ (Capra,
1962/1982, p. 28). We will examine some of the ‘adverse consequences’ in Lecture
10.

3. From applied science to R&D and technological progress

It may be that there are individual scientists working in solitary isolation from the
world. However, the bulk of science and perhaps all R&D are carried out in an
institutional setting – whether that setting is academic or industrial. Kressel has
usefully identified three distinct kinds of R&D and offers the following definitions:-

 Basic research – ‘aims at the discovery of laws governing natural phenomena.

The best basic research is conducted in an open environment where creative
minds can follow their instincts. Major discoveries are frequently made in the
course of looking for something else, so it’s important that a researcher is free

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 to work on hunches….Investing in basic research is a high-risk endeavour. It
has the potential to generate enormous gains, but it is impossible to predict
whether a specific discovery will have commercial value. Adding to the risk is
the need to invest in follow-up development before a raw technology can be
commercialized….The fundamental work that uncovered the properties of
semi-conductors in the 1930s and 1940s is an excellent example of the
process. As basic research, its discoveries produced extraordinary
technological and commercial results. But these outcomes required extensive
applied research and product development before they could fulfil their
potential.

 Applied research – ‘occurs farther along the road to productization. It begins

with a general knowledge of basic physical phenomena and seeks to discover
a path to their practical utilization. Applied research can have far-reaching
consequences. The Bell Labs work that made it possible to prepare single-
crystal germanium and establish its properties led directly to the construction
of the first transistor. Early work on data structures was the stimulus for the
relational architecture underlying modern database technology.

 Product development – ‘covers all activities that lead to new products or

processes, help make existing products better, or improve their
manufacturability. In the case of transistors, for example, product
development work was focused on finding ways to fabricate practical devices.’

Significantly, he goes on to add that, ‘there is no question that, in the long term,
innovation is impossible without basic research. Scientists have to understand
fundamental principles and materials before they can apply them to new products.
But once this understanding is in place, the primary activities of innovation are
applied research and product development.’ (Kressel, 2007, pp.102-3). The topic of
innovation will be dealt with in next week’s lecture.

4. Industrial R&D - the Edison, Bell and RCA Laboratories

‘The 20th century has often been called the Age of Edison, because he played a
role in creating many of the technologies that shaped the modern industrial world.
With 1,093 patents to his name, Edison has been held up as the archetype of the
lone inventor, producing innovations by sheer force of personal genius. This is a
myth. Thomas Edison did not work alone. He may have been the driving force
behind many of his inventions, but he was supported by a hand-picked research
team assembled for the purpose’ (Kressel, 2007, p. 105).

Edison succeeded in bridging the cultural gap between so called ‘pure’ science and
the practical inventors – technologists who did applied research and product
development. In 1876 he established the world’s first industrial laboratory in Menlo
Park, New Jersey which he called the Invention Factory. Here scientists and
technologists were integrated in a single organization. In 1887 he moved to new
premises – the Edison Laboratory – in West Orange, New Jersey, creating the
world’s first R&D centre where breakthroughs were made in many areas including
the production of the phonograph, motion picture technology, incandescent lighting,
and electric power generation. Edison’s central concern was with commercial

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success. R&D for its own sake did not interest him and the focus was firmly on the
development of product innovation. The combination of teamwork and the creation
of successful products made Edison’s laboratory the forerunner of all subsequent
research strategies and inspired the formation of several large corporate laboratories
in the early 20th century, including those at American Telephone and Telegraph
(AT&T), International Business Machines (IBM), the Radio Corporation of America
(RCA), Westinghouse, and General Electric. The largest of these was AT&T’s Bell
Laboratories, founded in 1924.

‘The work at Bell Labs ran the gamut from basic research through product
development By the early 1980s, when AT&T was broken up by agreement between
AT&T and the Department of Justice, Bell Labs employed about 20,000 scientists,
engineers and support staff distributed around the country. A total of 2,000 were in
the research department, while about 8,000 people worked on the software that
operated the telephone network and enabled its services. The remaining 10,000
were tasked with product development on behalf of AT&Ts business units. Long-
term research and product development spanning many years was possible at the
Laboratories because they benefited from a unique industrial advantage: being part
of a government-created telephony monopoly’ (Kressel, 2007, p. 108).

AT&T organised on the basis of vertical integration with the company having control
of the US telecommunications network from technology to the production of
equipment and, via the Bell operating companies, the bulk of service delivery.
AT&T’s profits were guaranteed by ‘cost plus pricing’ negotiated with government
regulators and based on assets deployed. This situation provided an environment in
which long term research projects could thrive and research results could be turned
into products. As Kressel puts it, ‘Bell Labs work that spanned decades made
possible the modern wire-line and wireless telephony systems, and built the scientific
and technical foundation for the semiconductor industry - the Laboratories also made
noteworthy contributions to computer science, including the invention of UNIX, the
most important system for large-scale and high-performance computing’ (Kressel,
2007, p. 109).

We should emphasise here the importance of leadership and vision in the sphere of
innovation research where strong corporate leadership has proved essential to
success. A key example is RCA Laboratories which, under the leadership of David
Sarnoff (unlike Edison a businessman rather than a technologist), presided over the
pioneering work on colour television. In addition to its research and manufacturing
capacity, RCA also owned a broadcasting network, National Broadcasting Company
(NBC) via which it could launch a colour television service – which it did in 1951.
RCA Laboratories invented and patented every one of the core technologies –
including manufacturing methods – for colour television. The technology was
designed to be compatible with existing TVs and RCA adopted a lucrative licensing
strategy which permitted other manufacturers and broadcasters to enter the market.
Kressel, who worked at RCA Laboratories, has commented on the significance of all
this as follows-

‘The development and successful commercialization of colour television by RCA is

an excellent example of the value of truly innovative research in a vertically
integrated company driven by a visionary leader. No independent organization could

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have succeeded without access to capital, its broad technical and scientific skills,
and its control of a television broadcast network. The strategy of strong intellectual
property protection resulted in an impregnable patent portfolio that allowed RCA to
dominate the television industry and extract license revenues from all parts of the
world’ (Kressel, 2007, p.111).

RCA made huge financial investment to achieve this situation and it was ten years
before the company began to earn profit from its colour television receivers. It was
profit from its television products that enabled the company to expand into many
other product areas – for example, the first germanium transistor designed for
consumer electronics was developed at the RCA labs in 1952 and manufactured at
the newly established Solid State Division in 1953, the start of a new era for the
electronics industry. We should also note in passing the importance of the patent
system in protecting intellectual property.

5. Henry Mintzberg – Machine Bureaucracy versus Adhocracy

The management thinker Henry Mintzberg, in his book Structures in Fives:

Designing Effective Organizations, identifies the defining characteristic of
bureaucratic organizations as standardisation. Large operating units, extreme
division of labour, and above all the need to maintain management control all tend to
what Mintzberg describes as Machine Bureaucracy characterised by highly
specialised routine operating tasks, very formalised procedures, a proliferation of
rules, regulations, and formalised communication throughout the organization; large
scale operating units at the operating level; reliance on the functional basis for
grouping tasks; relatively centralised power for decision making, and an elaborate
administrative structure with a sharp distinction between line and staff. Mintzberg
sees Machine Bureaucracy as the essential structure for routine manufacturing but
inimical to the creativity required for successful innovation.

However, in his 1989 book Mintzberg on Management: Inside Our Strange World of
Organizations he identifies a number of alternative organizational forms and
considers their relevance/appropriateness to various situations/activities. The one
most suited to innovation he describes as ‘Adhocracy’. As he puts it:-

‘To innovate means to break away from established patterns. Thus the
innovative organization cannot rely on any form of standardisation for coordination.
In other words, it must avoid all the trappings of bureaucracy, notably sharp divisions
of labour, extensive unit differentiation, highly formalised behaviours, and an
emphasis on planning and control systems. Above all it must remain
flexible….Information and decision processes flow flexibly and informally, wherever
they must, to promote innovation. And that means overriding the chain of command
if need be….We have a distinct configuration of the attributes of design: highly
organic structure, with little formalization of behaviour; specialized expert training; a
tendency to group the specialists in functional units for housekeeping purposes but
to deploy them in small project teams to do their work; a reliance on teams, on task
forces, and on integrating managers of various sorts in order to encourage mutual
adjustment, the key mechanism of coordination, within and between these teams,
which are located at various places and involve various mixtures of line managers
and staff and operating experts.’ (Mintzberg, 1989, p. 199)

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This is the natural habitat of the project manager, operating across conventional
professional boundaries – influencing rather than commanding – sustaining high
levels of communication – a world of colleagues rather than ‘bosses’ and
‘operatives’. Minzberg offers the examples of a high-technology research
organization, an avant-garde film company and a plant manufacturing complex
prototypes as appropriate candidates for Adhocracy. Another relevant example is a
Formula 1 design team.

6. Concluding remarks

By the early 20th century scientific research was being systematically harnessed by
industry. In the developed nations, and most prominently the USA, a clear linkage
had developed between entrepreneurial activity, innovation and productive effort
within a market based economy which, whatever its inherent faults, has been
remarkably successful. Companies grew from modest entrepreneurial beginnings to
become major corporations and, in many cases, declined once their ‘edge’ was
dissipated to be replaced by newcomers – part of the constant churn of ‘creative
destruction’ described by the economist Joseph Schumpeter. Shumpeter’s ideas,
together with the topics of entrepreneurship and innovation and the activities of
venture capitalists will be examined in Lecture 3. Henry Mintzberg identified
‘Adhocracy’ as organizational form most appropriate to innovation.

Sample examination questions

Discuss the differing view of scientific activity described by Popper and Kuhn.

Compare and contrast Mintzberg’s Machine Bureaucracy and Adhocracy.

References and background literature

Capra, F. The Tao of Physics: An Exploration of the Parallels Between Modern

Physics and Eastern Mysticism 3rd edition, Flamingo, 1982

Gertner, J. The Idea Factory: Bell Labs and the Great Age of American Innovation,
Penguin, 2012

Gorham, G. Philosophy of Science, Oneworld, 2009

Isaacson, W. The Innovators: How a Group of Hackers, Geniuses and Geeks

Created the Digital Age, Simon and Schuster, 2014

Kressel, H. Competing for the Future: How Digital Innovations are Changing the
World, Cambridge University Press, 2007

Kuhn, T. The Structure of Scientific Revolutions 3rd edition, University of Chicago

Press, 1996

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Mintzberg, H. Mintzberg on Management: Inside Our Strange World of
Organizations, The Free Press, 1989

Okasha, S. Philosophy of Science: A Very Short Introduction, Oxford University

Press, 2002

Popper, K. Unended Quest: An Intellectual Autobiography, Routledge, 1974/2002