{{B}}Research and Development in Industry{{/B}}
It is only through innovation that large companies will be able to survive, according to Mark Peter, vice-chair- man of UK-owned industrial giant 5P. However, says Peter, it remains difficult to run a truly innovative company. Innovation involves speculation, unproven technologies and unpredictable costs. It takes a lot of managing, because managers really have to be on top of what's happening. In addition, innovation does not fit easily into the orderly kind of organization that company accountants like. Despite this, Peter claims it is an essential policy to pursue.
The 5P group's record of growth aid profitability indicates that it manages the orderly part of the business pretty well. The statistics are big: operations in more than 60 countries, sales in more than 200. around 60, 000 products and 70, 000 employees. But what makes 5P different is its innovative approach to innovation itself. Although it is a massive multi-national with a turnover of $ 15 billion, the whole company is bro- ken down into tiny groups which work together and help each other and are then encouraged to consult internally with the other groups. This positively encourages individual and collaborative research.
A further encouragement is that all research staff world-wide are expected to work on 5P projects for only 85% of their times for the remaining 15% of time they are free to pursue ideas of their own, using company facilities. In this time they can work on their own or in a group. One hugely successful project that has come out of this 15% rule is the Post-it note. The idea came from an individual inventor and then. using the business skills of a large organization, was rapidly developed into a major product. The success of the Post-it note proves how profitable the innovative 15% rule can be.
Mark Peter says innovation is at the heart of 5P. In 1996. more that 30% of sales were generated by products less than four years old. He says: "We almost always get into new markets through innovation. We're very good at adapting these innovations to lots of different markets so we have a high success rate. We take an idea and see how many applications it's got. Then we try to establish market dominance. We have a tremendous variety of technologies so we can adapt anything but we still need the original ideas to develop." In the past year 5P has introduced a group-wide program called Pacing Plus. This means that they are still actively seeking new ideas, but with the difference that they hope many of them will eventually lead to the establishment of completely new business. In this way, 5P will be able to invest in a wide range of markets and even create some new ones.
This emphasis on innovation creates unusual stresses and strains and makes a company like 5P a difficult business To manage. Technical people at 5P are given a large degree of intellectual freedom, and the company appears to specifically try to recruit people who think for themselves and who don't necessarily solve things by the traditional routes. The management encourages people to step outside of the security that comes from working in a big, stable group, and then to handle the consequences. So far the mixture of freedom and heavy responsibility seems to work: the 25 research schemes now under review could generate business worth $ 6 billion a year.