When Will We Stop Blindly Pissing Away Money Down the R&D Rat Hole?

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Let me start by saying that I am a physicist and have been involved with many of the leading U.S. research facilities over the years — Los Alamos National Laboratory, Sandia Laboratories, just to name two.  I also directed the Socrates Project under the Reagan administration.  So the quick knee-jerk reaction to the title that “I don’t understand research and development or the value of technology” holds no water at all.  Please don’t even try to argue this point.
Research and development (R&D) does not equate to a competitive advantage in the marketplace or on the military battlefield.  Knowledge for knowledge’s sake is a worthwhile pursuit.  Totally agree.  But it is conceptually flawed and detrimental to the objective — being competitive — when companies and governments use the need to increase economic and military might as justification for higher expenditures on R&D.  But yet this is the rapidly rising battle cry among the leading thinkers in Congress, the Pentagon, academia, think tanks, and the press — “Raise R&D funding levels, and America’s future will be secured.”  How so far from the truth.
One highly critical set of decision makers who suffers from this R&D is the key to competitiveness thinking is the leadership in the office of the Secretary of Defense.  But this was all avoidable.
In the late 1980s, I “assisted” in writing legislation that would force DoD out of this R&D is the key to competitiveness thinking.  As a member of the intelligence community, working directly with the U.S. Congress was considered a hanging offense.  But I was willing to risk it because I foresaw that DoD thinking in this manner would lead to the massive dilemma that DoD is now at a loss to address — the rise of China as a military threat and the almost total erasure of U.S technology leadership on which our military strength is based.

The legislation mandated that the Secretary of Defense develop and present a Department of Defense technology strategy to Congress every year.  It was a process that would force DoD out of its R&D is the key to competitiveness thinking.  The legislation passed, and for all intents and purposes, lies dormant and unexecuted to this day.

But let me go back to the beginning of the story — The Socrates Project.

Throughout the 1980s, I was the Director of the Socrates Project within the U.S. intelligence community.  I also initiated the program.  The Socrates Project had a two-fold mission.

1/ Utilize the full range of intelligence to determine the true underlying cause of America’s declining economic and military competitiveness, and then 2/ use this understanding to develop the required solution.  We were fully successful in both aspects of our mission.

What we determined (and covered in our last blog but is worth restating) was that the cause of the decline was America’s shift from technology-based to finance-based planning that began at the end of World War II.

In finance-based planning all decision-making is based upon manipulating the acquisition and utilization of funds, and the final measure of success is how well we optimized the fund exploitation to achieve the objective — generating a profit.

In technology-based planning, the foundation of all decision-making is the outmaneuvering of the competition in the acquisition and utilization of the technology.

How effectively an organization or a country outmaneuvers the competition in the technology exploitation fully dictates the level of other resources and how they must be utilized to generate a competitive advantage.  The other resources include but are not limited to manpower, natural resources, time and funds.

Where technology-based planning starts with the foundation of maneuvering in technology for a competitive advantage that then dictates the rest of the business plan, finance-based planning leaves technology exploitation, which dictates competitive advantage, to chance.  The manipulation of funds, which is the focus of finance-based planning, often leads counter to generating a true competitive advantage in the marketplace or the military battlefield.  The finance-based planning organizations of the U.S. pride themselves in being highly effective in what equates to rearranging the deck chairs on the Titanic.

What is competitive advantage?

All competitive advantage is a matter of satisfying the customers’ needs better than the competition, where the customer needs are defined from the customers’ perspective and covers the full range of their needs.  This goes for both commercial and military competitive advantage.  If you are not excelling at satisfying one or more customers’ needs, no amount of slick marketing, branding, or financial optimization — Financial shell games — matters.  The organization is going to die.  Or in the case of DoD, be totally ineffective.
Outmaneuvering the competition in the acquisition and utilization of technology is a multi-faceted, fluid, on-going chess game played with the technologies of the world.  Winning at this technology chess game requires a technology strategy.  When I use the term “strategy,” I am not using the simplistic, conceptually flawed term that is traditionally passed off as “strategy” in the business community.  Strategy is not the same as a vision statement, a target list of products or services, a road-map, an exercise in consensus building, or glorified trend analysis that really belongs at the racetrack.
In the case of a technology strategy, the limited resource is technology, where technology is properly defined as any application of science to accomplish a function.
A technology strategy consists of a coherent set of offensive and defensive technology acquisition and utilization maneuvers.
The set of technology acquisition maneuvers consists of the full range of means to acquire the technology that the organization requires, and prevent or hinder the competitor from acquiring the technology that it requires.  At some points in time, the technology strategy may be executing maneuvers to acquire technologies for the organization, while at other times, it will be executing maneuvers to retard the competitors from acquiring technology, and at other times it will be doing both.  Research and Development (R&D) is just one of the mechanisms in the full set of technology acquisition maneuvers.  But when this one mechanism is used, it is both very precisely and accurately targeted and is done in a systematic coherent process interconnected with a full range of precisely planned offensive and defensive acquisition and utilization maneuvers.
Just executing the one mechanism of R&D is extremely costly and highly ineffective for generating and maintaining a competitive advantage.
The U.S. using R&D as the sole means to address technology exploitation for a competitive advantage makes it a one-trick-pony knuckle-dragging Neanderthal event next to a modern agile fighter with a full range of fighting techniques and weapons at his disposal.   The Neanderthal may get in one or two good hits, but the modern fighter will consistently outmaneuver him until he is fully exhausted, and then he is simply and unceremoniously eliminated.
So, from Socrates’ intelligence-based view, who was the modern agile fighter?
It was then and now has developed into the China we know today.  China was executing very aggressive, highly coherent countrywide technology strategies that, if left unchecked, were guaranteed to enable China to evolve to sole super-power status faster than any country in history.
It was seeing the utter futility of the DoD R&D approach to technology exploitation, and China’s aggressive technology strategies that caused me to risk my neck and career to draft the legislation that would transform DoD into the agile, multi-faceted fighter needed to ensure our military super-power status and contain China’s aggressive technology-based strategies for military, economic and political dominance.
The legislation passed but has never been executed. Since then, as we all can see now, China has gone from barely being on the Pentagon’s threat radar and even then only because of its massive manpower and communist government to, by some people’s estimates, being the #1 threat to the U.S. with that threat rapidly growing by the day.
Is R&D important?  You bet it is — We have some of the best researchers and research facilities in the world. But R&D is only effective when it is a coherent element in a complete, holistic technology strategy to achieve and sustain competitive advantage.
We need to stop being the Neanderthal before it’s too late.  We must evolve or expire.

By Michael C. Sekora – Past Director of the Socrates Project, President of Quadrigy, Inc. affiliated with Operation U.S. Forward

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Harvard Business Review: Candid Arrogance or Just Plain Stupidity?

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A few years back, I was in Hsinchu, Taiwan, (aka “Science City”) lecturing on technology strategies to 35 vice presidents and senior executives of one of the world’s largest and most prestigious Taiwanese high tech corporations. As we began to dig deeper into the true definition of “strategy,” a member of the audience asked for my view of the Harvard Business Review. He asked the question because we were discussing the difference between true strategy and what the business world usually passes off as strategy.

I immediately responded to the question by calling the Harvard Business Review a Trick-of-the-Month club. I explained that one month, HBR will say that the key to a company’s success is for it to totally focus on the customer. Two months later, the HBR will say that the key to success is to totally ignore the customer to avoid always being stuck in the present. In neither case does the HBR explain why the approach is sound, nor does the writer connect to any of HBR’s other previous “nuggets of wisdom.” I shared that I’ve noticed that in most cases, these “nuggets” are nothing more than isolated and superficial observations that HBR’s contributors and writers base upon fragmented, anecdotal information. HBR treats readers as nothing more than fat, dumb frogs willing to blindly jump from lily pad to lily pad, not caring that they have no ability to know which pad will be strong enough to support their hefty weight.

After I finished my answer, the entire room of white-shirted executives erupted in uncontrollable laughter. I was shocked and taken back because I didn’t think my answer was that funny, and from my experience, I thought I had just pointed out the obvious. On the next break, I pulled aside one of the executives whom I knew and asked him why that comment about HBR had gotten such a strong response. He smiled and said, “When we talk with American corporate executives about competitiveness and strategy, they tell us to faithfully read the Harvard Business Review. They act as if it is at the forefront of all the latest thinking and wisdom. But when we look at HBR, we see nothing more than a rambling bunch of disconnected tricks. And we are confused. You are the first American to actually state what we see. And you stated it as if it were obvious to everyone and no big deal. That is why your comment received such sincere laughter. You just confirmed what we all know.”

The reason Harvard Business Review can only address competitiveness and strategy, as a “bunch of disconnected tricks,” is that the foundational premise on which the publication addresses these two is incorrect. And it is not a matter of the premise needing updating to realign its focus (e.g., putting a higher priority on R&D) or to add another term (e.g., the gig economy). HBR’s entire premise is false, and we must discard it.

U.S. business schools share the premise that financial manipulation (i.e., finance-based planning) is the foundation for all decision-making for all functions within an organization private or public. In finance-based planning, the basis of all decision-making is the effective acquisition and utilization of funds — fund exploitation. In finance-based planning, the measure of success is how well the organization optimized fund exploitation to accomplish the objective. (The objective can be maximum profit or ROI, increased market share, or in the case of the military, a new tank.) But in all cases during the process, the bottom line question is, “How efficient are you or were you in your exploitation of the funds?” Organizations mistakenly either equate financial efficiency to competitiveness or ignore the need to be competitive.

The correct premise is that maneuvering technology to generate a competitive advantage is the foundation for all decision-making. How effectively an organization out-maneuvers the competition in the acquisition and application of the technology fully dictates the amount of other resources and how they must be utilized to generate a competitive advantage. The other resources include but are not limited to funds, manpower, natural resources, etc…

It is a fact that when dealing from the finance-based perspective, American companies see nothing more than an almost infinite number of disconnected market factors. As a result, the best that these companies can ever achieve from this view are fleeting insights on how some of these factors may correlate to support a competitive advantage. These “insights” mistakenly then become “principles,” and companies who elevate these “insights” erroneously refer to their new “principles” as “strategy.”

In contrast, the technology exploitation foundation (i.e., technology-based planning) abides by the laws of physics. The result is that it is a logically consistent, closed-set environment with no discontinuities.

Take the following simple example. Two young baseball players back years ago wanted to figure out how to hit one out of the park.

The first started observing some of the major league players who went long. He looked at the players’ weight, height, age, attitude, type of bat used, how their coach motivated them, if they used chewing tobacco and if so, what type, and their weight-training schedule. He then compared and contrasted what he observed, threw in a few statistics, and got some insights, (conventional U.S. business approach).

The second young player started with the laws of physics (e.g., Force = Mass x Acceleration, Torque = Moment Arm x Force) and used these laws to examine what he then knew to be the pertinent attributes to determine how players optimize all the variables at their disposal (according to the laws of physics) to generate maximum force at the correct angle and at the correct time.

After all their work, the first player determined that he must chew Red Man, weight train on Thursday nights, be 5′ 11.5″, weigh 195 lbs., and have a coach that hollers allot to be able to hit pitches out of the park.

The second player focused on skeletal alignment, strengthening the flexibility and power of the correct muscles groups, and keeping correct foot placement and weight distribution to generate maximum torque on the swing. Guess who knocked it over the back fence?

The bottom line is that if U.S. companies and America wants to be competitive and rebuild economic health, they must abandon finance-based planning and adopt technology-based planning.

They must move beyond a faulty, fragmented hit-and-miss approach with disconnected market factors that hope on a good day to deliver a competitive advantage in the marketplace and begin addressing the foundational structure — technology exploitation — that acts in a highly logical fashion and dictates how a competitive advantage can be won and lost.

History is written by the winners.

By Michael C. Sekora – Past Director of the Socrates Project, President of Quadrigy, Inc. affiliated with Operation U.S. Forward

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