27 January 2008

Three Ways to Kill the National Labs

Suppose you want to improve productivity at the US National Laboratories, to give the taxpayers more value for their money. Here are things that people are actually doing to achieve this, and the consequences of their efforts.

1. Take control. Apply project management techniques such as the Earned Value Method to all R&D activities, large and small, without exception. The intent is to empower managers to track every project's progress, and to identify and correct problems before they become unmanageable. The problem is that with all the overhead charges for facilities, support staff and management, a laboratory charges between $300,000 and $400,000 per year for each full-time equivalent (FTE) scientist or engineer. (No the scientists and engineers don't get that as salary - they are lucky to see 1/3 of that.) Doing all the tracking and reporting necessary to fully implement the Earned Value Method will take about 1/4 of a FTE. In other words, if you insist on using the full project management apparatus for a $100,000 project, you won't get anything but reports on the work the FTE hasn't done. Putting the burden of project management techniques on small projects paralyzes them. This leads to the next item.

2. Think big. When bringing in new projects, only go for the ones that are big in terms of dollars. The intent is to only take on projects big enough to not be crushed by the burden of project management activities. Indeed to take on only those big enough that project managements technique are absolutely necessary. The problem is that some small projects can have a big impact. A small project that finds a way to defeat improvised explosive devices (IEDs), for example, would completely turn around the situation in Iraq, where IEDs are the weapons of choice for the insurgents. In other words, doing only big projects doesn't guarantee that you are making a big difference.

3. Go for the payoff. Apply return on investment (ROI) analysis to everything the labs do. The intent is to pare away the R&D investments that aren't bearing fruit for the taxpayers. The problem is that there is no known way of determining what that return will ultimately be. Consider ARPANET, the little network that was put together so that universities doing research under the  DARPA (Defense Advanced Research Projects Agency) could collaborate and communicate their work to their contract sponsors. By any known accounting method, it would have been considered a dead loss at the time. But ARPANET grew into the internet, which grew into the world wide web, which is the medium over which you are reading this article. The value of internet commerce is now in the billions of US dollars. The taxpayers got an enormous return on their investment, but it took twenty years and did not accrue directly to the original agency that funded the groundwork.

Or for a more individualistic example, ROI analysis, the Earned Value Method, and the Six Sigma method (used for quality control and improvement) would all dictate that you fire the researcher who does experiment after experiment, which all fail, month after month. That researcher might say something lame like

"If I find 10,000 ways something won't work, I haven't failed. I am not discouraged, because every wrong attempt discarded is another step forward".

That researcher might be quoting Thomas Edison.

So, while getting value out of the R&D investments in the National Laboratories is a national necessity, we need to be careful how we go about it. The techniques above work well and are indeed necessary for a  large project in which the path forward and the individual steps to achieve it are well enough known to make a realistic projection of how and when the steps can be achieved. Such a project is not research and invention. It is development and innovation.

Research is inquiry into the workings of the natural world. Invention is discovering how to make something useful out of previous research. Development is the process of reworking the invention so that it can be manufactured in quantity.  Innovation is the business process taking the newly manufactureable product into a real world application.

Research and invention can easily be stifled by inappropriate controls applied by people who don't themselves understand the research they are managing. Yet this is what is beginning to be imposed on the National Laboratories by the new Limited Liability Corporations (LLCs) that Congress (a Republican Congress at that) has mandated to run them.

The nation runs the risk of getting good looking balance sheets from the Labs for a while, but an ever diminishing return of new ideas, discoveries, inventions and analyses.

Rather than just thinking big bucks, the lab managers need to think big impact. The labs need to do what is important, and if that means learning to manage a mixed portfolio of large and small projects with techniques appropriate to the size and content of each, then so be it. The national labs exist to empower the nation to change the world - for better, not worse. Let that be our guide as we dialog with our funding agencies and our government about what we should do and how we should do it.

Blogged with Flock

No comments: