EXECUTIVE SUMMARY

ACKNOWLEDGMENTS

CHAPTER 1: INTRODUCTION: DELINEATING THE STUDY

1.1 About the Advanced Technology Program (ATP)

1.2 Is ATP Meeting its Mandate to Accelerate the Development and Commercialization of Technology ?

1.3 What is Cycle Time ?

1.4 Why Reduce Cycle Time ?

1.5 Cycle-Time-Related Findings of Previous Studies of ATP

1.6 Further and More Focused Study of Impact on Applied Research Cycle Time Warranted

CHAPTER 2: RESEARCH DESIGN

2.1 Research Methodology

2.2 Sampling Methodology

2.3 Research Questions on Cycle Time

2.4 Research Question on Applied-Research Performance Measures

CHAPTER 3: RESEARCH RESULTS

3.1 Interpretation of Results

3.2 The Importance of Reducing Applied Research Cycle Time

3.3 Reasons to Reduce Applied Research Cycle Time

3.4 Impact of ATP Participation on Applied Research Cycle Time

3.5 Flow-Through of ATP's Impact on Applied Research Cycle Time to Later Stages in the Technology Development Life Cycle

3.6 Economic Value of Reducing Applied Research Cycle Time By One Year

3.7 ATP Effects that Helped Reduce Applied Research Cycle Time

3.8 Carryover of Cycle-Time Improvements Resulting from ATP Participation to Non-ATP Applied Research Projects

LIST OF REFERENCES

END NOTES

APPENDIX 1: SELECTED BIBLIOGRAPHY ON CYCLE TIME

APPENDIX 2: ATP PROJECTS AND INTERVIEWEES

APPENDIX 3: ABSTRACT

The Advanced Technology Program (ATP) is a unique partnership in which the Federal government and private industry jointly fund research and development projects that have high technical risk and commensurately large potential for creating broad-based benefits for the United States. The ATP was created by the Technology Competitiveness Act of 1988, amended by the American Technology Preeminence Act of 1991 (P.L. 100-418 and P.L. 102-245). Industry conceives and proposes research projects to the ATP. The ATP evaluates the proposed projects for their potential to add to the scientific knowledge base and to contribute to the nation's economy, and provides multi-year funding to those projects that score high in rigorous competitions. Research awards are made both to industry-led joint ventures and to single companies. If the research projects are successful, the companies are expected to undertake subsequent commercialization activities and to promote the diffusion of the enabling technologies developed into multiple application areas. The ATP focuses on accelerating the development of those technologies which are likely to have benefits extending well beyond the direct award recipients. In economic terminology, it focuses on funding technologies for which the social return is likely to be high and far in excess of the private return on investment.

The ATP acts as a partner rather than a contractor in the research project. In addition to the funding, awardees often receive technical advice from the National Institute of Standards and Technology (NIST) scientific staff and advice from ATP's technical and business monitors who provide project oversight for the ATP throughout the project life. In addition, proposers receive constructive feedback upfront from ATP's peer review process on their technical and business plans. The ATP emphasizes integrated planning across all aspects of the project by encouraging participants to establish a team that includes people who are involved with the development of the technology - and people who will be responsible for the eventual application of the technology in products or processes that can be commercialized. Although the ATP provides funding only for research, it requires that upfront planning be done for down-stream activities such as marketing, production, and distribution; and encourages that the voice of the customer or end-user be inserted into the process as soon as possible.

The ATP has an evaluation program to ensure that the projects it funds are on track, to determine their short- and longer-run impacts, and to improve the program's effectiveness. The 1993 Government Performance and Results Act (GPRA) requires evaluation of Federal programs, and the ATP has emphasized evaluation from its start in 1990. In support of that effort, the ATP engages the services of a variety of academic and consulting economists, as well as its own staff. This is one such evaluation study.

Since the ATP-funded projects are multi-year research projects and most of the approximately 300 projects the ATP has funded to date were funded only in the last several years, it is premature to attempt to measure empirically the long-term impacts of the program. However, some of the earlier funded projects have recently completed or are nearing completion of their research phase, and it is beginning to be feasible to conduct preliminary assessments of some of the effects.

The study investigated the impact that participation in the ATP has had on the applied research cycle time of a group of program participants from 1991 through the spring of 1996. Cycle-time impacts are of keen interest because one of the ATP's legislated mandates is to assist U.S. businesses in creating and applying generic technology for rapid commercialization.

Earlier surveys found that a majority of program participants believed that participation in the ATP had helped them to reduce cycle time and that it was important to do so - but the earlier surveys which addressed a variety of performance metrics did not provide details on why cycle-time reduction is of special importance to the companies; on how participation in ATP helped them to reduce their applied research and technology development cycle time and get to market more quickly; or on whether there were time effects beyond the ATP project.

Structured telephone interviews with the primary investigators of the 28 projects funded by the ATP in 1991 resulted in the following principal findings:

• The sample included 18 single-company projects, led by 13 small for-profit firms, 3 medium or large companies, and 2 non-profits. In addition, the sample included 10 joint ventures, 4 led by non-profits, 3 led by small companies, and 3 led by large companies.

• Twenty-seven (27) or 96% of the 28 company interviewees estimated that participating in ATP had helped their companies to reduce their technology development cycle time anywhere from 30% to 66% with fourteen estimating a 50% reduction (most typically from a projected six-year cycle down to a three-year cycle).
  - These program participants spoke of a stage in the technology development life cycle that is not usually reflected in the literature . . . that is the "capitalization stage," wherein cash infusions are particularly critical to further progress.

  - The interviewees attributed their cycle-time reduction to ATP's requirements for disciplined and integrated project planning and management; achievement of a critical mass of resources through ATP funding; attraction of additional financial support because of ATP's "Halo Effect;" greater project stability because of a long-term and strategic commitment to solving the technical problem; and ATP's emphasis on collaboration.

• Twenty-four (24) or 86% of the 28 interviewees expected the positive impact on cycle time already experienced in the applied-research stage to flow through to later stages in the technology-development cycle (the product development, production, and marketing stages), thereby causing them to enter the marketplace more quickly.

• Fifteen (15) or 54% of the 28 interviewees were able to quantify their "ball-park" estimates of the economic value of reducing cycle time by just one year, and these estimates ranged from one million to several billions of dollars, with a median value of $5.5 million.

• Twenty-four (24) or 86% indicated that participation in ATP resulted in cycle-time improvements that carried over to other technology development projects outside of ATP. They spoke of adapting specific "ATP practices" to related projects; application of methodologies and processes used or developed in the ATP project to the firm as a whole; adoption of a cultural bias favoring speedier processes; and taking advantage of the positioning provided by the enabling technologies developed in their ATP projects to accelerate the development of a whole series of related applications.

  - These findings on carry-over impacts suggest that ATP's positive impacts on participant cycle time may extend beyond the specific project funded, resulting in broader and longer-term benefits to awardees than might have been anticipated.

  - These findings suggest that ATP may be fostering self-perpetuating, institutionalized practices that reduce cycle time.

The economic vitality of a country depends increasingly on the ability of its companies to harness and use technical capabilities rapidly and effectively. Since applied research is a source of new technologies and product innovations, accelerating research cycle time holds potential for accelerating commercialization of research results and, thereby, promoting the economic growth of the United States and enhancing our quality of life.

From the findings of this study, it appears that the ATP is helping to overcome two types of economic efficiency problems related to speed to market:

1. the difficulty of obtaining funding at all to undertake long-run, high-risk, enabling technology development; and

2. the difficulty of implementing coordinated, collaborative R&D management practices needed to speed the conduct of R&D and the commercialization of the resulting technology.

The author wishes to thank all those who contributed so many excellent ideas and suggestions. First is Rosalie Ruegg, the Director of the Advanced Technology Program's Economic Assessment Office, who made a significant contribution to the research at the beginning of the project, by helping me to improve the series of interview questions; and at the end, by helping me to clarify, focus, and shorten the final document.

Next, appreciation is due to Richard Spivack and Ernesto Robles, colleagues in the Economic Assessment office, who helped me run chi square and other statistical analyses on a computerized statistical package, SPSS. Richard Spivack served as reviewer, reading initial and final drafts of the report and providing helpful comments. In addition, Jeff Harrison, a research librarian at the National Institute of Standards and Technology, was of great assistance in my literature search.

Special thanks are due to the 28 program participants who gave so generously of their time and thoughts in the structured interviews: Doug Armstrong, Conrad Balazs, Don Burland, Calvin Carter, Trevor Castor, Jack Corley, Stephen Demko, Thomas Edman, Joseph Engleberger, Bruce Gambol, David Gibson, Scott Goodwin-Johannason, Arnold Hagler, Carl Johnson, Nassar Karam, Glenn Kephart, Gretchen King, Jim McNeely, John Parker, John Pollinger, John Rowell, Howard Saunders, Mike Sellberg, John L. Simonds, Ernie Vahala, Bill Waddell, David Welch, and Arthur Yang.

Finally, I would like to acknowledge the contribution of the Washington Editorial Review Board Reader, Gregory Tassey, a Senior Economist in NIST's Program Office.

1.1 About the Advanced Technology Program (ATP)

The Advanced Technology Program (ATP), which is administered by the National Institute of Standards and Technology, an agency of the Department of Commerce, is a unique partnership between government and private industry to accelerate the development of high-risk, generic technologies that promise significant commercial pay-offs and widespread benefits for the economy. The ATP was created in 1988 with the passage of the Omnibus Trade and Competitiveness Act of 1988 (P.L. 100-418), which directed that the National Institute of Standards and Technology (NIST) expand its outreach beyond laboratory research and development to include a rigorously competitive ATP and the Manufacturing Extension Partnership Program.

The ATP provides funds for the early phases of technology development through cooperative research agreements with single businesses or industry-led joint ventures and research consortia. Awards to individual companies may not exceed $2 million and the period of Federal funding may not exceed three years. Projects by joint ventures may run as long as five years, with no limit on the amount of funding . Single companies that receive awards are reimbursed for part or all of the direct costs of their proposed research but must pay for all overhead costs. Joint ventures, which consist of two or more companies, are reimbursed for less than half of their direct and overhead costs; the companies must provide more than 50 percent of the total funding for their project. (Some of these requirements are expected to change for future competitions.)

The goals of the ATP as stated in its enabling legislation are "to assist U.S. business in creating and applying the generic technology and research results to (1) commercialize significant new scientific discoveries and technologies rapidly and (2) refine manufacturing technologies." As restated in the Federal Register on July 14, 1990, the ATP will assist U.S. businesses to improve their competitive position and promote U.S. economic growth by accelerating the development of a variety of pre-competitive generic technologies by means of grants and cooperative agreements.

Through 1996, the ATP had announced 288 awards and committed $989 million for advanced technology development. The participating organizations (the awardees) had committed over $1 billion dollars in matching funds.

1.2 Is ATP Meeting its Mandate to Accelerate the Development and Commercialization of Technology ?

One of ATP's evaluation interests lies in gaining a better understanding of intra-firm impacts of ATP-funded projects. This study contributes to that area by providing a more in-depth look at the impact of ATP on the awardees' applied research cycle times. ⁽¹⁾

The specific purpose of this study was to evaluate the impact that the ATP is having on applied research cycle time of companies participating in the program, with the larger objective of determining if the ATP is successfully meeting its legislated mandate to accelerate the development and the commercialization of technology. The study focuses on applied research cycle time, because high-risk applied research is largely what the ATP funds, and at this early stage of the ATP, that is the period of time most feasible to evaluate. ⁽²⁾ Although there is a large body of literature and an established discipline that focuses on improving production cycle time and even product-development cycle time, this is not the case for applied-research cycle time. The investigation of applied-research cycle time is a relatively new and emerging discipline.

1.3 What is Cycle Time ?

Cycle time, according to Daniel Jordan, is the following:

"Cycle time is the time required to complete a particular process, such as the product development process, from start to finish. Cycle time is distinct from timeliness. It should be viewed from the customer's perspective in that it includes time required for testing, validation, modifications and rework. Although not all aspects of cycle time may be under an organization's control, it is important to know where the time is spent in order to best identify opportunities for cycle-time reduction." ⁽³⁾

Similarly, Hewlett-Packard defines cycle time as the period of time from the starting point when the opportunity occurs to the point when the customer is satisfied. ⁽⁴⁾

Different terms are sometimes used to connote the cycle time concept. These terms include "Time Line," "Cycle Time," "Time to Market," "Speed," and "Slip Rate."

It is relatively easy to define the starting points and ending points for the "downstream" functions of manufacturing, sales, and distribution. It is more difficult to define the starting points and the ending points for the "upstream" functions of applied research and technology development. One can not state with any certainty the starting and ending points for applied research. No matter what one posits, it will be challenged, debated, and discussed.

Hewlett-Packard has instituted a program at the beginning of each new product development cycle called the "Imaginative Understanding of User Needs (IU²N)." During this time, the organization pulls together its resources and defines the product that will proffer the most competitive response to the opportunity. With reference to Figure 1, the goal is to cut the time between "To" and "Ts" as a strategy to increase return on investment. ⁽⁵⁾

Within the company setting, the main source of cycle-time reduction strategies has traditionally been operations. Typically, cycle-time reduction (CTR) started in manufacturing and then migrated "downstream" to sales and distribution. A question is whether the ATP can start at the applied research end and stimulate time reductions that will propagate forward, from the research cycle through the production and marketing cycles.

1.4 Why Reduce Cycle Time ?

Cycle-time reduction is viewed as increasingly important because it enhances global competitiveness. In the 1970s, Japanese companies adopted a civilian equivalent of maneuver warfare in manufacturing called "cycle-time analysis," and "slaughtered" American competitors. ⁽⁶⁾

According to Groves, an Ernst and Young study concluded that Japan is the only country that emphasizes the routine use of both cycle-time analysis and process simplification. About half of the Japanese businesses use these practices more than 90 percent of the time. Fewer than 25 percent of the businesses in the United States, Canada, and Germany use process cycle-time analysis or process simplification to improve their business processes. ⁽⁷⁾

In a 1988 Harvard Business Review article titled "Time - The Next Source of Competitive Advantage," George Stalk warned that unless United States companies reduce their new product development and introduction cycles from 36-48 months to 12-18 months, Japanese manufacturers would easily out-innovate and out-perform them. ⁽⁸⁾ In order to reduce cycle time, Stalk said that domestic firms must learn to develop manufacturing processes and products simultaneously to collapse time and ensure better manufacturability, an approach often referred to as simultaneous or concurrent engineering. ⁽⁹⁾

McGrath, Anthony and Shapiro have stated, "If manufacturing and total quality management were viewed as the industrial battlegrounds of the late 1970s and 1980s, product development and cycle-time reduction are the battlegrounds of the 1990s. The advantages that come from reducing time to market and consistently developing better products are so significant that they will shift the competitive balance in favor of companies that can achieve them first. A company that can efficiently introduce more new products, react faster to market and technology changes, and develop superior products will win battles with its competitors. The key to achieving these advantages is improving the product development process and getting to market more quickly. This is why it will become the battleground of the 1990s." ⁽¹⁰⁾

Cycle-time reduction helps a company achieve its goals. As Table 1 shows, high performance companies report faster time-to-market and have more aggressive cycle-time reduction goals than low-performance companies.

Table 1. Cycle-Time Performance of High Versus Low Performance Companies

By being first to market, a company favorably impacts its goals as they relate to sales, sales growth, development costs, total costs, profits, market position, market share, customer loyalty, competitors, industry standards and intellectual property rights. ⁽¹¹⁾ In industries dependent on patent protection for high margin, an additional year before the product comes off patent may be extremely valuable. Informal standards, such as the "form factor" or "feel of the product," can also be importantly related to cycle time. Gary Tooker, president of Motorola, pointed out that the form factor for the company's portable hand-held phone established a standard in the industry for "feel" because it was first to market.

Though most of the articles to date on reducing R&D cycle time focus more on the "D" (development) than the "R" (research), there is at least one article that highlights industry's increasing interest in reducing applied research cycle time. Bob Burkhart's article "Reducing R&D Cycle Time" for the Industrial Research Institute (IRI) states that research at the "fuzzy front end" carries high uncertainty; and successful output cannot be readily scheduled, as with the development phase. Only after identifying the potential causes for uncertainty in the decisions and activities of the research phase might barriers be reduced or removed by applying appropriate solutions; for as knowledge grows, risk recedes and the capacity to advance in a shorter time frame materializes. Bob Burkhart's research for the article came from the IRI's ten-member Management Research Team which used common total quality management (TQM) tools to identify 45 major causes of uncertainty in research in eight different categories, as shown in Table 2. "Customer requirements not defined" and "delays in decision" were the most frequently encountered causes of uncertainty. Forty potential solutions to causes of uncertainty in research were also identified, as shown in Table 3. The solutions outlined by this industry team are consistent with ATP's emphasis on integrated business and technical planning and management. ⁽¹²⁾

Table 2. Causes of Uncertainty in Research

Table 3. Potential Solutions to Uncertainty in Research

As total quality management (TQM) practices were thought to render the most significant strategic advantages in the 1970s and 1980s, cycle-time reduction is believed to be the new wave that will carry world-class organizations from the end of this millennia into the next. As total quality management became a common practice, so will the practice of reducing cycle time. There is a new recognition that in the same way that a shorter product development cycle enhances a firm's ROI, reducing R&D cycle time helps a company to increase its ROI.

1.5 Cycle-Time-Related Findings of Previous Studies of ATP

Previous studies found that participants reported that the program had the effect of shortening their research and development (R&D) cycle time, enabling them to accelerate the development and commercialization of the technology.

Solomon Associates, in a 1993 report, found that sixty-nine percent (69%) of the first group of ATP awardees reported a significant shortening of the R&D cycle. ⁽¹³⁾

Silber & Associates, in a 1996 report, found for 125 ATP participants, funded between 1990 and 1992 the following: ⁽¹⁴⁾

(1) 95% of participants believed that the ATP award accelerated their progress.

(2) 74% anticipated shaving off a minimum of two years from the R&D cycle.

(3) 81% described speed to market as critically important or very important.

(4) 66% anticipated entering the market before the window of opportunity closes (not all respondents were involved in commercializing products or processes derived from their ATP-funded technology, for example, a given joint venture member might have a specialized research role only).

1.6 Further and More Focused Study of Impact on Applied Research Cycle Time Warranted

A review of these findings from earlier studies found that program participants believed that participation in the ATP program had supported them in their efforts to accelerate their technology development, but the studies -- which addressed a broad and diverse set of performance metrics -- did not provide details on cycle-time reduction. They did not go into why program participants felt that reducing cycle time was important; how participation in ATP had helped participants to reduce their cycle time; whether reducing applied research cycle time translated into shortening time to market; and whether there was carry-over to other operations. Nor did these surveys assign an economic value to reducing cycle time. The primary purpose of this case study was to gain a clearer understanding of these and other relevant issues pertaining to acceleration of technology development and commercialization.

2.1 Research Methodology

Michael Quinn Patton's 1987 book, How to Use Qualitative Methods in Evaluation, provided useful guidance on the research methodology. ⁽¹⁵⁾

To support the research design, the case study method was paired with user surveys. Both methods are viewed as appropriate to evaluate R&D projects that took place in the past, and both have their own strengths and weaknesses. For example case studies offer the advantage of providing detailed illustrations of the relationship between R&D and its impacts, but the disadvantage of generally providing no way to "add up" the results statistically for a more than anecdotal picture. User surveys, in contrast, generally provide more statistical evidence of impact across members of a group, but often lack the richness of detail needed to understand underlying relationships. ⁽¹⁶⁾ Pairing these methods allows the researcher to enrich the statistical treatment with detailed information about the hows and whys of applied research project acceleration.

This post hoc study assesses the impacts on cycle time of participating in the ATP, based on a telephone survey of the twenty-eight (28) 1991 ATP awardees. The twenty-eight awardees surveyed include 18 single company awardees and the lead organization of each of 10 joint venture projects. Together, the 28 projects in the sample comprise 10% of the projects the ATP has funded to date.

Nonparametric data on applied research activities, and parametric data on applied research cycle times were collected via telephone interviews. The collection of nonparametric data was intended to provide insights into how and why participation in ATP had reduced applied research cycle time for ATP program participants, while collection of parametric data was intended to allow the quantification and statistical evaluation of how much the cycle time had been reduced - and hence, to assess the degree of impact.

The interviews were structured so that the same set of questions were asked in the same order, so that themes could be easily discerned. The questions were asked in open-ended style and the interviewer simply recorded their responses without trying to match their comments to previously coded possible responses. The coding was performed after the interviews were completed.

Because interviewees were not provided with advance copies of the interview questions, their responses were more "top of head" and spontaneous in nature and tone. Interviewees were encouraged to be candid and forthright with their responses. They were assured that their individual responses would be without company or personal attribution.

2.2 Sampling Methodology

The study focused on 1991 awardees because the majority, having been awarded cost-sharing grants for a three-year period, were at or near the end of their active participation in the ATP program. Sufficient time had transpired to allow the impact of participating in ATP on applied research cycle time to have materialized and become apparent to program participants.

Table 4. Number of ATP Proposals, Number of Awards and Monetary Value of Awards, 1990 - 1996

Table 5. Taxonomy of 1991 Interviewees

As shown in the taxonomy in Table 5, the 1991 ATP awardees can be classified in four major technology arenas: advanced materials, electronics, biotech and manufacturing technologies. Interviewees included those from small for-profit companies, medium- and large-sized for-profit companies, as well as non-profit industry consortia. ATP defines small business in the same way as the Small Business Administration - that is, as a business having fewer than 500 employees, but in fact, the majority of the small companies in the sample, and in ATP as a whole, are quite small, having fewer than 50 employees. (Details - project title, participant's name, location, and contact information are included in Appendix 2.)

2.3 Research Questions on Cycle Time

In evaluating the impact that the ATP program had on company applied research cycle time, the following eight questions were asked of the principal investigator for each project:

(1) How important is it for your company to reduce cycle time (time to market) ?

(2) Why is it important for your company to reduce applied research cycle time ?

(3) How much (by what percent change) did participation in the ATP affect your ATP project's applied research cycle time ?

(4) Do you expect the impact on cycle time in the applied research stage to flow through to other stages in the technology development life cycle ?

(5) Can you give a ballpark estimate of the economic value of reducing your cycle time by one year ?

(6) How were the cycle time improvements achieved ? (i.e., what did you do differently as a result of participating in ATP ?)

(7) Did the cycle time improvements (that were a result of participating in ATP) carryover to other technology development projects outside of the ATP project ?

2.4 Research Question on Applied-Research Performance Measures

An eighth question was also asked: "What applied research performance measures are tracked and assessed across applied research projects ?"

This open-ended question was asked in order to discover if and how companies were measuring applied research cycle time and/or other applied research performance measures.

3.1 Interpretation of Results

The research results follow, organized as responses to the questions listed in section 2.3 preceding. The research results are descriptive in that they describe the impact that the ATP program had on the 28 awardees3.6 from the 1991 competition, as related by the principal investigator of each project's lead organization.

Despite limitations, descriptive analysis allows a researcher to analyze data and communicate the results without attempting to make a general statement or inference that goes beyond the particular individuals studied. In this study, descriptive analysis illustrates the Advanced Technology Program's impact on a group of awardees' applied research cycle time and suggests future lines of inquiry.

3.2 The Importance of Reducing Applied Research Cycle Time

Twenty-seven (27) or 96% of the 28 interviewees indicated that it was "very important" for their companies to reduce cycle time, while one (4%) indicated that it was "important." Specific terms used by the interviewees to answer the question, "How important is it for your company to reduce cycle time ?" - all of which were characterized by the author as denoting "very important" - were the following:

(1) "Very important."

(2) "Extremely important."

(3) "Obviously very important."

(4) "One of our most important corporate imperatives."

(5) "Critically important."

(6) "Critical to our future."

(7) "Absolutely critical."

(8) "A must."

These results are consistent with findings from an open literature review that found that cycle-time reduction was viewed as important because it enhances a company's global competitiveness and helps a company to better achieve its performance goals. These results are also consistent (though not identical) with the findings from the recent survey conducted by Silber & Associates. ⁽¹⁷⁾

3.3 Reasons to Reduce Applied Research Cycle Time

When the twenty-eight interviewees were asked "Why is it important for your company to reduce cycle time ?", most gave more than one reason. As a result, there are more than 28 responses.

There is obvious overlap among the types of reasons given, but in order to preserve the flavor of the responses, these have been kept separate rather than merging them under umbrella headings.

(1) Meet Competitive Challenge [12 interviewees]

Reducing cycle time and being first to market with technological innovations and new products provides one with a competitive advantage. One interviewee stated, "Hitting the market first - with a viable product - gives you a chance to be more competitive and successful. It gives you a significant leg-up."

Another interviewee said that his company had "faced very strong competition from the Japanese. They have a much shorter cycle time." He went on to say, "we may have a similar cost structure but our cycle times are two to three times longer. It is critical that we reduce cycle time if we are to be competitive with them."

(2) Satisfy Customers [9 interviewees]

Nine interviewees all mentioned the following points relating to the impact of reducing applied research cycle time on customer satisfaction:

Enhancing customer satisfaction.

Reacting to voice of customer more quickly.

Meeting wants and desires of customer.

(3) Attract Additional Capital [8 interviewees]

Many of the program interviewees spoke of a stage in the technology development life cycle that is not reflected in the literature - that is the "capitalization stage." Cash infusions are critical to these innovators and inventors who need capital to fund their high-risk technologies.

Eight interviewees stated that reducing applied research cycle time helps them to acquire "elusive and shrinking" R&D dollars.

One interviewee pointed out that it is only possible to acquire venture capital and financial support for a new technology and/or new product that have/has well-defined risk, well-defined value, and well-defined time to market. He stated, "for new technology development, you can only have so many years and so many dollars available for early stage development until a project must be self-supporting. You must clear the threshold and you must show that you have something real. If you don't hit the threshold, you don't get the funds."

A second interviewee stated, "reduced cycle time shows that you are on the forefront of technology development, establishes credibility with venture capitalists and ensures future financing."

A third interviewee expressed this concern, "if we don't get products out soon, venture capitalists will lose interest and pull out. We have a critical need to get something out in the next decade."

(4) Enhance Technology Development Process [7 interviewees]

Seven interviewees stated that reducing cycle time enhances the technology development process by accelerating the development of technology to the point where it can be utilized, leveraged and commercialized. "Results are more likely to be realized."

(5) Reduce Costs [6 interviewees]

Six interviewees cited cost reductions from cycle-time reduction.

One interviewee stated, "Reducing cycle time saves dollars in a big, big way. When you get a product to market six months earlier, it generates many, many millions of dollars in cost savings." Other interviewees said that with a reduced cycle time:

The development cost is lower.
The initial cost of new and improved versions is lower.
The labor cost is reduced.
The cost of capital is lower because of the time value of money.

(6) Survive [5 interviewees]

Five interviewees stated that cycle time and time to market affects their ability to survive.

One interviewee stated, "Cycle time is an issue we wrestle with. We've learned that the superior technology doesn't always win the game . . . Sometimes, it's the company with the lower cycle time."

A second interviewee stated, "The faster, the better. Anything that will help us do it faster, the better off we are."

A third interviewee stated, "It means 'life' or 'death' for us. 'Go' or 'no go.' Reducing cycle time is necessary to being a viable organization. Fast, we survive; slow, we don't. Entering the market during the window of opportunity is a 'make' or 'break' decision - not only for us in this product class, but for us as a company."

(7) Enhance Quality [5 interviewees]

Five individuals pointed out that production quality is enhanced by shorter cycle times. Intuitively, one might expect production quality to be enhanced by longer cycle times, not shorter cycle times. Though the responses may seem counter-intuitive, one interviewee explained that "Quality is married with cycle time. The two metrics are related. Especially in the hand-off from design to manufacturing. Process is dramatically improved. It becomes a collaborative environment. Manufacturers get to use design at the time of design rather than post hoc. Quality of the product is enhanced by shorter design and engineering lead time - engineers are able to introduce changes that enhance the design or the product. In the past, with the older, longer cycles, engineers would have to compromise."

(8) Increase Return on Investment (ROI) [5 interviewees]

Five interviewees stated that reducing cycle time increases return on investment.

Several interviewees pointed out that reducing cycle times will help their companies more quickly achieve long-term, industry-wide results necessary to hitting their corporate financial benchmarks.

(9) Respond to Changing Market [3 interviewees]

Three interviewees stated that reducing cycle times would make it easier to survive in their "turbulent," "highly unstructured" market places.

(10) Dominate Market [3 interviewees]

Three interviewees reflected one interviewee's thought that: "If you're the first one there with a bug-free technology, you have a chance of establishing market dominance - and can then set the bar for everyone else."

(11) Reduce Risk [3 interviewees]

Three interviewees thoughts were captured by one who said: "Greatly reducing cycle time on the initial product and on subsequent products increases net present value, and decreases uncertainty and risk."

(12) Grow [2 interviewees]

Two interviewees reflected the sentiment that "Cycle-time reduction allows us to develop new business and new jobs."

(13) Increase Sales Volume [2 interviewees]

Two interviewees stated that when you're the first to market and one year in advance over your competition, sales volume goes up.

(14) Increase Market Share [2 interviewees]

Two interviewees reflected sentiments that for any technology, it's important to reduce applied research cycle time if you don't want to lose your chance at increasing market share - and those who are first to market have a differential advantage in terms of increasing market share.

(15) Combat Perceived Weakness [2 interviewees]

Two interviewees stated that applied research cycle-time performance was perceived as a weakness in their respective companies.

The first stated, "Reducing applied research cycle time is critical in starting a new company. Part of the reason we merged with another company is that we didn't do a good job on applied research cycle time."

The second stated, "Though our company is recognized for having great technology performance, we are also recognized for our poor applied research cycle time. For the last one-and-a-half-to-two years, reducing applied research cycle time has been greatly emphasized and is now an important metric in our company."

(16) Develop Critical Capability [2 interviewees]

Two interviewees acknowledged that their companies were trying to reduce applied research cycle time to develop a critical capability. The first stated, "Applied research cycle-time reduction is critical for our product class. Our company is trying to develop this capability." The second interviewee echoed this sentiment by stating: "It is absolutely critical to do it as quickly as possible; to try something new; and to operate in a short technology development and product development cycle time."

(17) Take Advantage of Window of Opportunity [2 interviewees]

Two interviewees respectively made the following statements: "Commercial windows are shortening," and "If you take too long, you're obsolete before you come out with the product."

(18) Collaborate [2 interviewees]

Two interviewees linked reducing applied research cycle times to enhancing collaboration. Because applied research cycle-time reduction requires a systemic and integrated approach, people from different sub-systems must work with each other and end users.

(19) Choice of Competitive Strategy [2 interviewees]

Two interviewees mentioned that reducing applied research cycle time opens up strategic choices. The first observed, "When companies are not first to market, they beat their brains out with price cuts in order to establish market share." The second observed, "Reducing cycle time enables companies to choose a higher performance strategy, instead of a price-cutting strategy. Higher performing companies tend not to engage in price wars."

(20) Maintain Technical Leadership [1 interviewee]

One interviewee felt that being first to market with a new technology was critical to maintaining technical leadership. "Our company had a competitive advantage - we were the technical leader and were perceived as such. We were known for our science. But, we also needed to be first to market in order to maintain position as technical leader."

(21) Establish Intellectual Property Rights [1 interviewee]

One interviewee pointed out that, "Technology has a finite protected life. The more rapidly you can get into the marketplace, the longer you can operate with U.S. patent protection and other forms of intellectual property rights protection."

(22) Follow Industry Practice [1 interviewee]

One interviewee stated, "In our industry, applied research cycle times have been dropping; cycle times are now measured in months instead of years."

The finding that the most frequently given reason to reduce applied research cycle time was to meet competition is consistent with the paramount finding from the literature review that cycle-time reduction is important because it enhances global competitiveness.

3.4 Impact of ATP Participation on Applied Research Cycle Time

After being asked, "How much (by what percent change) did participation in the ATP affect your ATP project's applied research cycle time ?", the median response of the twenty-eight interviewees was that participation in ATP reduced their ATP project cycle time by 50% or three years (see Table 6). The median response was that without ATP, the same project would have taken six years. In terms of years saved, the range was from 1 to 2 years at the low end, to 10 years and more (infinity) at the high end. In terms of percentage cut in cycle time, the range was 25% to 80%.

Five of the 28 interviewees challenged the question. They said that a more relevant question was, "Would you have done the applied research at all without ATP support ?". They attributed the entire existence of the project to participation in ATP; with an "infinite" impact on the applied research cycle time. As one interviewee stated:

"The business environment is now more short sighted. It is more hesitant to put capital into technology development projects; and to apply technology once it is developed. Given the past three-to-four years, it's fair to say we wouldn't have started or pursued this research without ATP funding."

These five interviewees,which included companies of all sizes, said they could not bound the reduction in applied research cycle time because they would not have ever begun without the ATP award.

Table 6. Impact of ATP Participation on Applied Research Cycle Time

It is interesting that many of the interviewees' responses to this question are so similar, particularly since the interviewees come from different kinds of organizations, different sizes of organizations, and different types of industries.

3.5 Flow-Through of ATP's Impact on Applied Research Cycle Time to Later Stages in the Technology Development Life Cycle

When asked, "Do you expect the impact on cycle time in the applied research stage to flow through to other stages in the technology development life cycle ?", twenty-four (24) or 86% of the 28 interviewees said yes. One interviewee suggested that this is better described as a cascade effect, not a flow, since it is not linear. He described it as a driving force that has a broad effect. This implies that, at least in some cases, speeding up the R&D may have a disproportional impact on the later stages in technology development.

Of the four interviewees who did not give a clear yes to the question, one said "probably yes", but that he wasn't sure, and three said that it was not applicable. Two of those provided the following reasons for the lack of applicability of the question:

"We only do technology development. We get a commercial partner interested and transfer technology to them. The intellectual property revenue stream seeds and funds internal R&D."

"The applied research only advanced to the demonstration stage. That's when market analysis revealed that new competitive challenges in the marketplace had rendered our applied research obsolete. As a result, we did not advance the applied research beyond the demonstration stage."

A careful review of the literature did not yield many articles that touched specifically on the flow-through of applied research cycle-time savings to later stages in the technology development cycle. Most of the R&D evaluations conducted by industry, government, academia, and science over the past four decades have focused on the short-term; few studies have directly linked research inputs to research outputs and research outcomes.

If there were neither flow-through nor linkage between research cycle-times and the long-term commercial outcomes, then there would be no market-place benefit associated with reducing applied research cycle time. If, on the other hand, there is a flow-through or linkage, then the potential for accelerated long-run economic benefits - that as a consequence may be larger both in present value terms and in nominal terms (due to competitive advantages) - exists from shortening the research phase. Common sense would cause us to expect a flow-through of time savings from the earlier stages to the later stages, and, indeed, this study found that most of the interviewees expected the impact on research time to flow through to later stages in the technology development and commercialization cycle. Though this study makes the anticipated linkage, the impact of earlier-stage time savings to the timing and size of longer-term outcomes needs to be more fully explicated.

3.6 Economic Value of Reducing Applied Research Cycle Time By One Year

When asked, "Can you give a 'ballpark estimate' of the economic value of reducing applied research cycle time by one year ?", twenty-two (22) or 79% of the 28 interviewees gave either a quantitative or qualitative "ballpark estimate." Fifteen (15) or 54% of the 28 interviewees gave a quantitative estimate. Seven (7) or 25% of the 28 interviewees gave a qualitative estimate. Some of the interviewees who provided quantitative responses also provided qualitative responses. ⁽¹⁸⁾

Even though interviewees estimated that participating in the Advanced Technology Program helped them to reduce their applied research cycle time anywhere from one to 10 years, all were asked to give the economic benefit associated with just a one-year reduction. The estimates are therefore much more conservative than if they had been asked to estimate the total value of the realized cycle-time reduction. The estimates range from one million dollars to "billions" for a one-year reduction in applied research cycle time and appear to relate specifically to the direct economic values to the company or JV member companies rather than to the potential broader benefits that might be realized. The estimates in Table 7 are listed in order of the size of the value, with the largest estimated value listed first. The median estimate of the economic value