The 4 types of research and whether or not scientific research is good business.

When I began to talk to people in Oregon about my for profit business concept (a better way to make bleach, which is an applied research project), I was often told "universities are where one does scientific research," or "scientific research is not a valid business model." To be fair, those that said that were not scientists. To be equally fair, scientists have done a piss poor job of informing the general public of what we really do. Yes, there is news about the Large Hadron Collider and the Higgs Boson, Neil Degrasse Tyson does wonderful job presenting astrophysics, and there are a few others that make the news but the vast majority of what is being presented are basic research results. Scientists do much more than basic research. In fact, only about 15% of scientists work in academia where the overwhelming focus is on basic research.

So far I've mentioned 2 types of research, applied and basic. There are in fact 4 types, the other two being commercialization and product refinement.

Defining the four types of research

Basic Research

Also known as fundamental research, basic research attempts to answer "what is happening and why?" To answer that question it is often necessary to develop new techniques or experimental protocols. The product of basic research is knowledge and when one hears the phrase "science for science's sake," the speaker is talking about this type of research.

As a general rule, a basic research project will last no less than 5 years with many projects lasting 20 or more years (a researcher's entire career).

Since this is not about creating practical results, investments in basic research really should be thought of as donations to satisfy one's curiosity where anything beyond that is a nice surprise.

Applied Research

Applied research is all about answering "we have this wonderful basic research result, now how do we turn that knowledge into and practical and commercial product?" Outside of science, the equivalent of applied research is product development. Despite the fact that applied research is focused on making products, it is still research because until someone creates a product based on a basic research result no one knows for sure that it is possible (in the language of science: "one hypothesizes that it is possible until one succeeds in making a new product"). The other reason it is research is that the lack of success is not proof that it is impossible, only that what has been tried so far has not succeeded.

This is in stark contrast to an engineering product development project where one knows the project constraints from the outset, and thus can calculate whether or not success is possible a priori. Knowing that success is possible before one begins a project in no way means that it will be easy to figure out how to succeed.

Generally applied research projects last no more than 5 years, with 1-3 year durations being common.

Applied research has the potential to produce truly revolutionary products. The lightbulb, internal combustion engine, and integrated circuit were all products of this type of research.

Examples that compare engineering vs. applied research vs. basic research

Engineering
    Q: "Is it possible to build a space elevator today?"
    A: "No, no known material has sufficient tensile strength to serve as the cable."

Applied Research
    Q: "With our current knowledge could we develop a cable for a space elevator?"
    A: "We don't know, but let us try."

Basic Research
    Q: "What determines a material's tensile strength?"
    A: "Let us develop a theory explaining tensile strength."

Commercialization Research

This type of research seeks to answer "now that we have a new product, how do we profitably make it on a large scale?" Chemists refer to this as process development.

Typically a commercialization research project lasts less than 1 year. As a side note, US SBIR and STTR grants primarily fund this type of research.

Product Refinement Research

Here the goal is to improve or to develop new variations of existing products. This is the bread and butter of most businesses, so much so that most people appear to think of it as "business as usual." Since the focus here is on known products with established markets, product refinement research is the least risky of the four.

The iPhone was the result of combining the cellphone and internet enabled computer existed, and is an example of product refinement.

Are there distinct boundaries between the 4 types of research?

No. While doing any type of research, one may gain new knowledge about why things happen as they do (basic research) or insights into how to make a new product (applied or product refinement research) or a better way to make a product (commercialization research). Some research projects actually combine two types of research. For example, researching how catalysts work combines basic and applied research (to answer the question one makes catalysts to experiment with and if they are sufficiently good catalysts then they are commercial products in their own right).

Research as a Business Model

The core focus of many of the largest companies in the world is applied research for that is their pipeline of new products. Drug discovery is a type of applied research, so every pharmaceutical (Hoffmann-LaRoche, Merck, Pfizer, being examples) company succeeds or fails based on their applied research. Technology companies are heavily involved in applied research. When Intel develops an new generation of photolithography machines, that is the result of years of applied research preceded by many more years of basic research. GE and 3M would not exist today if not for doing applied research. In fact, GE is the descendent of the first industrial research laboratory: Edison Laboratories.

Can businesses do basic research and be successful?

Yes, with the caveat that only a small percentage (say <10% ) of their research investment go to those types of projects. If a company allows its research efforts to become predominated by basic research projects, it will fail because the projects consume a lot of resources while seldom directly producing new products.

Industrial research gained a bad name in the late 1980's and early 1990's precisely because companies, like Bell Labs, allowed their research to be dominated by basic research projects. Once that happened, it was only a matter of time before the accountants/CFOs/CEOs saw little return on investment and blanket killed the projects. Some may not have understood the fundamental cause for the lack of returns, while others decided that the only way to change the research culture was to clean the slate. Either way, many investors now appear to believe scientific research is bad business.

Concluding Remarks

Scientific research is good business, but one has to be disciplined in balancing long-term (basic research) vs. short-term returns (the other types). A failure to invest in basic research results in dry pipeline of new products (which has been seen in the pharmaceutical industry in recent years), but too much investment in basic research results in insufficient income.

Something else to consider; while investing in basic and applied research can have huge returns, it will always be a high risk venture.

Maybe in the final analysis those who were telling me that scientific research belongs in universities, not business, were really telling me that the stakes were to high for their liking. I am ok with that, though find it frustrating, and when I succeed they will have missed out, but it is their life.