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Wall Street's myopic PROFIT Hunger pushing big Firms to abandon R&D , is it good or bad for mankind ?
Across industry consolidation over past couple decades , convertes small family owned firms into cortporate giants through mergers or acquisitions. Despite having it's downside , that process came up with an upside , which was bigger muscle for individual giants to invest in R&D for their own competitive survival from which mankind also got benefited to some extent as innovations got much more speed and big giants commercial muscle helped innovation to reach bigger population quicker than ever.
Though innovation always suffered from having slower speed as our ethical standard and regulatory frame work always had far less speed compared to innovation. Moreover due to psychological reason also diffusion of innovation is slow in society always which is on discussion in other thread here.
http://www.ted.com/conversations/3479/why_does_the_diffusion_of_inno.html
Behind the scene in recent time Wall Street become the BOSS of BIG Corporate Giants. The myopic hunger for PROFIT of Wall Street pushing big Firms to abandon R&D as their non core function , which should be taken care of somebody else !!! As process of innovation is uncertain, sometimes slow , needs lot of fund. To make BIG BOSS Wall Street happy big corporates freeing up those money to put somewher else to gain immediate profit. Recent trend in Healthcare industry is the proof.
That means innovation will suffer from funding problem as was echoed in passionate talk of Nina Tandon at Columbia University.
http://www.youtube.com/watch?v=uQ5aiUGg1Yo
In this era when Innovation become ever costly & commercialization become far more complex, we can't push innovation to individual labs of scientists like Thomas Alva Edison or Alexander Fleming, when it was cheaper and simpler.
In such situation it seems to me in near future Innovation can come at much slower pace due to funding reason, and mankind will miss the benefit of the same.
Agree or disagree?
Or you have other perspective of same ?
What is your idea abo
Bakul Valambhiya (Mistry)
Salim Solaiman 50+
I disagree about your generalized comment, in recent past & still to some extent Big Firms invest in R&D of their own considering that as a competitive edge, which right now tend to diminish that's why this discussion is.
If Capatilist system has got only one strength, that is "innovation" driven by competition which is hugely encouraged and rewarded (in terms of business return once successful).
Niu zhen
regarding cortporate mergers or acquisition,i think it is a trend due to "Matthew Effect", we here has a saying-Great trees keep down the little ones.in chinese is"大鱼吃小鱼，小鱼吃虾米".
Salim Solaiman 50+
But here it's a bit different scenario , BIG TREEs have given some jobs to the small trees without any support that needs big investment which that small trees don't have. Sometimes when the small trees come up with some new ideas , BIG one buys the whole small tree and take only that prospective piece of idea that fits in to BIG ones business interest and kill rest of all other ideas or project of the small tree.
What kind of innovations are going on in your field in China? At manufacturing China is leading , what about innovation ?
Really interested to know about China.
Niu zhen
Salim Solaiman 50+
Niu zhen
Salim Solaiman 50+
We all are learner as life is journey of learning if one take it in that way. Thanks for your interest in this thread. This discussion is for that reason to learn from each other.
You know I know nothing about chinese language , would really love to learn your language once have time and opportunity.
Niu zhen
Salim Solaiman 50+
Yes reading and exchanging views can provide you learning English better.
So whats your view about the subject here ?
Krisztián Pintér 200+
Niu zhen
Dan Willis
Salim Solaiman 50+
Any thoughts ?
At Houston, Texas
Salim Solaiman 50+
I am aware of that trend about the industry your referred to. Guess similar is happening other industry as well, which sometimes they say in nice word as "outsourcing". But my gut feel (which may be wrong, and love to be wrong) is they are abandoning R&D to a great extent , and going out with a shopping list and bag in hand to shop around.
But how the small fishes in the pond , will get their food to deliver items shoppers are looking for? Due to that worry which was also visible in Dr. Nina's talk in youtube, opened up this debate.
Your contribution is greatly appreciated.
Debra Smith 200+
Salim Solaiman 50+
You are aware sometime this buying selling game is only done to push up the share index only. It's not uncommon BIG FISH bought a small innovative FISH than killed the whole small fish , so the small piece of innovation is also gone ...............
With that intial financing they also lose their soul.....
As you wished , I also wish so that this startegy lives really very short for the sake of innovation.
Debra Smith 200+
Salim Solaiman 50+
Other thing also happen, a Big Firm buys a small company as that came up with some innovation which is very attractive. But that small company also may have some other R&D project ongoing which are at different point. As the Big Firms buys the smaller one, it finds all other projects of that small company is not a startegic fit to their big R&D portfolio , so they just shut those down.
Well these are all business decisions which is necessary to be taken for the sake of shareholder's interest or the bosses of Wall Street.......but mankind can miss some of the innovations which could be great help for all.....
Don't know what could be the solution in this fiercly profit driven model of business in future.
Debra Smith 200+
Debra Smith 200+
R&D spent millions on developing what they 'could' do rather than what anyone would buy.
Having said that, however, who imagines that 3M, Dupont or others who are known for revolutionary new products will eliminate their R&D for long. All companies run on and profit by competitive advantage.
This is simply another path that businesses will follow and we will all say 'how could they have thrown the baby out with the bathwater?" in a few years.
The real problem to my mind is that rather than develop things in the lab, the companies will go into the real world and appropriate ideas from the creative poor and profit from them rather than partner with them so that both sides prosper.
Salim Solaiman 50+
Good to have you here.
I will check that book. Yes , innovation shouldn't be limited to R&D that I fully agree and also getting ideas from different stakeholders in the whole value chain is necessary these days when innovative products has much shorter life cycle due to inter an intra, supplimentary category competitive pressure. Getting ideas at early development or even pre-development level from stakeholders and then developing product might help for quicker diffusion of innovation , which is good for commercial success of innovation.
But I am not sure once R&D is outsourced those things will be there or not, as main target for those outsourcing companies is to offer cheaper and quicker outcome while maitaining thier own profitability. So in this case profit issue comes twice , first orginal company profits by paying less through outsourcing then that recipient company have to make profit out of that less money of the original company. Ultimately for R&D there will be lesser money, while the truth is now a days R&D is far more expensive even if year to year devaluation of money is not considered.
D. W. Major
Wall Street is Bad for every one except them!
Wall Street is EVIL.
There is not a single Human working on Wall Street and we should abandon it period!
Profiteering is the real Evil in this world!!!
Salim Solaiman 50+
Let's think of a better model which is currently only profit focused !!!
D. W. Major
What we need is to protect the basics of live and make them accessible to every one.
The basics of live is food and shelter.
That must be guaranteed and as such children should be educated by growing food and understanding nature.
A society can only function if it has a proper agriculture as a backbone and proper housing.
On the back of this we can build an education system where people are educated to the best of their abilities. This way we ensure the evolution of our society.
Food and shelter must be protected from greed, Food is NOT a commodity!
The current model of inflation greed corruption and theft is based on the Occult.
This has to end or humanity will perish!
You will see that every politician from Berlusconi to Merkel Putin Obama and Cameron are Freemasons.
They are in charge so it is their fault and they are corrupted by Wall Street.
Freemasons are Satans little helper and must be brought to light and justice.
Wall street is Satan.
And every one that works on Wall Street and makes insane profits brings suffering and pain to Humanity.
Expose them and bring an end to this Occult Dictatorship.
Free Food.
Free Housing.
Clean Air.
Clean Water.
Free Education.
And we can make this world a paradise again.
Salim Solaiman 50+
PROFIT is the nicer name of GREED which is driving our society so long causing all the problems and concern you mentioned which are very basic needs of humankind.
Now that GREED has extended it's agressive claw also innovation that actually brought us today's level technologically scientifically.
To solve the problems you mentioned we also need social innovation / reform soon.....
Ed Schulte 50+
saw your tag re: "language"
but re: "wall street" BIG ..this is shifting very quickly ...as of the end of the year ..bond rating agencies will no long be ONLY USA based ( as the current "news" hype of italy / Greece etc causes excitement ) Look at Singapore as a current example of small and prolific entrepreneurship for the model of the future without mental blocks.
In Dr Tandon's (Cambridge ) presentation is an interesting example with a BIG preverbal "twist". Although she did not say it outright ...the big block in her funding is the so called "Moral right" who put out BIG $$$ against this type of research work. I see this situation as "interesting" to say the least because ....as the shift unfolds...where entrepreneurship is greatest ..moral right is the least ....Dr Tandon may have to consider relocating ..i am sure she will be welcome wherever she goes
Salim Solaiman 50+
Thanks for your optimistic insights. Yes the role of "Wall Street" might get decntralised to other part of the world but my worry is that whether this shift of power also bring a change shift in mindset as well, which is very myopic now towards very near term PROFIT. Like you I also want to be optimistic about that.....
About Singapore , you rightly said regulatory environment & also ethical environment there are still more Innovation friendly , that Singapore took to keep there Economy dynamic when they have next door giant emerging economic powerhouse China. Singapore rightly identified it's strategy to move in to innovation as they will not be competitive with China if they remain manufacturing focused which it was before , because of the huge economy of scale and skilled labour power China has.
Main challenge for Singapore to be in forefornt of Innovation is to quickly develop infrastructure to support R&D and also availability of ample talent (i know many will love to relocate even that may remain a challenge). Next challenge will be the funding which is still controlled by stock markets.
Wish that also will change soon to speed up innovation hence betterment of mankind.
Krisztián Pintér 200+
Salim Solaiman 50+
But how those small research lab will run costly R&D projects of this era without adequate funding , who will going to take the risk of investment behind that uncertaininty that onec big firms used to do traditionally as you rightly said.
That's the reason of this discussion. Thanks for your contribution.
Krisztián Pintér 200+
however if it is true, it can be still explained with the recent economic "boom", which means lot of resources were invested (wasted) into the boom sectors: real estate, derivatives and government bonds. the world went crazy in the recent years, there are no savings, and people consume themselves into debt.
so in short: profit hunger is surely not the reason. profit hunger actually promotes R&D, not hinders it. capital wasting trends destroy it.
Salim Solaiman 50+
http://www.pharmcast.com/BuyersGuide/Datamonitor/DatamonitorReports.htm
Krisztián Pintér 200+
this underlines that not the profit motive, but other forces are behind this particular cut in costs. R&D is the last to fall, since it is absolutely necessary to maintain market lead. if companies cut R&D costs, it indicates big trouble.
Salim Solaiman 50+
Will come up with more once I am convinced with authenticity of source .
Salim Solaiman 50+
Please find more links below, hope you will get more information and data
http://www.bionity.com/en/whitepapers/49803/outsourcing-in-pharmaceutical-industry.html
http://www.businessweek.com/magazine/content/05_12/b3925601.htm
http://www.pharmaphorum.com/2010/09/03/trends-in-pharmaceutical-rd-outsourcing/
Krisztián Pintér 200+
Salim Solaiman 50+
The other point is that companies outsource those functions which they consider to be non core function for them, so now R&D became non core function ! That's a big shift in mindset as well, which also will hinder innovation. Well that's my view and hope that's not right, even if it is right, it shouldn't have any negative impact in the effort of innovation.
More links here
http://www.reuters.com/article/2011/05/11/us-summit-rd-idUSTRE74A3JA20110511
http://www.slideshare.net/ReportLinker/rd-cost-cutting-managing-cost-containment-and-safeguarding-productivity
Harald Jezek 50+
Stopping to invest or even reducing it, would be suicide in our competitive world. Coming constantly out with new stuff is at the very core of any successful company.
Salim Solaiman 50+
Don't get me wrong by taking me as someone against outsourcing as a whole. If outsourcing is done to get things done by someone else more efficiently and effectively even at lesser cost , I am more than fine with that.
R&D from my perspective doesn't fall in that category as it's the soul of organisation to bring new technology , innovation for their own competitiveness from which finally humankind will be benefitted.
Some of the big Global Companies I know outsourced some of their non core functions ( not R&D in this instance) and now they are struggling to get things done as per their own standard. So it's visible now new consultancy firms grew who terms them to be expert in "Service Level Agreement (SLA)" , that gives the overall indication what's going on.
Can any SLA really drive innovation from outsourced company ? I see innovation , R&D as a matter of passion.
Just my personal example, these days whenever I buy something from the BIG names which used to ensure certain level of my expectation when those were manufactured by themselves , now I find lot of deviation in negative way once they outsourced the manufacturing.
I would be more than happy if your view become true. Thanks for your time & contribution in this thread.
Krisztián Pintér 200+
Salim Solaiman 50+
My worry is going for cheap may create resource crunch for R&D interms of infrastructure and talents that's it.
Harald Jezek 50+
However, at least the companies I know, don't outsource R&D, because R&D is like to soul of a company. It gives it it's identity based on it's creative accomplishments. This doesn't mean that certain activities within R&D might be outsourced (e.g. a company might use a university to run some studies supporting it's internal R&D.
In general, outsourcing has it's pros and cons. The pros are usually cost reduction, reduced liabilities, etc, while the cons are mainly loss of control. As long as you have all processes under one roof you fully control the outcome. Once you start using third parties you give away part of this control and that sometimes results in not foreseeable problems.