Connecting for Innovation

By Marshall Loeb

Executive View

One reason for America's lag in productivity and gap in balance of payments is that the U.S. has lost much of its lead in innovation. Not in a long time have Yankee tinkerers produced an invention to rival nylon or the transistor. U.S. scientists and engineers have brought forth some fascinating new products, including talking toys and maybe the Moodymobile, but the ingenious Europeans and Asians are being granted an ever increasing share of the patents.

This deeply troubles John Hanley, a soap supersalesman who rode the Tide to the top at Procter & Gamble and in 1972 floated over to become chief executive of one of its major chemical suppliers, Monsanto Co. Now Hanley, 57, is hard-selling a provocative idea: that technology could leap ahead if two basic but often distant institutions would join forces. Those two are U.S. universities and U.S. corporations.

In a promising pilot, Hanley's firm has committed $23 million to a joint project with the Harvard Medical School to find new means of combatting cancer. For four years, at both Boston and Monsanto's campus-like home in suburban St. Louis, scientists from the college and the company have been unwinding the secrets of "molecular messengers," which control the growth of tumors. Besides money, Monsanto, like many another firm, has quite a bit of technical expertise to offer. Says Hanley: "We can, in fact, bring something to the party."

Its own biochemical research has taught Monsanto to manipulate cells. The making of ingredients for simple toothpaste has unlocked some mysteries of dental cavities. Thus the company's scientists are also working with those at the Harvard Dental School to find ways of controlling diseases of the teeth and gums.

Of Monsanto's Harvard connection, Hanley says, "A lot of people in both education and business are watching this project. Exxon, for example, is looking at it. They have some fledgling arrangements with M.I.T., and I gather that they want more. There isn't a month that goes by that some paper shuffler like me doesn't inquire, 'How're you coming along?' David Rockefeller was in my office a few weeks ago and asked if we could make the same kind of deal with Rockefeller University."

Harvard and Monsanto are aiming at a tough scientific target, but Hanley figures that it is equally significant that they are demonstrating a means for working together to increase the effectiveness of the research under way in U.S. universities. Compared with cash-short colleges, companies have far larger resources to invest in basic research, and they are much more expert in managing that research, directing it to the market and recruiting scientists. "The transferral of technology from the university to the marketplace is a very flawed mechanism in this country," says Hanley. "It doesn't work worth a damn."

One problem, in his view, is that the Daddy Warbucks of university research is the Government. Washington is dandy at ordering up explosive missiles and exotic miscellany, but it rarely has its eyes on the marketplace. If potentially commercial discoveries are made, the feds are often reluctant to part with the rights. But without an exclusive license, companies are unwilling to risk the daunting expense of trying to convert basic research to products that serve people. Hanley argues that companies should be allowed to buy such licenses by paying the Government whatever it has put up to finance the research, plus royalties. And, he contends, private corporations should do much more to supplement public officials as the bankrollers of campus scientists.

Beyond just putting up cash, he says, companies should combine broadly with universities on specific projects, sharing scientists, pooling knowledge. Now Hanley surveys the university horizon for joint ventures. He wants, among many other things, to find means of reducing noise in factories and ways of using recombinant DNA to produce new products. As he says: "In just about any field--you name it--there is potential for a university and an industrial concern to work together."

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