R & D in Pittsburgh

A short time ago, Harold Miller blogged about the role of corporate R & D in growing Pittsburgh's economy.
The Pittsburgh Region has the good fortune to have a significant base of corporate R&D facilities. PPG's Chemicals, Coatings, and Glass Research Centers are all located here. Alcoa's Technical Center - the largest light metals research facility in the world - is located here. Crucible Materials Corporation's Research Facility, with the largest titanium gas atomizer in the world, is located here. Bayer's Material Science division is located here. U.S. Steel's Research Center is located here. The Heinz Global Innovation and Quality Center is located here. Seagate's Research Center is located here. Mine Safety Appliances has its Research Center located here. Sunoco has a Research Center here. The list goes on and on.

Not only do these corporate R&D centers provide thousands of highly-paid jobs for the region, they hold the potential for creating new startup companies for the region. While many of the innovations developed in these R&D Centers will be utilized by their parent corporations to improve the cost or quality of existing products or to introduce new products consistent with the corporation's business strategy, other innovations may produce their greatest value through a new startup company. And those startup companies, if they are successful, will create more new jobs for their home region.

I'm not so optimistic about local R & D spawning new companies here; in fact, some of the highest profile recent R & D moves to Pittsburgh -- Seagate, Intel, Apple, Google -- involve companies that are capitalizing on Pittsburgh's technical expertise (and Carnegie Mellon's expertise in particular) precisely to support corporate growth elsewhere. In fact, there's a case to be made that R & D thrives in Pittsburgh precisely *because* the parent operating companies *don't* live here. Corporate culture can be stifling. Move the idea generators out of the corporate hothouse, and better ideas come along.

Maybe the R & D business strategy for Pittsburgh is to attract corporate R & D for its own sake, not because it spins out other growth. I'm not angling for a new slogan for Pittsburgh, but "Where the Ideas Come From" isn't a bad one.

Comments

3 Responses to "R & D in Pittsburgh"

C. Briem said... 5/31/2006 8:57 PM

If you dig into the history, you will find that a lot of the 'new' economy in Pittsburgh is spun off off the coroporate R+D infrastructure built here long ago. Just one example, you mentioned Respironics hitting $1B in sales. Respironics founder McGinnis is here becasue of Westinghouse in many ways. There are innumerable ties between Westinghouse and the tech base in the region today.

Mike Madison said... 5/31/2006 9:17 PM

The more I poke around Pittsburgh, the more I'm impressed by the continuing influence of Westinghouse -- which strikes me (anecdotally) as the most important corporate ancestor that Pittsburgh has.

But there's a difference, I think, between R&D attached to a local company (Westinghouse) and R&D that stands alone, with the parent housed elsewhere (Seagate). The former seems much more likely to spin out other local business.

Harold D. Miller said... 6/03/2006 3:01 PM

I think that the corporate approach to innovation is more important than where the headquarters is located. If the company is committed to an "open innovation" approach, then it will be more likely to support, or even encourage, spinouts. If the company still follows a "closed innovation" approach, then maybe distance from HQ helps, I'm not sure.

Regardless, attracting and retaining corporate R&D centers for their own sake is an important economic development strategy, not only because of the high-paying jobs they create, but because of a variety of other synergy factors, such as what IBM does in Austin (see http://pittsburghfuture.blogspot.com/2006/05/value-of-corporate-rd-centers.html for details)

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Pittsblog 2.0 is written by Mike Madison, a law professor at the University of Pittsburgh. Send email to michael.j.madison[at]gmail.com. Mike also blogs at Madisonian.net, on law and technology. Chris Briem of Null Space drops by from time to time.

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