Modes of experimentation: an innovation process—and competitive—variable

The outputs of R&D, such as new research findings and new products and services, are generated with the aid of specialized problem-solving processes. These processes are somewhat arcane and have been largely ignored in studies of technical change. However, their improvement can significantly affect the kinds of research problems that can be addressed, the efficiency and speed with which R&D can be performed, and the competitive positions of firms employing them. In this paper, we first describe the general nature of the trial-and-error problem-solving processes and strategies for experimentation used in the development of new products and services. We next discuss the rapid advances being made in problem-solving methods, and the impact such advances can have on the competitive position of adopting firms. Finally, we offer a detailed case study of the impact one novel experimental method, combinatorial chemistry, is having on the economics of the drug discovery process. q 1998 Elsevier Science B.V. All rights reserved.