Cof Group Research & Development Research Policy A. L. Heard Strategic Approach to Integrati.on of Group R&D resources In.order that the R&D function within the Group serves Group needs effectively the following goals are agreed: 1. Basic research or applied research/ development proj ects will relave-t-tv- as--ag-reed act- *f- bwei-%ness- objectives'. 2.. :These projiats are being 'ce n'tred an 'taborator'-ies'hav-ing. the relevant special expertise thus avoiding duplicati 01, ':6I:sev;fier_e. 3. Progress reports and final results of these projects, subject to certain confidentiality restrictions, will be easily accessible by those in the Group needing information. The strategy being developed to attain these goals is three-fold'. Firstly, we have agreed at the Research Conference a set' of R~q~&;zh o.bje!;tives -We"ar.e..%Low.concen t"~Ping integ.rating the R&D c'entres (five CAC 'pl,~. BATU12- R&D)' to ensurpintha"t ift activities which they undertake of Group relevance are identifiable (conversely to ensure that if they have a particular expertise it is available for the Group). The second stage, still concentrating on the six R&D centres, will be to broaden this systematic coverage to embrace all projects including those classed as of local interest (and generally much more 'down to earth' or short-t:rmvincuature ) since inevitably, some classed as Iocal.ili have r le an e to other companies. The third stage will be to broaden the system still further such that all BATCo Operating Company projects or technical needs are identified, particularly in the area of product development/Lanovation or analytical/physical measurements, and that areas of overlap or poor awareness of technology, are traced. So far, we have moved principally over the first stage, but the second should follow during 1986. The basis for the third stage should be laid during 1986 and could begin to be implemented during 1987. In. the interim the existing links between BATUKF R&D and BATCo companies which are constantly being strengthened, should ensure a measure of technology flow. BATCo document for Province of British Columbia I November 1999 Organisation of Group RSD Following the decision to decentralise R&D, arrangements are well in hand for th7e-trgns-fer of CI&DC to 3AT7KE. This vill' take -effect from Isc. Januar7 1986, by v hich time 7.5% of the planned staff reduction will have occurred. The level of fundamental reseapch at Aoxk;hampton iill have _fAll ly.Z0Z.to .~gn Irom.' 4pproxizate approxima*tely 40% of the t'otal effo-rt, which- itself is in.the process of reducing from 284 to 166 staff. we expect the level of direct involvement of BATUKT- with the R&D .1 acility - tQ.. rime. as thay bacQma incraiLaingly aware.. of.. the.- _~. . . : . potential of this resource, but this will be a gradual process. The oth 'er majo.-r clients of the. Laboratory. ara the BATCo cam-panies who at pres .ent are having to be reassured that the unit exists and, 'increasingly. vill. -serve- their newds-. ~ CAC.-comat-ries -have agreed to--- support B-ATUKE R&D laboratory until mid-1987, by. which -time redundancies will be complete. Thereafter it is improbable that B&W or BATCF will contribute. Whilst a reassessment of the projects at GRSDC by both the CAC Tobacco Chairmen and their R&D Directors led to the abandonment of some activities,-- the majority of the research areas eliminated were cons-idered* to be capable of beiug-betcer managed on behalf. of the Group by the individual CAC laboratories The following gives a 'broa(r* 'ptctn-re- of"the 'ceitres- of- eitperttsd-withIM tldff- Grb~uo'R&D'~*- centres:- Leaf (chemistry, physics, biology, agronomy) - Brazil, USA Tobacco Processing (improvements in quality or costs) -USA, Germany, Brazil, Australia Smoke (chemistry, physics, biology) -UK, Germany Consumer Issues (behaviour, preference testing, pharmacology) -Canada, USA, UK Innovative Product Development -USA, Germany (inc. biotechnology), UK At this stage it would be an over simplification to say that there is complete agreement on the new decentralised approach to R&D, but there is an increasing realisation that GR&DC had outlived its usefulness, and with this realisation has come an increasing preparedness of the directors of the R&D centres to work as a team. Hitherto they had been rather independent in setting their C) rQ C) BATCo document for Province of British Columbia I November 1999 ~rogzammes and in reporting their findings. A signifizamt factor n :h;-s mo~ye towards an incegracion o~ R&D resources within the Group has been a series of meetings, culminating in the Research Conference during w-hich a common "t of Research Objecti.vas have been established for our Gromp:--wi.de ac-tivities. These were . derived from a Raciouale for Research which was developed within BATCo. Both this Rationale and the Research Objective-s are based on the purpose of our research in terms of the -business rather then. on- specific --technotagieskechnica:1, subjecvr,6- Rationale for Research Since its inception, Central R&D has had the responsibility of eiploting 'the ton In addlitIon -to the role of seeking products.. and _prjoceVseq ybich. improve the Co2pauy's --amo irnd beal th Competitive perfarinance. .4s'regards: the. king. q.~%!estiou.,. it is app:r~ut that a -fter more than.25 years of studying... smoke and- u:sing. V''ar ous bio'~?'g'i.cai.JoA_e1s.' ias4id'.dn.-au:U-Aals to reflect biological activity, no clear answers 'have emerged from the research conducted in our own laboratories. Consequently, it v -oas idered appropriate to re-define the role of internal R&D, t:sre'-evaluate the distribution of resources and facilities between internal and external research and to set a new course for Group R&D in the future. The new rationale for R&D re-cognises the r wo-separace targets, b ...identifiad a ovq~_, but~.,makes mac# clearer. _dis.ti.aS:tiqjd between... their purpose and also between work to be carried out in-house a .nd that done, more appropriately, externally. The two arms of R&D are thus Product Research (-internal-) and Smoking and aealth ('exterual"). Projects in the Product Research category are designed principally to anticipate and meet either: consumer demand, or requirements of regulatory authorities. Those in the Smoking and Health category are selected either to investigate claims against the product or to pursue other lines of research which may provide better information about whether or not there is in fact any relationship between smoking or smoke components and particular forms of ill health. Grouu Research Objectives for Product Research Stemming from this Rationale, a series of Research Objectives for the Group have been agreed with the CAC countries as follows:- C) (Z) U1 (-n N) CD Url BATCo document for Province of British Columbia I November 1999 Response to Consumer Demand Sublieccive Smoke Improvement: To have the technology to enable Group Companies to achieve supertority o"r leading campecitive brands &nA. to be able to maintain smoke quality whilsc responding to other probable restrictions. This will include the -need for reliable me-thods of measuring consumer (ii) Subjective Cigarette Physical Parameters: To identify-consumer standards for performance and to be i*-atbI'e-re-rhese`bot* efficiently Ind` con'sist-dutly Whils.t res.pouding to. other probab.le restrictions. (iii)..Pontrol of Smoke Levels/Smoke Compn.~.n.;$ i.n.. Bo t h Mai'n's treim' _Si-d`e'.tre'am':.' To ensure that the Group is technologically prepared to adapt products to respond to consumer requirements with respect to smoke levels and constituents without impairment of consumer acceptance in other respects.' (iv) Cost Reduction.: -To..I&ve :the.-. X.i4c.b.po.l.ogi cal. capa~rility of beIA49 thq, Lave4t cost producer for corresponding styles of products in Group markets whilst maLatainimg quality standards. (v) Social Aspects: To develop products which will reduce the social concern for smoking through modifications which are aimed at alleviation of 'nuisance' aspects. (vi) Yovelty/Distinctiveness: To develop technology which enables the Group to introduce new products appropriate to identified market segments. - (vii) alternative Products: To position the Group with appropriate technology in the event that alteruati~e produc=s to conventional cigarettes either become a significant threat to our business or constitute an appropriate divers if icacion. (viii) Tobacco Agrotechnology: To have the technology to allow maintenance and/or improvement of both tobacco quality and productivity in order to meet the needs of the leaf market and thereby C) the ultimate needs of the consumer. C) CI\ BATCo document for Province of British Columbia 1 November 1999 Response to Regulatory Authorities i Control of Principal Smok2 Deliveries in 3oth Mainstream and Sidestream: -To ensu're that the Group is technolo~gicaI17 prepared to adapt p-coducts to meet standards imposed on the . .ind.ustry, without impairment of consumer acceptance.' (ii) -Control of.Miaor Smoke Components ia Both Mainstream and Sidestream: To ensure that the Group is technologically, prepared to adap-t -producta to,. awat.- &tanAards -Inpe"d. an. the industry, without impairment of consumer acceptance.- (iii) Parforzaace Against Biological, Tar'Quallty or Compoisite For those indices which have a high probability of being introduced, to acquire the technology to permit Group products to be optimally positione4. ' (iv) Legislative/Administrative Standards for New or Modified Materials or Processes: To be aware of. All legisl;tive/administrative standards pTesent, ~r ftlopose'd fttnre'Groiap~' products/processes and to ensure chat technology, exists to enable these standards to be achieved. Smoking and Health Research Strategy In parallel with the search for common Research Objectives for our Product Research, we have sought to establish a coherent approach throughout the Group towards the teebaical aspects of Smoking & Health issues iacluding the external placement of research. The key objectives are:- To determine the effects of smoking, if any, on the smoker. To critically review all papers which claim to associate smoking and individual smoke components with particular diseases and normal health. To ensure that such work as may be accessary to investigate and clarify such claims is carried out using the facilities of the leading research groups in universities, medical departments and institutes. C) C) (-n Ln NJ C-1 114 BATCo document for Province of British Columbia I November 1999 6. To explore, using similar external facilities, other gouadl7-based wt~rk which -may clarify :he association of smokiag, smoke camponents. par:tcular diseases and normal health. ro discuss with regulatory authorities the association between smoking, individual smoke compoaents,.various diseases and normal health. The Research Conference has recommended that a Scientific Advisory Group be set up under.Dr. Thorutoo,.composed of in-house experts who take advice on an 'ad hoc' basis from.excernal experts. The precise taruA of reference axe. currently, bqizL&.r_1arifird, hur_ in. br d.terms,. QA function of the Advisory Group would be to identify, and ensure that it is familiar 'with, all external research vbick would- be. relevant to the health issue,*,to eva-luate, th-e quality of that-res ,Xrcha-and- any eanclusicras -b4SC'd-. UP61L ..It - -and, - when- in- Lts- view- &app sent -VT. or -.. . clarifTing work. is required_ to recomme!nd- the allocation- of -funds for that purpose. The terms of reference will be cleared with individual company C.E.O.s before a recommendation Is made to the Tobacco Strategy ILeview team. Group Research Programme Considerable attention has been directed a-t defining the scope of the ~-Gr(iuly 1Nnjearch,-?Tvgra*we.- Viewed sinll~ly &D tbe_t1o~ta:l',-Vt,*Jdizt-s conducted in the six R&D centres there are currently 606 project titles, all of which are collected on a computer database. However, these are widely diverse and clearly vary in their relevance to other research centres. A project classification system has been introduced throughout the Group using the following classifiers: Scope: Group, Local or General Interest Depth: Fundamental Research, Applied Research/Development or Support Work Function Orientation: Leaf, Marketing, Production, etc. Technical Subject: Tobacco, Processing, Components, Subjective Attributes, Mainstream, etc. and most recently: Group Research Objectives: as shown on pages 3/4. C) L:1 BATCo document for Province of British Columbia I November 1999 7. -he Research Directors have agreed that those projec:s which fall ,n!:a the categories of Group-wide relevance and are rated as Fundam~ntal or Applied Research/Developmen: in nature shall conatituce the Group Research Programme. Currently this constitutes 153 of the 606 projects throughout the Group. Wh.ilst all projects will be maintained on the database and can be &creased and grouped in a multituda of ways. (e.g. all Leaf research, all work an smoke quality improvement), only the projects within the Zroup6 Rasa&rrh Programme.. will. b.s 14L1rar_t64J'-. and monitored collectively by the CAC X&D Directors. In order to give more cohesion- to.this latter group, the- team consisting of the R&D Director of each of the six laboratories -tvtethe~r - wttb -the - Rov*&Tch. Co--ardtn&"-r, z,w:LLI- be idemeLfied. a-* the lesearch Policy Group. Tbe'RPG will thus ova rv iev the Group lesearch .Pr.ogramme,.' and' wi.L1 malEe . recomm'emdat ions via th~-_ Co-ordinator.fo.r more.-6i'less'activity'on a'pairticular''idpi.c 't .obe puTiued' 'at "any of -t1le R&D. cezft-ies~- "Thb. final (tecision 61i 'p*roje'lets, to be run at*each ce-utre will, h-owever ' be the re'sponstbility of? its General Manager and Research Director. The importance of the projects database in terms of Group-wide co-ordination of R&D effort cannot be overstressed. Providing reliable effort (in terms of man years) is supplied for each project, the allocation of resources, for icstance, against the leseareb Objectives, can be easily ideurified. 'The'contribution of the various R&D centres to Group-related activities in relaLion to otlie^i striciry b'e-6,iP-ir4d-- v 9 an C overall allocation of Group resources on Fundamental Itesearch in relation to Applied Research or Technical Support can be identified and used as a basis for management control. legrattably at this stage the effort data supplied by the individual R&D cencres is not sufficiently sound for the current profile of Group R&D activities to be given in quantified form. The &PG members recognise this as of high priority, and an Information Group meeting with specialists from each centre will cake place in January to 3tandardise all aspects in relation to this database. The RPG recognise the potential extensions of this computerised database for reporting research progress, in addition to listing projects. A further benefit foreseen is the identification of potential areas of duplication. Looking ahead. whilst for most purposes a co.puter terminal with suitable protective entry codes will provide access to the Group lesearch Programme for certain purposes, it will be necessary to produce a 'hard copy' version of the full programme. Whereas in the past such programmes have reflected a cechnology grouping (such as all work on Tobacco Processing or on Mainstream Smoke), in future the programme will be displayed by Group Research Objectives (see pages 3/4). U4 C:) U-1 BATCo document for Province of British Columbia I November 1999 8. An i2portant corollary of the decentralisation of research is that eaz*- centre now has an obligation to repor: findings in a sys:emaCLc and disciplined manner. Hitherto, GR&DC has set the standard for formal reporting vh1ch we no d to adop_t r broughout the G roup- Agreeme at on bot h ;ruseress and final re?orting of research was reached at the Research Conference It should ba recogrLised, however,. that this repr-eaeuts a 'hid.deu. czst' of deceatrali sing research. In'addition to formal repor~ting, the RPG recognises the importance of maintaining contacts between scientists at beach level. One Lanortant, vehicle -for this, contac-t -is the technica-L s.pec-ialist meeting and five have been planned for 1986 as follows-:- Subject Boar Coun-tr7 Suggdste