At 59, he's no rookie. He worked for U.S. Steel as a draftsman, for Armstrong Cork as an ad writer, for Martin Aircraft Tool as a tool engineer, and later as a proposal director for projects including Titan and Project Vanguard. He was in charge of packaging and new products at Hunt-Wesson Foods, and was vice-president of development and technical services at American Can.
He gave up big-company security in 1973 to start Simco, a small company that specialized in conceptualizing and developing new products. He intended to stay small to ensure that his time wouldn't be drained away by administrative concerns. And he has. Today Mason owns three companies -- two R&D firms, Simco Inc. in Weston, Conn., and Simco Space Bio-Systems Research Services in Houston, Tex., and a third company, the Masonware Corp. in Newport Beach, Calif., which markets his line of microwave cookware. The two R&D companies have a total of 12 full-time people, with a network of about 120 scientists, technicians, and specialists who are brought in to work on various projects. Half of the companies' work is for large-company clients like Johnson & Johnson, S.C. Johnson & Son (Johnson Wax), Frito-Lay, Lipton (Tea), American Can, and Neutrogena. The other half is developing proprietary products of their own.
Though Mason has had no trouble getting contracts for major corporations' own projects, none he's approached have been willing to take the risks that a long-term commitment to an unproven (and off-the-wall) product like the tallow tree would entail. And he's convinced that attitude is typical of most large companies.
"Failure in large companies is not tolerated," he says. "There's dictatorship of the bottom line.Lots of people think they know how to control the bottom line, and they generally control it by not taking action, by not taking risks. They're protecting what has been built before by those who had guts or were foolhardy enough to take risks."
Therefore, goes the thinking of Mason and others who advocate federal support of R&D, since small companies don't have the money, and large companies won't spend it, the government should fund long-term R&D efforts. "The government has the power, the money, and the incentive to do it," says Mason. "How long do you think we could support a war without imported oil?"
The government does believe in supporting some R&D, of course. That's why it's spending more than $30 billion on it. But most of the money isn't going to small companies like Mason's.
If large companies produced more innovations, then few small companies would have reason to complain. But in fact the opposite is true: Small companies produce about twice the innovations per employee as large companies.
Passing over small companies is "cheating the taxpayer," says William Whiston, director of economic research at the Small Business Administration. Whiston has studies going back 20 years that support his claim. One of the most widely quoted is a 1977 National Science Foundation study that tentatively concluded that between 1953 and 1973 firms with fewer than 1,000 employees produced 24 times as many innovations per employee as firms with more than 10,000 employees, and 4 times as many as the companies in between. That finding later turned out to be incorrect. More recent analyses show that small companies are somewhere between 1.8 and 2.8 times as innovative as large companies per employee.
Whiston will settle for the smaller numbers. "I think all you have to do is establish that small business is at least at innovative as big business," he says.
If that is the case, then why, asked a panel studying industrial innovation for the Commerce Department in 1979, is so much of federal R&D awarded to large firms, federal laboratories, and universities? "We believe," the panel said, "that a larger share of federally funded R&D awarded to small businesses would produce substantially greater results." But the trend appears to be going in the other direction.
As it turned out, Stanley Mason's experience defied the trend. Though the congressional subcommittee didn't seem to pay much attention to what he had to say, a New York Times reporter passed the story on to a friend at Newsweek. When Newsweek quoted Simco vice-president Michael Handler in an article on alternative energy, someone at the NSF was intrigued enough to ask the company if it would be interested in a relatively new research grant program they had for small companies.
The NSF didn't start its Small Business Innovation Research program (SBIR) out of a concern for small companies or a conviction that they would do innovative work (see box page 32). In fact, Congress required it to set aside some of its applied research budget for small business. The NSF charged Roland Ribbetts, then a director of applied research programs, with seeing that the money was well spent.
Tibbetts and others he consulted devised a three-phase program that he thought might be a pilot for other agencies, as well as for a larger scale effort at the NSF. It was designed to lead a small company from a six-month feasibility study to a two-year larger scale research effort, and then to private sources of capital, such as venture capitalists and large corporations, for commercialization.
The program attracted 329 proposals from 34 states in 1977, and of those 42 got Phase I grants of up to $25,000. The following year, the entire $4.3-million budget was allotted to Phase II grants, which average $200,000, for a continuation of half of the first 42 projects. In 1979 and 1980 the number of applications and Phase I projects funded increased.
Twenty-five thousand dollars didn't sound like much money to Mason, but in spite of the relationships he'd built up with large companies over the years, no one else was giving him anything. Besides, the application called for just a 20-page proposal, and he thought the exposure to the scientific community might be good for the project. Mason and his colleagues put together and sent off what was 1 of 530 applications submitted by small companies in 1980.
