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Gary Liberson, PhD

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Getting Value From R&D Dollars

Posted: 06/17/11 04:51 PM ET

Innovation is key to our success, and our universities are an important source of that innovation. So I was more than a bit curious when I read an article by Vivek Wadhwa: Making Research Pay with the tag line: If university research were a business, it would be bankrupt. His thesis, and that of the Ewing Marion Kauffman Foundation, a foundation dedicated to advancing entrepreneurship and innovation, is that universities hold intellectual property hostage by placing unreasonable conditions on those seeking to bring ideas to the marketplace. The culprit identified is the university office responsible for licensing intellectual property: The technology transfer office. Yet, I think tech-transfer offices are just whipping boys for a tougher systemic problem.

Universities want to make money, but are often clueless about the effort it takes to bring an idea to the marketplace.

The problem of innovation and universities is similar to what corporations are facing today. The Other Side of Innovation: Solving the Execution Challenge has three bulleted points (among others) that resonate on this issue:

  • Ideas are only the beginning.
  • The primary virtue of an effective innovation leader is humility.
  • When it comes to innovation there is nothing simple about execution.

All three of these points sum up the typical problems of a university's culture. Professors think their idea equals invention equals money and/or fame. This kind of thinking leads to secrecy (i.e., communication silos) and innovation needs to breath to grow. Does anyone think humility is a common characteristic of academia? A lack of humility leads to more silos to protect a perceived precious idea. In terms of the difficulty of execution, this is where the entire process reaches its biggest logjam. The university overestimates the value of an innovation because it undervalues the execution necessary to bring an innovation to the marketplace. Blaming the tech-transfer office at this point is like blaming your attorney for a deal falling through.

Some universities are getting more sophisticated, creating Proof of Concept Centers (POCC) to take the next baby steps towards reaching the marketplace.

Almost everyone who writes about the problem of R&D and universities recognizes Stanford and MIT as examples of "doing it right." Both universities have very tough tech-transfer offices and yet seem able to negotiate successful deals that make everyone happy. Take a look at The Sorcerers and Their Apprentices: How the Digital Magicians of the MIT Media Lab Are Creating the Innovative Technologies That Will Transform Our Lives for insight into what makes, at least, part of MIT's technology machine successful.

The Institute I always hold up as the example of success is the Weizmann Institute of Science in Israel. Weizmann is a pure research facility. No faculty member was ever given a position to commercialize anything. Yet, they have the highest conversion rate from patents to industry of any entity in the world. It's tough to answer why, but it is easy to identify some notable characteristics that differentiate it from any other institution:

  • Streamlined management: The President of Weizmann runs the organization, not the faculty.

  • Fewer silos: Faculty and students all live on campus and the Institute works hard at making sure neighbors are from different departments.

  • Professional IP management: Weizmann owns All IP, and commercialization is managed by a separate organization.

  • Better understanding of faculty role: If a Weizmann patent is licensed for commercialization, a faculty member has two choices: Stay at Weizmann or leave to join the licensed entity. One cannot do both.

MIT, Stanford, Weizmann, and the Kauffman Foundation among others all offer models for improving our academic innovation machinery. However, our funding agencies (e.g., DOD, NIH, NSF) need to care as much about the technology created as the way in which the funds are spent. In an earlier blog I suggested that NIH (and I would add NSF) discover why some universities have been successful marketing technology.

Innovation is key to our future success. Grants to universities are not gifts, but investments in our country's future. While the funding agencies have a responsibility to monitor the legitimacy of the expenses, their higher purpose is to ensure the investments provide the best returns for our society.

 

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04:04 PM on 07/08/2011
Yes, there is a systemic problem and that piling the blame on tech-transfer offices (TTOs) is not fair. But it’s not that university tech transfer offices are clueless; it’s that the TTOs are under-resourced. As described by Fuentek president Laura Schoppe on our blog, a lack of adequate funding leaves lots of TTOs bottlenecked, so they don't even have the resources they need to triage/prioritize the dozens (or even hundreds) of innovations reported to them each year. They aren't holding innovation hostage with unreasonable terms - statistics show that universities' licensing terms are typically quite low, especially compared with corporate-to-corporate license agreements.

Conflicting metrics exacerbate the problem. Many university TTOs are being told to foster startups and encourage entrepreneurship, yet they are also being told to “show me the money” now, even though we know that most startups don’t result in revenue for at least a few years -- *if* they survive. So not only are university TTOs not getting the resources they need, they also are dealing with conflicting goals in terms of where to focus their deal-making efforts.

You can read Laura's full blog post here: http://bit.ly/mAe4Er
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RedDogBear
12:11 PM on 06/20/2011
This article seems to me to demonstrate once again the bankruptcy of the idea that "the free market rules all". Universities aren't supposed to make a profit. The research they do should be in the public domain. That's the only way to do true research is in an open environment. Then any company can pick it up and move to the next level of making a product.
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dadw5boys
Disabled Vietnam Vet
07:55 AM on 06/20/2011
The real problem is Americans no longer want the NEWEST, LATEST, and MOST IMPROVED PRODUCTS.
Now they want QUALITY Products that last and can be repaired !!! Americans are fianlly getting past being a throw away society.

One problem is Quality is very expensive and DESIGNING FOR THE DUMP is too ingrained in Engineering !
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RedDogBear
12:01 PM on 06/20/2011
"DESIGNING FOR THE DUMP is too ingrained in Engineerin­g ! "

Have you ever designed anything? I have. Many computer systems and I can assure you that its a very hard problem. You have to balance people issues, technical issues, business issues,... But in all the books I've read on how to design and build systems I've never come across anything that encouraged "designing for the dump".

What you design for is based on the requirements you get from the marketing and sales people. They tell you what they think will sell and you design for that, its that simple.