06/17/2011 05:27 pm ET | Updated Aug 17, 2011

Getting Value From R&D Dollars

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.