Transferring Innovation from Science to Business

From Science to Business on effective firm--university partnerships is a new book on the university-enterprise arm of innovation. Karin Wall talks with author Dr. Georges Haour, Professor at the executive education institute IMD.

Georges Haour: The knowledge and technology available in universities and public laboratories must be much better “leveraged” by firms, in order to create new activities and jobs. It is a gold mine, but the so-called “technology transfer” process does not “mine” it well.  Universities are a privileged actor in the distributed innovation system, which I described in Resolving the Innovation Paradox and which calls for firms to effectively federate many external inputs, with an entrepreneurial perspective.

IM: Why is the issue of firm-university partnerships particularly acute now?

GH: The world is facing a host of crises: water, food, commodities in general, but also healthcare: we need myriads of effective innovations to provide good quality healthcare at acceptable cost  to a population, which is fast ageing and living longer in OECD countries.

Indeed, moving to a low carbon economy is another large challenge and a tremendous opportunity as well. China has understood that very well. For all these reasons, we cannot afford to ignore this “gold mine” of knowledge, new ideas and innovation.

IM: What are the channels for knowledge and technology transfer?

GH: They are numerous. A big one, of course, is constituted by students  going to work for the industry: the flow of knowledge & technology is best carried by the people who have them.  The chart below maps the ways this transfer take place. Some of them are informal and companies probably underestimate the extent with which they are influences by the work of universities/public laboratories.

They are three main channels for transferring knowledge and technology from universities to industry: collaborative research, licensing and spinning out start up companies.

IM: Tell us more about the first one, “collaborative research”!

GH: The firm engages with a university and funds a research project carried out by the university. In the so-called “science-based” sector of pharmaceuticals/biotech, companies often engage in such a science-to-business  process.

A very small fraction of universities carry out collaborative research with companies. According to the OECD and the 2009 AUTM report (www.autm.org), funding by the private sector only represents, at best, 6 to 8 % of the research budget of these universities: the lion’s share of research funding comes from the public sector.

Universities are clumsy at making their knowledge and science relevant to firms; indeed they do not know the magic world of “business”. Firms, on the other hand, are not curious enough.

IM: Why not more?

GH: Universities and firms are two very different worlds and this is good ! This, however, means that they have difficulty building bridges between them. Universities are clumsy at making their knowledge and science relevant to firms; indeed they do not know the magic world of “business”. Firms, on the other hand, are not curious enough, and do not have the imagination, to “see” the implications of today’s research. They are busy trying to satisfy share-holders with good results in the next quarter…

Engaging in such collaborations requires a lot of energy and time…and trust, in order to well understand where each partner is coming from. Large companies engage with universities, when SMEs – small and medium-size enterprises, would also  benefit from such collaborations.

Also, we need much better leaders of innovation projects, in universities, but also in companies. We all know that the single most important reason for success of an innovation project is the crucial human factor.

IM: How about the second channel?

GH: When it comes to patent-based licensing and/or selling intellectual property (IP), most universities do not generate enough income to cover the expenses of their technology licensing office. Each year, there are exceptions, with “blockbuster” deals for new molecules licensed to a big pharmaceutical company.

IM: What are the pitfalls in this area?

GH: It is difficult to spot the industry and the firm, in the world, for which a specific license will mean most. The criterion of success for a licensing office should not be the income derived from the licensing deals, but the number of jobs created by the firm, as it develops the new activity based on the license.

The criterion of success for a licensing office should not be the income derived from the licensing deals, but the number of jobs created by the firm, as it develops the new activity based on the license.

IM: How about the third channel?

GH: The third channel for commercialisation is the creation of start ups based on university work. This is a complex path and universities usually do not have the business sense required to follow it, as they rightly concentrate on excellence in teaching and in research.

In this area, there is much talk of “incubators”. These days, China is particularly keen on “University incubators” attracting engineers from the Chinese diaspora.

University officials and politicians believe that, when office/lab space and computers, are provided, the incubator is complete. The crucial element of an incubator is to provide people bringing business intelligence and managerial practices to the entrepreneurial teams.  The entrepreneurial teams of start up are isolated. They need contacts, inputs and conversations on how to define their offering, their business models, etc…They need to be asked the tough questions.

IM: Where is knowledge & technology transfer best done?

GH: In Switzerland. Why? Excellent research, pragmatic business culture, patent-aware, but not litigation-prone, etc…

In tech. transfer, Europe is doing as well as the USA by any measure:  percentage of research budgets funded by firms, number of licensing deals and creation of start ups. Asia is moving fast, investing massively in universities. Several of them are already in a world league, such as the University of Tokyo for example.

IM: This is counter-intuitive…Conventional wisdom is that the US is leading in this area.

GH: The world is fascinated by the USA. What the USA actually do well is to fast grow the start ups into Microsoft, Cisco, e-Bay, Oracle, etc. Not bad for job-creation…

IM: A last comment on knowledge & technology transfer?

GH: Two quick things:

1) we have talked mainly about transfer of scientific and technological knowledge. Our world needs non-technical innovation more then ever, partly because non-business issues have never been so important to business.

We thus need to innovate in mindsets, business models, managerial practices, anthropological and geopolitical perspectives. On these aspects also, university knowledge must make its contributions, helping the world “muddle through” the transformations it is facing.

2) OECD countries, but also China and others, need to create more jobs. The criterion of success for partnerships between firms and universities/public laboratories is not the amount of revenue to the university – it is small anyway; it is how it effectively contributes to value- and job-creation in society. These partnerships must take their full part in a vibrant job-creation dynamics. The latter must be right in the centre of the radar of our fierce leaders…This is particularly true of Europe. This  is very frustrating, since Europe is the region in the world that is best equipped to brilliantly succeed in the 21st century!

About Georges Haour

Dr Georges Haour is Professor of Innovation & Technology Management at IMD. He acts as an adviser to companies on the management of R&D/ innovation, entrepreneurship and technology commercialisation.

Born and raised in Lyon, France, he obtained a PhD in Chemistry form University of Toronto, Canada. Prior to IMD, for nine years he managed a 30 staff business unit at Battelle, in Geneva, carrying out innovation projects on behalf of firms. Several of his innovations have been licensed and generated substantial new activities for the client companies.

He has 8 patents and 110 publications. From Science to Business is his fourth book on entrepreneurship and innovation.

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  • Haour

    Karin, good job putting my austere answers in a more attractive perpective and  I especially like the  choice you have made  of the two sentences highlighted
    the  interviewee Georges Haour 

  • http://www.facebook.com/people/Olexandr-Babich/100000856519668 Olexandr Babich

    The majority of our scientists have a technical orientation, therefore way from a science to business for them is combined enough. And to address to the managers do not wish. Protect интелектуальную the property.

  • Bill

     I totally agree with the message and all the comments , but I have some additional recommendations based on my experience as a consultant, industrial executive and professor having done collaborative research, licensing and spin-offs.
    By practicing a new fourth (4G) generation of innovation theory and practice, the relationship between universities and corporations in the United States can be improved. It certainly needs to be.
    According to the National Science Foundation in an InfoBrief
    http://www.nsf.gov/statistics/infbrief/nsf06328/nsf06328.pdf
    entitled “Where Has the Money Gone? Declining Industrial Support of Academic R&D”, corporations have only funded about 5% of university research for several reasons including disputes over intellectual property rights.
    The University-Industry Demonstration Project (UIDP) is a consortium that is attempting to solve this dispute. In their web brochure, UDIP has acknowledged that “many U.S. companies have stated that they are increasingly turning to foreign research universities that offer more favorable IP rights”.
    http://sites.nationalacademies.org/pga/uidp/index.htm
    So, what’s the solution?
    I have experience helping both large companies and SME’s do collaborative research and licensing with major universities by having both parties practice 4G. Here are the keys for success.
    Requirements for the funded research contract at the university to be paid by the SME were (1) all IP created by funded work would be jointly owned and could be licensed to others, (2) the problem to be solved by the research would be exclusively defined by the SME and the degree of the solution exclusively measured by the SME – this is a lot more than “use-inspired research, which is better than basic research but still an unrealistic dream (3) the research would be of a quality to form the basis for a new PhD project and thesis – the funding would pay for the graduate student’s tuition and some compensation for living (4) patent applications would be filed before publications jointly authored; applications fully paid for by the SME and the content would be directed by the SME but reviewed by the university. Result – Success; problem solved with all parties happy; PhD produced with publications and follow-on government grants to the university.
    Bill Miller, Phd, President 4G Innovation LLC

  • Haour

    Points well taken, Bill !
    You know the joke about the consultant (or the banker)  taking your watch and charging you for it ? Well, many US companies find that US universities are behaving like the consultant in the joke and turn to more “user-friendly” institutions, in Europe and Asia.
    The solutions to the issues raised are multi-faceted and my first priority would be to more effectively “help” SMEs be more competitive, so that they create jobs. Easily said, NOT easily done.
    We need a few conversations – with a glass of wine – to probe these more… 
    best
    Georges
    Haour@imd.ch

  • http://www.fuentek.com Laura A. Schoppe

    Nice overview with some excellent
    points, Georges. I agree that a university tech transfer office’s success does
    not have to be measured solely/mainly by royalty revenue; there are other metrics to
    consider (see http://bit.ly/h5uY6c). It’s
    also true that universities need to explain their research and innovations in a
    way that is relevant to business. At Fuentek, we find that carefully prepared
    technology marketing descriptions help serve as a bridge (see http://bit.ly/mQxggy). Of course, this presumes
    that universities consider the market when determining the value of their
    innovations (see http://bit.ly/mxVOFG). We suggest a two-step process for making this evaluation (see http://bit.ly/i4bDbz).

     

    The biggest challenge I see is that most university tech
    transfer offices are tasked with big goals but then are not given the staff/resources to achieve them. But there are tools and processes out there that can
    help, and I’d like to think that Fuentek’s blog goes a long way toward sharing
    those tools with tech transfer offices (http://bit.ly/hnNq64).

    - Laura Schoppe, president, Fuentek LLC

  • Haour

    Laura,
    Absolutely right that TT offices are not given the proper staff and money ressources. Common sense Switzerland, ounce again, is an exception. Fifteen years ago, Swiss policy was to build these offices and did it right.
    As a result, Switzerland today is the place in the world where TT activities are most effectively done.
    (The USA remain the champion when the issue is to grow the ventures).
    Georges Haour
    http://www.sciencetobusiness.ch

  • Eunice

    Georges Haour, how can I be able to get a copy of your book.  I live in Kenya East Africa.
     

  • http://www.arbitrageportfolio.com/what-is-and-how-to-arbitrage/ arbitrage

    Awesome article, I really enjoy reading post about technology and innovations. Will wait for more of this

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