GOOGLE AND PURDUE: EXAMPLES FOR UW-MADISON
Thomas Edison relied on a simple philosophy to guide research that led to world-changing inventions such as the first practical light bulb, the motion picture camera and an early version of the phonograph.
“Anything that won’t sell, I don’t want to invent,” Edison said. “Its sale is proof of utility, and utility is success.”
This approach might be a bit extreme for public research universities, but closer alignment with Edison’s thinking could result in greater prioritization being placed on creating intellectual property that can lead to new products and services in the marketplace. This would benefit America’s economy and provide new sources of revenue to fund additional, and potentially society-changing research, at academic institutions.
I feel that the nation’s heartland could benefit the most by providing greater incentives for faculty and students to engage in commercial endeavors and improving the entrepreneurial support infrastructure offered at its universities.
Edison’s pragmatic, commercial approach is especially relevant today. The U.S. economy still is mired in a slow recovery, with both productivity growth and new startup formation rates remaining below those experienced prior to the 2007-2008 financial crisis. These drop-offs are alarming because startups have been the key to the innovation that creates new technologies and products. Perhaps our best prospect for reversing the trend is for more research scientists to follow Edison’s example.
Why we have Google
The relationship between entrepreneurial research and economic growth is well established: Google, which began as a Ph.D. project by Stanford graduate students Larry Page and Sergey Brin, employs more than 60,000 people; Facebook, which emerged from Harvard undergraduate Mark Zuckerberg’s dorm room, employs 17,000. Biotech pioneer Genentech, with a payroll of nearly 15,000, was the result of research at Stanford and the University of California, San Francisco.
In 2015 alone, intellectual property from university research accounted for the creation of 1,012 startups, and patent licensing from universities and nonprofit research organizations supported 3.8 million jobs, according to the Association of University Technology Managers.
Despite the evidence, many universities fail to provide incentives that encourage graduate students and younger faculty to think like entrepreneurs. While most, if not all, research universities now have technology transfer offices and incorporate business skills in their science and technology curriculums, tenure — the holy grail for most young faculty members — still is tied primarily to publishing in academic journals and securing research grants. Obtaining patents, licenses and activity in other commercial activities have little if any bearing. Starting a business is often a negative in the eyes of tenure committee members.
The self-taught Edison wasn’t constrained by the rules and culture of academia, nor were visionary entrepreneurs such as Mark Zuckerberg, Bill Gates or Twitter co-founder Jack Dorsey, all of whom dropped out of college to start companies. At the other end of the spectrum, research and development in fields such as biology, physics or chemistry, require sophisticated laboratories. Researchers in these disciplines might fare better, and perhaps more intellectual property would find its way into the economy, if the university career path were more accommodating to the scientist-entrepreneur.
For more than half a century, the U.S. has maintained a competitive edge in the world economy in large measure because of its leadership in research and innovation. To assume that this will continue without change is naïve.
What should be done now
There are steps that can be taken to make sure this happens. The first is to enhance funding for the Small Business Innovation Research (SBIR) program rather than cutting funding as the White House’s 2018 Fiscal Year Budget proposes. The SBIR program is administered by the National Science Foundation, but
funding is provided by 11 different federal agencies. The SBIR funding program’s mandate is to enhance the commercialization of intellectual property from scientific research — much of it being created at research universities — by getting it across “the valley of death.”
The second is to strengthen technology transfer offices to ensure that patents are filed for groundbreaking discoveries and their commercial potential is exploited. A program of state and federal matching grants for these offices is one way to make certain universities have the resources they need to improve commercialization programs.
Higher rates of academic entrepreneurship could address some of the entrepreneurial awareness and support system shortfalls that exist in the U.S. heartland, which is harming overall job creation and wages in the region. For example, none of the top 10 in the Kauffman Foundation’s 2016 Index of Metro Startup Activity hail from the heartland. Among the 39 large metro areas included in Kauffman’s rankings, Kansas City was highest at 15th. The disparity in economic performance between the two coasts and the central part of the country is contributing to a series of wider chasms.
And universities themselves can take actions to encourage and support technology transfer and commercialization at their institutions.
In a study, “Concept to Commercialization,” that I led in 2017 for the Milken Institute on which American research universities were best at technology transfer through licensing and startup activity, there weren’t any universities among the top 25 in Ohio, Kentucky, Tennessee, Alabama, Mississippi, Louisiana, Arkansas, Oklahoma, Kansas, Missouri, Nebraska, Iowa, South Dakota, North Dakota or Wisconsin.
At 32nd, the University of Nebraska had the best performance among universities in these states, followed by the University of Missouri at 34th and the University of Wisconsin-Madison at 35th. Purdue was the highest in the heartland at 12th, and first among public universities without a medical school, followed by the University of Minnesota at 14th and the University of Illinois Chicago-Urbana at 18th. The regions in which these universities are located have higher per-capita incomes and witnessed stronger economic growth in recent years.
Purdue’s example
Purdue serves as an effective case study for how quickly commercialization improvements can be achieved. Utilizing the same methodological approach back in 2006, Purdue was 39th in commercializing its research. A jump from 39th to 12th in roughly a decade is a significant and meaningful improvement.
How did this happen?
Part of the answer rests with a change in leadership when former Indiana Gov. Mitch Daniels became the university’s president in 2013, which resulted in an increased focus on commercialization at Purdue. In a press release on Purdue ranking 12th, Daniels explained the institution’s transformation:
“For the past four years, we have focused our efforts on creating the most supportive structure possible for our entrepreneurial faculty, students and staff. We have knocked down the barriers that often kept important Purduebased research from reaching the marketplace in a timely way, and built what we believe to be the most friendly, conducive environment to ensure our research and the innovations that result reach their fullest potential.”
Former Indiana commerce secretary Dan Hasler followed his former boss by becoming CEO of the Purdue Research Foundation. Hasler challenged administrators and faculty to formulate a new system for fostering and nurturing startups. Two critical organizational pieces were proposed: The Purdue Foundry and Purdue Ventures. Established in 2013, The Foundry added a commercial accelerator to the mix of entrepreneurial support. Enhancing access to earlystage risk capital was addressed by the creation of Purdue Ventures, which set up three venture capital funds with assets ranging from $2 million to $12 million.
Prior to Daniels’ arrival, Purdue had begun a review of its tenure program to update and clarify guidelines. There was an increasing awareness that impact measures beyond publications and citations needed to be more codified. The review concluded that departments, schools and labs needed to have additional discretion to include commercialization metrics among the set of impact criteria for tenure decisions.
Another important conclusion from this tenure review was that a growing number of faculty were undergoing interdisciplinary work and had joint appointments. Many believe that the most important problems can only be solved or business opportunities exploited through multiple perspectives addressing them jointly. This encouraged collaboration, which improved the odds of success in the marketplace.
I believe that public universities in the heartland should learn from Purdue’s example and provide greater incentives and support for faculty to participate in entrepreneurial activities. If heartland universities made patenting, licensing or startup activity key factors in faculty tenure decisions or placed more weight on them, it would send a strong signal to young researchers that they support entrepreneurial activities. Eventually, it would tip the academic culture to be less focused on publishing in peer-reviewed journals for professional advancement.
Pure research will always be the foundation of scientific advancement, but to ignore the economic imperative of more entrepreneurial research is to ignore the reality that the declining pace of startup creation puts American economic growth at risk.
Higher rates of academic entrepreneurship are essential to reviving declining startup rates and productivity throughout the U.S. economy — and the American heartland has the most to gain.
Ross DeVol is a Walton Fellow at the Walton Family Foundation and is based in Bentonville, Ark.