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End Note

Slow and Steady Won't Win This Race

Making the case for increased startup output
University Business, Feb 2011

As the nation continues its climb out of the Great Recession, it's natural for economic and political commentators to focus on what needs to change to spur a new era of prosperity. A less-discussed, equally important facet of achieving this goal is to strengthen what works. For all its flaws, the U.S. economy remains a tremendous engine of value creation. Focusing on what we're doing wrong risks missing areas that are pretty good but could be better.

Modern research universities' intellectual capital, advanced facilities, and student talent help nurture regional economic ecosystems where innovation-based firms can thrive. But this has historically been a process producing results measured in decades. We need to align resources more purposefully to create jobs now. Job creation is increasingly important in light of a strengthening trend from the last three recessions: more than half of job losses in the current downturn are expected to be permanent, rather than temporary. Our understanding of who creates jobs is also changing. A pair of studies released this summer by the Kauffman Foundation found startups create most of the country's net new jobs.

University communities have not done a great job in converting faculty
innovation into startups.

The good news: Universities are a great source of the innovation needed to fuel new startups. More than 20,000 invention disclosures were filed by U.S. universities in fiscal year 2008, the most recent year for which this collective data is available. The less good news: university communities generally have not done a great job converting faculty innovation into startups. Small startups can take as much or more time to spin out than the negotiation of a potentially huge pharmaceutical licensing deal. For technology transfer offices with limited resources, that means hard choices are in order.

We need low-cost strategies that can be implemented by a large number of universities to increase startup output. In parts of the country hardest hit by the recession, like Arizona, this has become a survival imperative. At Arizona State University, it has translated to tighter alignment of research, entrepreneurship, and technology transfer programs. While each university needs to find its own path, strategies that have worked well at ASU have built upon these concepts:

  • Focus on volume: Blockbuster licensing revenues aren't the norm, but many campus leaders continue to chase only big deals. We need, instead, to facilitate the flow of a much larger number of discoveries into the marketplace by improving work processes and offering investor-friendly licensing terms.
  • Share information: Making it easily and broadly available to faculty investigators - especially by letting them see each other's productivity - can increase accountability and performance. Tools like online dashboards provide performance feedback to researchers and are worth the effort to implement.
  • Stop plowing the same ground: Avoid repetitive, time-consuming activities with templates and standardized processes. ASU created master agreements for certain industries so terms need not be revisited every time.
  • But, be flexible: License agreements cannot be standardized across industries. In the semiconductor field, manufacturers aggregate intellectual property and know-how from hundreds of sources for just one product. Yet, a new drug may rely on a handful of patents.
  • Consolidate/align efforts: Often research, entrepreneurial, and educational functions aren't well integrated. Entrepreneurial programs may be isolated in business programs, and research is expected to serendipitously create market-ready innovation. Greater integration can result in more rapid results.
  • Nurture/identify market-ready research: Aligning existing strengths with urgent societal priorities is a social imperative. It also improves the ability to secure new research funding. ASU uses tools to spot new research cluster opportunities in national priority areas such as alternative energy and then assemble the strongest possible interdisciplinary project teams, supported by project managers.
  • Engage with decision-makers and industry leaders: Rather than focusing on traditional lobbying, more attention should go toward understanding national priorities and the existing barriers to commercializing potential solutions and then tuning research programs to address these.

Universities have an enormous potential to be economic recovery heroes - if we can accelerate the benefits we offer by generating new technologies and entrepreneurial efforts that will in turn create new jobs. The strategies above will help that effort.

R.F. "Rick" Shangraw, Jr. is senior vice president of Knowledge Enterprise Development at Arizona State University. Augustine V. Cheng is managing director and chief legal officer at Arizona Technology Enterprises.