Next-Generation Approaches to Entrepreneurial Growth at Universities
Lesa Mitchell
Vice President, Advancing Innovation, Ewing Marion Kauffman Foundation
It has long been known that universities play a role in economic development,
dating back to the 1800s when Land Grant universities were created to provide
skilled people and new research knowledge for a growing economy. The way we
perceive and manage that role has changed, however. Universities now are
expected to generate growth, rather than merely sustain it, especially through
entrepreneurial companies bringing research to market.
Public policymakers and university officials worldwide are striving to
accelerate this process of innovation and commercialization. And, in many cases,
the approach they use centers on a twin set of institutions: having a strong
technology licensing office at the university to patent and license research
technology, while building incubator facilities or technology parks nearby to
help "breed" startup companies.
One can see why this is deemed a winning formula. The Bayh-Dole Act of 1980,
which enabled technology licensing on a wider scale than before, is oft given
much of the credit for recent university-driven innovation in the United States,
while Stanford University's renowned technology park was an early hub of the
growth in Silicon Valley. Therefore, one may conclude, the route to successful
new companies in a given region must be to license and incubate startups.
At
the Kauffman Foundation, we have a broader view. After years of studying how
innovation works (or fails to work) in and around universities, we are finding
emerging new solutions.
Many Pathways to Innovation
Our studies began with looking at how to improve licensing outcomes. At many
universities, a given office becomes the de facto control center
for the innovation strategy. Faculty, who make inventions or discoveries, work
through the licensing office, which is charged with a multitude of tasks—from
determining commercial viability to patenting, licensing, and earning revenue.
Many, but not all, of these offices are under-resourced for such a large agenda,
and are in a constant push-pull based upon competing university priorities. In
working with universities to address these topics, we learned of an underlying
issue that may pose a greater concern: a tendency to focus on patenting and
licensing to the neglect of other modes of innovation due to the competing
concerns.
High-profile success stories have led us all to think of patentable
technologies as the universities' primary form of innovative "output" to the
economy, and of licensing as the main means of commercial diffusion. In fact, as
innovation scholars have pointed out, universities have a range of valuable
outputs—from "information," or knowledge, to human capital—and there are many
possible pathways for diffusing them into the market: through consulting
engagements, through non-patent-based startups, or simply through networking
entrepreneurial students and faculty.
We see evidence that these outputs and pathways, if well-cultivated, can
provide a significant new source of entrepreneurial outcomes in addition to
patenting and licensing. For instance, many MIT students and alumni are prolific
entrepreneurs and, in a program that serves them, called MIT Venture Mentoring,
the majority of the mentored companies do not hold intellectual property from
MIT. Most either are based on new business models to meet a need in a market, or
they are software companies, which tend to rely less on patents. A replica of
this model has been implemented in St. Louis at Washington University with some
early visible success.
Also, business plan competitions now are common on U.S. campuses, and their
potential has yet to be fully explored. A recent Angel Capital Association panel
noted that these competitions, in which few of the plans depend on licensed
technology, might be more likely sources of new-company formation than are
licensing university patents. Conclusion: Patenting and licensing are certainly
important, but a brighter future awaits universities and regions that, supported
by resources across the campus and from a local entrepreneurial community, can
tap the whole spectrum of innovation.
Better Early-Stage Help
As for incubators: There are times it makes sense to bring fledgling firms
together to share lab facilities and services, and there can be synergies from
the interaction. But, in too many cases, the incubator also is a real estate
project that has to make real estate sense. If wet labs are needed, they can
drive the costs quite high, and if filling the space becomes a concern that
trumps serving the entrepreneurs, much of the value is lost. There are examples
of successful incubators in places like St. Louis and Madison, Wisconsin;
however, there are many more examples of failures. We should continue to learn
from the successful incubators, while also considering new models.
One such new model, the proof of concept center, is seeing success, both as
an incubator of early-stage ideas and as a way to provide students and faculty
an opportunity to experience commercialization in a real sense (see the sidebar
below). Proof of concept centers do not require shared physical space, but
instead provide funds and expert assistance for early-stage innovators to take
their next steps.
Faculty and Ecosystems
Finally, two principles are paramount for stimulating innovation and
entrepreneurship at universities. The first is that the faculty members
are the key agents. In addition to leading research projects, they teach
and influence students, chair departments and programs, and tend to be active in
both university and civic affairs. They cannot be viewed as mere "performers" of
research that might be worth something. They are the people who can shape the
entrepreneurial culture of a university, of an entire region—or not.
In high-growth regions with highly entrepreneurial universities, the
following tend to be true of the faculty. They have frequent and extensive
contacts with private industry, which attunes them to thinking in terms of
practical value creation while enabling them to share their own expertise. And
they operate under university policies that encourage such activities, rather
than laboring against policies that draw barriers separating the academic from
the commercial.
The other principle for stimulating entrepreneurship at universities is that
there is no single model for success. This brief essay has stated
some basic elements of success, but they may need to be applied in different
ways or mixtures. What works best may depend on a university's research
strengths, the nature of the related industries, the nature of the region (big
city, rural, etc.), and other variables. The only common thread is the need for
a well-developed ecosystem of innovation. Magic bullets may score occasional
hits, but ecosystems flourish with many pathways to the commercial market.
