Transferring Innovation from Science to Business

By: Georges Haour

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, 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!