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Press Clipping(s): Innovation and the University-Industry Interface

A very interesting discussion on University and Industry collaboration on Innovation was initiated by Kenan Sahin, the president and CEO of TIAX (former A.D. Little Consulting’s technology practice). Check it out on Xconomy.com.

Innovation and the University-Industry Interface

Kenan Sahin wrote:

Editor’s note: This article was published last July 2, during our first week in existence. Given the attention to last week’s post by Chris Gabrieli questioning Harvard’s legacy of tech transfer, we wanted to share Sahin’s thoughtful observations with a wider audience.

The buzzword of the 1980s and ’90s was “entrepreneurship.” This decade, the obsession is with “innovation” as the presumed path to riches for people and nations. Since the key generators of innovation are research universities and the key implementers of innovation are companies, there is an ever-increasing focus on making the university and industry interface more effective. But will the twain meet? It could be very difficult.

The question is critical, and there is no better place to ask than here in Kendall Square, at the confluence of great universities, multinational companies in both the life sciences and information technology, and scores of start-ups.

Though hugely complementary, academic and industrial entities hold different values and are motivated by different incentives. One key to surmounting the many obstacles to successful collaboration is to better understand the two worlds, identifying those differences that are truly reconcilable, temporarily reconcilable, and totally irreconcilable. There’s no point in dealing with irreconcilable areas.

Universities are akin to malls: they have a common roof and share services. The mall manager, like the university president, cannot dictate to the stores or close them at will. But a company is more like a department store. The president can reorganize the store whenever he or she wants. So, even as they share the same title, the two presidents hold vastly different powers. Think of the former president of Harvard, Larry Summers, who was forced out last year under pressure from his “store managers,” and the current president of the UMass system, Jack Wilson, whose “store managers” in June passed a no-confidence measure against him.

University faculty are excellent at starting novel things and very poor at completing them in industrial terms. The rewards for starting a novelty are reporting it in publications. But for industry, starting is secondary to finishing in terms of bringing successful products and services to the market. Realizable market value far outweighs novelty.

Universities have a peculiar secondary workforce: students. A lot of work in academia is accomplished by students who actually pay to work. Not only that, but after they are “fired” (i.e., graduate) they continue to pay. What company has employees who pay to work and continue to pay? This “paying,” “transient” workforce gives academia unique characteristics and strengths not found in industry. Further, this workforce never ages. Students in any era tend to span the same age bracket.

Partly because of the transitory nature of the workforce and partly because the faculty focuses on novel “starts,” true production prototypes from which commercial products will be created do not get built. Most universities do not have, and cannot have, pilot plants. As a result, most university-generated innovations do not make it past the early stages.

Academic institutions have huge reputations and visibility, but a very small or dedicated core staff. For instance, MIT is huge in reach, breadth, impact, and reputation. Yet its core faculty has hovered around 900 since 1950. Contrast this with IBM at some 350,000 employees.

Then there are the differences in perception. A lot of academics view themselves as selfless workers at the service of humankind, while viewing business/industry as the contaminated world. Industry holds similar negative views of academia, believing it to be populated by people who are disconnected from reality and hold irrelevant—or even dangerous—ideas. While the distrust between academe and industry is less pronounced today than in the past, it certainly still exists.

Faculty members think they work very hard. Business executives think academics hardly work. Academics tend to think business people are vastly overpaid.

Businesses think academic institutions have very poor business models: they shun growth and charge prices (tuition) well below cost. Yet, on the average, companies survive barely a few decades. Universities mark time in centuries. So one wonders who has the better “business model.”

The challenge is to connect a long-lived entity that is loosely organized and that distrusts or at least is suspicious of the outside world with one that is results oriented and ruled by an iron-fisted and truly empowered “unitary executive” president, but has a much shorter business life.

It’s critical to make this connection stronger and more enduring if we want to receive the full benefits of the university innovation machine. The first step is to understand and respect the differences. What a loss it would be if universities become like businesses (likely) and businesses like universities (unlikely). The second step is to live with the irreconcilable differences (the university president cannot order change; universities have a “transient” workforce, etc.) and build the interfaces accordingly.

I don’t have definitive answers, and I’d love to hear some great ideas from readers. In a future column I will offer what I have come up with and to an extent experimented with as someone who is squarely between the two worlds, and part of both.

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