Universities, Innovation, and the Competitiveness of Local and - - PowerPoint PPT Presentation

CBR Summit: Innovation and Governance 29-30 March 2006

Universities, Innovation, and the Competitiveness of Local and National Economies

Richard K. Lester

Director, Industrial Performance Center Professor of Nuclear Science and Engineering Massachusetts Institute of Technology

CBR Summit: Innovation and Governance 29-30 March 2006

“We believe the United States’ economic and political standing are fundamentally bound up in

• ur capacity as a society to innovate. We believe

companies that do not embrace innovation as a core business value will fall to global competition – and that innovation in universities and government is crucial to unleash America’s national innovative capacity.”

• - “National Innovation Initiative”

Council on Competitiveness July 2004

2006 Richard K. Lester

‘Standard model’ of university engagement in the local economy

 University-initiated technological

entrepreneurship.



Laboratory research



Discovery/invention



Disclosure



Patenting



Licensing



Spinoffs

 But the model is incomplete.  University role isn’t just about ‘tech

transfer’.

2006 Richard K. Lester

Myth #1: Economic significance

• f university spin-offs

 New business formation around university

technology, though increasing, is still a small contributor to the total number of business starts (2-3% or less in the U.S.)

*Startups licensing university IP; total number of university-related startups: 8,000-10,000/yr

~ 150,000/yr ~ 3700/yr Patents 550,000/yr 400-500/yr* Startups U.S. total U.S. universities

2006 Richard K. Lester

Top U.S. patent award recipients -- 2004

. . 132 MIT 135 Caltech . . . .

1305 Sony 1310 Toshiba 1514 Hitachi 1601 Intel 1604 Samsung Electronics 1760 Micron Technology 1775 Hewlett Packard 1805 Canon 1934 Matsushita Electric 3248 IBM

2006 Richard K. Lester

Myth #2: Payoff from university technology transfer



Total licensing revenue to universities is -- and will remain -- a small fraction

• f research revenues (4-6% in U.S.)



Don’t expect licensing to transform the finances of the university!

2006 Richard K. Lester

Myth #3: Role of patenting & licensing in university tech transfer



Licensing university patents is only one of several mechanisms that firms use to access university-developed science and technology



Indirect mechanisms may be more important (e.g., industry hiring of university graduates)

2006 Richard K. Lester

Adding to the stock of codified knowledge Providing public space Problem- solving for industry Educating people

Undergraduates Graduates Mid-career Executive Contract research Cooperative research with industry Technology licensing Faculty consulting Providing access to specialized instrumentation and equipment Incubation services Publications Patents Prototypes

• Forming/accessing networks

and stimulating discussion of industry development pathways.

• Influencing the direction of

search processes – Meetings and conferences – Hosting standard-setting forums – Entrepreneurship centers & mentoring programs – Alumni networks – Personnel exchanges (internships, faculty exchanges, etc.) – Industrial liason programs – Visiting committees – Curriculum development committees – Creating the built environment to support this

Multiple university roles in the local economy

CBR Summit: Innovation and Governance 29-30 March 2006

CBR/IPC Innovation Benchmarking Survey

• Barriers to innovation
• Role of public policies
• Sources of knowledge, technology
• Types of collaboration
• Human resources
• Innovation effectiveness and efficiency

CBR Summit: Innovation and Governance 29-30 March 2006

Innovation Benchmarking Survey: Sample Characteristics

100 1149 100 1149 100 1540 100 2129 Total 11.5 132 11.5 132 13.9 214 8.9 189 1000+ 20.1 231 21.6 248 24.4 375 24.9 531 100-999 68.4 786 66.9 769 61.8 951 66.2 1409 10-99 % No. % No. % No. % No. Size (Employees)

US UK US UK Matched Samples Full Samples

CBR Summit: Innovation and Governance 29-30 March 2006

University contributions to business innovation

• Industry interactions

with universities are widespread and multi- faceted

• Informal contacts,

recruiting, publications, and conferences are the most frequently cited contributors in both UK and US

• Licensing of university

patents is among the least frequently cited interactions

2006 Richard K. Lester

At MIT, even patent holders downplay the role of patenting and licensing in university tech transfer.

Source: Agrawal and Henderson, “Putting patents in context”, Management Science, Jan. 2002. Based

• n interviews with 68 MIT faculty in Mech E. and EECS with at least one patent and license.

CBR Summit: Innovation and Governance 29-30 March 2006

Universities compared with other sources

• f knowledge used in business innovation
• Internal knowledge, customers,

suppliers, and competitors are the most frequently cited sources of knowledge relevant to innovation.

• Universities are less frequently

cited.

• UK companies cite use of all

external knowledge sources more frequently than their US counterparts.

CBR Summit: Innovation and Governance 29-30 March 2006

Uses of partnerships and collaborative arrangements by innovating firms

• Other firms, customers, and

suppliers are the most frequent partners/collaborators in both countries.

• UK firms are somewhat more

likely to partner with universities than their US counterparts.

• In both countries, firms are

more likely than twice as likely to collaborate with other firms as with universities.

CBR Summit: Innovation and Governance 29-30 March 2006

Selected summary

• Interactions between firms and universities are wide-

ranging and multi-faceted.

• University-industry interactions are more pervasive in the

UK than in the US, but UK firms attach less importance to these interactions than their US counterparts.

• Universities are seen by industry in both countries as a

relatively small contributor to overall innovation-related knowledge flows.

• ‘Traditional’ university contributions -- education and

training, conferences, publications, informal contacts -- are seen by industry in both countries as significantly more important than patenting and licensing.

2006 Richard K. Lester

The LIS Project: An international, interdisciplinary collaboration

Sponsors Alfred P. Sloan Foundation National Science Foundation TEKES Norwegian Research Council Cambridge-MIT Institute (UK) UTRI (Japan) Research Units Industrial Performance Center, MIT SENTE, University of Tampere Helsinki University of Technology Center for Business Research, University of Cambridge Rogaland Research Institute University of Tokyo Disciplines Management science Entrepreneurship studies Economics of innovation Engineering systems Urban and regional studies Political science

2006 Richard K. Lester

‘Outside-in’ perspective on university role

How can universities strengthen the abilities of local firms to take up and apply new technological and market knowledge productively?

2006 Richard K. Lester

Country Location Industry/technology USA Rochester, NY Opto-electronics USA Akron, OH, Advanced polymers USA Allentown, PA Opto-electronics/steel USA Boston, MA Bioinformatics USA New Haven, CT Biotechnology USA Charlotte, NC Motor sports USA I-85 Corridor, NC/SC Autos USA Alfred-Corning Ceramics USA Youngstown, OH Steel/autos Finland Tampere Industrial machinery Finland Turku Biotechnology Finland Seinajoki Industrial automation Finland Pori Industrial automation Finland Helsinki Wireless Finland Oulu Medical UK Central Scotland Opto-electronics UK Aberdeen Oil and gas UK Cambridge Bioinformatics Taiwan Taipei-Hsinchu Electronics Taiwan Taipei-Hsinchu Software Japan Hamamatsu Opto-electronics Japan Kyoto Electronics Norway Stavanger Oil and gas

LIS Case Portfolio

2006 Richard K. Lester

LIS Interviews

714 TOTAL 31 Norway 84 Japan 103 United Kingdom 238 Finland 258 United States Number of interviews

An additional 117 interviews were carried out in Taiwan.

2006 Richard K. Lester

Finding I: Multiple university roles in the local economy



Create



Attract



Unlock



Adapt



Combine

2006 Richard K. Lester

Finding II: Firms seek different inputs from different universities



Help with specific problems (‘analytical’)



Staying current; participating in

• ngoing conversations about the

direction of technologies, markets, curricula (‘interpretive’)

2006 Richard K. Lester

Four pathways of regional innovation-led growth

I.

Indigenous creation of new industry

Silicon Valley: Personal computers Boston: Systems biology

II.

Transplantation of new industry into region

I-85 corridor (NC/SC): Automotive industry Taipei-Hsinchu corridor (Taiwan): Electronics industry

III.

Diversification of existing industry into new

Akron, OH: Tires  Advanced polymers Rochester, NY: Cameras, copiers  Opto-electronics

Type I: Indigenous creation of new industry Type II: Transplantation

• f new industry

Type III: Diversification of

• ld industry into

related new Type IV: Upgrading of mature industry

• Success conditions (and failure modes) for

each of these pathways are different.

• Patterns of innovation in each case are

different

• Roles of educational institutions, financial

institutions, government, and others for each pathway are different

2006 Richard K. Lester

CREATING NEW INDUSTRIES UPGRADING EXISTING INDUSTRIES

Customer-driven; TQM; continuous improvement; ‘best practice’ Science-driven; entrepreneurial Internal financing, supplier financing, govt. financing for demonstrations Angel/venture capital (private and public); active asset management Lead firms Lead customers/users Research universities Government labs BS/MS-level engineers; faculty-student knowledge

• f industry practices and

business problems. Internships, rotations. Ph.D.-level scientists and engineers; entrepreneurial business education Participate in regulatory processes; global scanning for best practice; ‘foresight’ exercises Long-term relationships between universities and established firms Creating an identity (‘evangelism’); standard-setting Proactive tech transfer from universities & gov. labs; startup-oriented

TYPE IV

Technology transfer Leadership in the public space Education and training Local anchors Innovation culture Financing

TYPE I TYPE I

2006 Richard K. Lester

Finding III: University role in local innovation system depends on industry development pathway

Creating New Industries (I) Industry Transplantation (II) Diversification of

• ld industry into

related new (III) Upgrading of mature industry (IV)

• Forefront science and

engineering research

• Aggressive technology

licensing policies

• Promote/assist

entrepreneurial businesses (incubation services, etc.)

• Cultivate ties between

academic researchers and local entrepreneurs

• Creating an industry identity
• Participate in standard-

setting

• Evangelists
• Convene conferences,

workshops, entrepreneurs’ forums, etc.

• Bridging between disconnected actors
• Filling ‘structural holes’
• Creating an industry identity
• Problem-solving for industry

through contract research, faculty consulting, etc.

• Education/manpower

development

• Global best practice

scanning

• Convening foresight

exercises

• Convening user-supplier

forums

• Education/manpower

development

• Responsive curricula
• Technical assistance for sub-

contractors, suppliers 2006 Richard K. Lester

2006 Richard K. Lester

Summary



Universities should embrace their role as actors in the local economy. This need not be inconsistent with the pursuit of excellence in the still primary missions of education and research.



The conventional view of this role is too narrow. Universities have many different ways to contribute to local innovation processes.



A ‘one-size-fits-all’ approach to economic development is common but not wise. Different industries, and different development pathways, demand different kinds of participation in local innovation processes.



Universities need to approach economic development

• strategically. This means aligning university efforts with

what is actually happening in the local economy.