Technology Transfer and the Third Way

Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.

William Pollard

Today, I noted with interest several references to a recent work by Dr. Roya Ghafele (University of Oxford), entitled “Financing University Research: Waking a Sleeping Giant,” related to an analysis on the means to finance university research.

Granted, this sort of work does not seem to appeal to a broad audience, rather to those specialists in the fields of intellectual property and research commercialization. I dutifully followed each link, in order to read the original “paper” and found, to my surprise, that it was actually a rather sketchy PowerPoint presentation on the subject, 14 slides in all.  Still, given the immediate relevancy to my work, I read through it, hoping to find some useful insights to share.   I found that it raised some issues that are of interest to everyone working within the academic environment. 

First and foremost, the title itself refers to “financing” university research.  Every faculty member can empathize with the problem of securing funding.  The second slide, likely in the spirit of an executive summary, lists recommendations for institutional programs and policies.  Since this is in presentation format, I presume that these are a bit clearer with the attendant commentary.  On the third slide, the subject is introduced as follows:

The ‘Third Way’ of university research commercialization focuses on systemic change, rather than on single stakeholder intervention. It reflects a third generation of innovation policies that focuses on training, awareness raising and the leverage of cluster effects, rather than the development of physical infrastructure (i.e. science parks).

This is a unique approach that outperforms existing best practice in many ways; i.e. it focuses on the leverage of network effects among the various academic institutions, rather than repeating the traditional ‘one university – one commercialization’ approach.

In the rest of the slides, Dr. Ghafele presents a rough outline of current university practices in “research funding” (or research commercialization), adds an elaboration on the recommendations summarized in the second slide, and ends with a checklist for “impact assessment” to evaluate institutional progress toward implementing the recommendations.

I don’t want to reproduce the information in the presentation, but rather to highlight three points that it raises with respect to the “systemic changes” that she advocates as part of this “third way” of research commercialization.

Programmatic Recommendations

The work includes multiple programmatic recommendations for improving performance of the technology transfer function, grouped into five broad categories as follows 1) Incentive Structures, 2) Boundary Spanning, 3) IP Entrepreneurship Awareness, 4) Institutional Support, and 5) Adequate Funding.  Clearly, many of these presume that there is institutional and individual resistance to change, and that it will be necessary to overcome this in some way. It is truly difficult to argue with some of the recommendations (e.g., “promote incubators”) but it is equally difficult to imagine effective implementation of most. 

How effective is it, after all, to “Undertake Awareness Raising Seminars” when most of the audience does not yet recognize the relevance of the topic?  Naïve implementation of such recommendations would likely increase overhead costs associated with technology transfer (already recognized as an “unprofitable” activity at most institutions) and assessing the impact might be a formidable task. Can the potential benefits be demonstrated such that the intended audience will embrace training opportunities?  Or is it preferable for the administration to “mandate” the training for the university community?

Cost/Benefits analysis

Among several benefits predicted for these changes, are “number of spin offs created, revenues created through academic consulting, joint ventures, and licensing revenues.” In order to realized these benefits, the institution is asked first to assume some additional “costs” to carry out programmatic changes (including “Overhead costs, Administrative expenditures, Depreciation of capital assets, and Costs of complementary services related to policy”).  

A first observation is that while the list of benefits may not be intended as a comprehensive one, two of these—academic consulting and “joint venture” revenues—are not tracked by the conventional technology transfer process, or at least not well.  Likewise, the costs listed might be associated, at least in part, with the staffing and activity of the technology transfer office, but are presented as “in addition” to those costs.  There is an assumption that the current levels of spending on technology transfer are NOT directed toward the most effective practices. 

The short list of costs does not overtly include extra money for intellectual property protection—although it does seem to encompass increased levels of staffing for the institution.  So perhaps internal expertise on patent protection (patent agents?) might be part of these.  However, a good deal of the transactional friction in technology transfer is related to these direct costs for protection of intellectual property.  Notoriously, additional spending on patents does not directly correlate with increased technology transfer effectiveness; however, lack of an intellectual property asset to license effectively shuts down the technology transfer process.


 Finally, the third key point I would like to highlight is the emphasis on entrepreneurship as part of the “third way” answer set.  The limiting factors for establishing new ventures are related to the 1) resources (both human and capital) and 2) culture (or values).   Some of the recommendations are related to training to increase awareness (i.e., to change culture, influence values) and to increase skill sets (provide the human resource component, and develop entrepreneurial activity). In my experience, entrepreneurship is, indeed, a key part of any successful research commercialization effort.  Economic impact of new ventures is commonly recognized as a benefit to the wider community—local, state, or national—new job creation in particular. Yet this is still a very risky strategy for long-term success.

 Most universities are willing to fully embrace the tangible benefits, such as increased licensing revenue.  In the end, it seems that many of the “intangibles” are really at the heart of the issues raised.  There are “intangible” benefits that are not being adequately accounted for in the current practices (such as partnering opportunities that may result in commercialization). Likewise, there are “intangible” costs or obstacles to technology transfer (devoting time and effort to learning new skills necessary for entrepreneurship).   With most universities under pressure to justify their budgets and spending, administrators will be reluctant to divert money into channels without clear outcomes.

In conclusion, one key take away from the presentation is that we need to find ways to improve the cost/benefit analysis. In order to implement any of the recommendations, it is important to communicate the benefits ahead of time.  It is also critical to find cost-effective means of doing so, in order to justify the investment of even modest levels of funding for this purpose.  Then, if the recommendations are sound, it should be possible move forward, and reap the desired benefits.  In order to sustain progress, the efforts must be subject to continued review and improvement, both in terms of measured outcomes and allocation of resources.  There are very real benefits to be reaped from research commercialization by the university, but it will require commitment and discipline on the part of the individuals involved to realize the rewards.