Business Schools

Small Schools' Big Tech Dreams


Even colleges and universities with less R&D funding can find profitable niches in tech transfer, a study finds

Call them the littler schools that could.

That's the theme of a just-released study on technology transfer that looked at the surprising tech transfer results of a number of smaller colleges and universities whose research and development budgets fell far short of the funds expended by tech development superstars such as MIT and Stanford.

The lesson learned, say the study's authors, is that a good combination of partnerships, incentives, and federal and local funding can help move research into the commercial arena, even when a school's R&D budget is modest.

The commercialization of academic research is big business. According to the study, sponsored by the National Science Foundation, in the last 10 years academic institutions have nearly doubled the number of licenses executed and more than doubled the number of startups launched. Universities that responded to the Association of University Technology Managers Licensing Survey reported that gross license income from licenses to corporations and startups in 2005 totaled about $1.6 billion.

The Tech Transfer Payoff

The study, prepared by Innovation Associates, a consulting firm in Reston, Va., highlighted a number of smaller programs that are developing new technologies through academic research, licensing the inventions, and helping launch businesses that use them. With fewer resources than the big players, however, these schools have to think creatively to contribute to the greater economic development of their state or region.

Technology transfer, the process of turning scholarly work into a marketable and practical product or service, spans a broad range of possibilities. In other words, it's not necessarily about coming up with the next iPod. "Innovation is not always high-tech," says Diane Palmintera, president of Innovation Associates and lead author of the study. "Innovation and new technology businesses can be based on advancement in different fields."

Leveraging the strengths of a university, Palmintera adds, can help it compete. For example, she says the University of Pittsburgh is finding success by getting funding from the National Institutes of Health and spinning off biotechnology businesses and Iowa State University carved out a niche in agriculture.

Engines of Local Development

One of the concepts that infuses the entrepreneurial culture of such programs in rural areas is "think globally, act locally." Because the school provides licenses or seed funding and office space, the companies often feel indebted to it and to the state or region. As a result, all parties involved share the goal of contributing to the economic development of the university's home state, region, or even country, depending on the potential magnitude of the business at hand.

John Finley II, chairman and chief executive of MemPro Ceramics, says he considers the University of Akron the primary economic developer in northeastern Ohio. His company, which provides filtration products for various industries, agreed to a licensing arrangement with the University of Akron in 2005 after a professor there encouraged him to take a look at the school's nanofiber research. Finley says the arrangement with the university has taken his firm from an outlook of $50 million to $100 million in opportunities to the tens of billions of dollars. He is so committed to the university and its relationship with his business that he's moving the company headquarters to Akron. He's already based there himself.

Use It or Lose It

Universities have always played a role in economic development. After all, it's their responsibility to educate the workforce and keep U.S. employees ahead of the pack, says Thomas Sharpe, associate vice-president for economic development at another Iowa school, the University of Iowa. Today the commitment to technology transfer allows universities yet another way to disseminate knowledge, through their inventions and discoveries, he says.

Academic institutions, says Sharpe, have a legal responsibility, too. He cites the Bayh-Dole Act, which covers any research funded by the federal government. The 1980 law boosted technology transfer by assigning patent rights to universities. At the same time, schools are required to identify, patent, and license products that result from their federally funded research or to return the rights to the federal government to do so.

To fulfill this obligation, Sharpe suggests universities take full advantage of the resources they have. He advises schools in rural areas to network and develop groups within the university to work together. At the University of Iowa, for instance, six centers for enterprise work with one another on the greater goal of economic development and an active technology transfer program. In addition, Sharpe participates in the Midwest Research Universities Network, where he shares best practices and informs venture capitalists that there are serious opportunities in the middle of the country, too.

Paving the Way to Commercialization

Professors and businesspeople alike agree that the only way a university can successfully compete in the technology transfer arena is by creating a culture of entrepreneurship. At Rensselaer Polytechnic Institute in New York, administrators and faculty have long supported business development on campus. In 1980, RPI opened an incubator, one of the first at a university. About a year later, the school opened its technology park. In 2000 the school developed an official strategic plan outlining RPI's commitment to scientific research and the creation of new ventures.

Administrators also put financial support and resources behind its promises. Today, RPI's Office of Technology Commercialization has grown from one or two employees in 2000 to about eight employees. The incubator has been responsible for creating 160 to 170 companies, says Charles Rancourt, director of RPI's Office of Technology Commercialization. And the school has hired 183 new faculty members since 1999, which increased the number of researchers on board. "We're smaller than MIT or Stanford," says Rancourt. "But the quality is very rich."

Changing the culture of any organization is a slow process. Steven Nissen, professor of Animal Science at Iowa State University and CEO of Metabolic Technologies, which launched at the university, says most universities still uphold the dogma, "If you're not publishing, you're not contributing." Although Iowa State believes that academic institutions need both to publish research and to commercialize it, others are not quite there yet, he says.

Most of the experts agree, however, that the future will bring continued synergy to universities and businesses. In fact, a recent report from the accreditation organization AACSB International challenges academics (BusinessWeek.com, 8/14/07) to make their research more practical and relevant to the corporate world.

John Cavalier, retired chairman, president, and CEO of MapInfo, which was recently sold to Pitney Bowes (PBI) and began as a project conducted by students and a professor at RPI, predicts that universities will see that technology has the potential to be a great source of revenue. The only caveat, he says, is that the schools have to create the right atmosphere to breed these inventions and businesses. To do that, the academics will have to put the money where their research is.

Check out the BusinessWeek.com slide show for a list of 10 lesser-known schools making their mark in tech development.


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