Friday, May 20, 2011

Stable, Flat and Small!

By Keith McDowell

Academe versus industry! What is it that keeps universities and industry from working together in a more connected manner to accelerate innovation? Is it really a war between cultures as some would have it, or a simple misalignment of cultures? Do feckless academics believe the world owes them a free ride paid for by tax dollars to pursue whatever research or scholarly activity they desire independent of the needs of society? Or do heartless and myopic business persons see the bottom line and the near term as the only discriminators for doing business – so-called efficient capitalism? Have “bashing” and “trash talk” about the cultural misalignment become an American sport to the detriment of all of us?  Or is the perception of a disconnect mere urban myth?

No one doubts that there are very real differences in the mission spaces and cultures of academe and industry or that they lead to a gap in translating discoveries into inventions and ultimately “products” that are commercialized and deployed. The differences are not just definitional in the sense of basic research versus applied research versus development, but arise from the functional requirements of the innovation ecosystem for different mission spaces. But implementation of the functional requirements has led to a gap with a capital G. It is THE Gap to accelerating innovation in America! Do we as a society have any hope of bridging the Gap?

Before we address this question, let’s review some basic facts.

An essential element of the mission of universities is that students have access, exposure and experience in acquiring and learning about STEM knowledge and its generation through research, whether basic or applied, curiosity inspired or use driven. All agree that the American STEM workforce of the 21st century demands it. It’s the raison d’etre for universities. Furthermore, basic research is absolutely essential to maintaining a dominant innovation ecosystem. Quoting from Measuring the Moment:  Innovation, National Security, and Economic Competitiveness, a November 2006 report from The Task Force on the Future of American Innovation:

Basic research is the prerequisite of applied research and development. It is conducted in an effort to achieve fundamental knowledge that frequently yields specific applications, including significant technological or health advances, or even whole new industries. Its results can be unpredictable, but as former House Speaker Newt Gingrich has written, “many of the really big changes that will transform our lives will come from unpredictable [research] breakthroughs.”

It makes perfect sense that the confluence of educating the workforce of the 21st century and basic research is housed in our universities. It would be stupid to change that fundamental structure. It doesn’t make sense for universities to change their mission space and to function as companies. It doesn’t mean, however, that universities cannot adapt and restructure in some measure to better bridge the Gap.

The report Measuring the Moment also asks the question “Why doesn’t industry fund more basic research?” Their answer provides an industry perspective for the Gap:

… The reason is that it is considerably easier for nations to capture the benefit of their investments in basic research than it is for companies. Basic research is unpredictable, and turning such research into a marketable product can take a decade or longer. Financial markets and international competition make it hard for companies to invest in research that does not show quick results. …

An even more important question is to what extent does industry fund research at universities? The following table provides the essential data.

Table: Industry Sponsored University R&D Expenditures

Fiscal Year
Amount (in millions)a

SOURCE:  National Science Foundation/Division of Science Resources Statistics, Survey of Research and Development Expenditures at Universities and Colleges
a Not adjusted for inflation
b Percentage of total university R&D expenditures

What does the industrial funding data tell us? It shows over several decades that the percent of funding at universities from industry has remained mostly “stable, flat and small” at about 5%, give or take a percentage point or two. Stable, flat, and small! Is there no way to change this dynamic in support of bridging the Gap? I would argue that significantly changing the mission spaces of academe or industry is not the answer, nor advisable. We need both in the innovation ecosystem.

The good news is that there are change agents, factors and forces at work which hold promise in bridging the gap. But they must be understood and properly directed. Here is my favorite list.

Convergence: Since the 1990s a growing consensus has emerged that R&D founded on discipline specific studies of isolated, specially prepared systems has mostly been tapped out, except for the continuing work in particle physics. In some sense, the “easy” science has been done. At the frontier, multi-disciplinary and even trans-disciplinary research on systems of systems or network science is the order of the day. “Convergence” is the title given to this phenomenon. One result of the convergence phenomenon is the increase in the complexity index of research and innovations. Kurzweil argues that it will lead to a “singularity” sometime in the middle of the 21st century, such as the emergence of a self-aware computer. Whatever the case may be, the enhanced clustering and connectivity driven by convergence are positive forces that could be usefully directed to bridge the Gap.

Emergence of University Start-up Formation: There is some evidence that industry and universities are expanding their connectivity, although mostly driven by start-up companies, and not mature industry. Unfortunately, the evidence with respect to startups is mostly anecdotal. However, Fred Block and Matthew R. Keller in an excellent 2008 paper describe the transformation in the demographics of R&D 100 Awards starting from 1970 when large firms dominated. They find today that “large firms acting on their own account for a much smaller share of award-winning innovations while innovations stemming from collaborations with spin-offs from universities and federal laboratories make up a much larger share.”

Enhanced IT R&D Infrastructure: The need for connectivity and strong overlap is very apparent in the information technology sector. Here the combined factors of fast market turnover of products and the integrated nature of products drive the market. The slow patent process and the use of many patents per product nearly obviates the concept of patents. Indeed, the very notion of a linear discovery-to-product pipeline tends to smear out into an integrated cluster of connected innovations. For this sector universities and the IT industry need to function as a single entity to achieve success in the commercial marketplace. Recognition of that fact is a step forward and is being actively pursued by universities.
Public-Private Partnerships: The President’s Council of Advisors on Science and Technology (PCAST) promotes public-private partnerships as a key mechanism to bridge the Gap. With a focus on the university-industry interface, PCAST notes in the report University Private Sector Research Partnerships in the Innovation Ecosystem that the “accelerating speed of technological development requires new methods of knowledge exchange between universities and industry so as to capture the societal and economic benefits of these innovations.”  PCAST further notes that “there is no ‘one-size-fits-all’ approach for creating a successful research partnership.”  Unfortunately, PCAST does not provide an actionable plan, but bringing awareness of their solution to the forefront is a major step forward.

Emergence of University Innovation Centers: With the slow demise of industry R&D labs that have a long-term focus and the continuing presence of the Gap, universities are beginning to enter this space through “innovation” or “proof-of-concept” centers. These are centers where university IP is enhanced through R&D sponsored by both external and internal funds. Such centers are discussed in Batteries Not Included.

Growth of Research Parks: The number of research parks in America is increasing along with their quality. Witness the growth of the Texas Research Park in San Antonio and the creation of the Science for Life park in Houston. While the definition of what constitutes a university research park is somewhat murky, their existence is a clear indicator of a regional innovation ecosystem and engagement of a university in a commercialization system.   They embody the concepts of co-laboratories and co-location among the entities that make up the innovation enterprise.

National Laboratories as bridging partners: National labs have built up a culture spanning basic research to deployment. They know how to bridge the Gap and we must use that capability and include them in public-private partnerships. The “lablets” model of the U.S. Department of Energy is a step in this direction.

Academe versus industry! It is not a problem to be solved by rearranging the deck chairs, a war between intransigent cultures, or a game played for political advantage. It is a strength of our innovation ecosystem, but one in need of improvements through bridging of the Gap. Surprising perhaps to some, such changes are already underway driven in part by the agents, factors, and forces that I’ve listed. But random progress is not enough. We need to marshal our best minds and leaders from academe, business, and government to change the dynamic of stable, flat, and small!

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