Research Development as an Innovation Tool

By Keith McDowell

Do you know the identity of the next emergent industry sector or technology? Or is that information of little value as you plan investment strategies? How about emergent science or research frontiers? There are plenty of “gee whiz” science articles meant to stoke our interest – fear of black holes at CERN notwithstanding. If only we had time to read them all!

Does it matter where and how government, industry, or foundation dollars will be spent on research? Should it be driven by the whim of researchers as they prepare unsolicited proposals, or should it be driven by STEM (science-technology-engineering-mathematics) gatekeepers who dictate new initiatives? And who keeps up with all of this? Yes, there are people who pay attention to such matters! And they are called “research development (RD) professionals” – not to be confused with R&D professionals or university development and advancement officers who seek gifts and donations.

Keeping up with our neighbors is not a new phenomena in America as we decide whether it’s time to move from a station wagon to a minivan and ultimately to an electric car. Or maybe it’s the move from vinyl records to cassette tapes to CDs to MP3 files and the currently ubiquitous iPod or iPhone. As a society, we are constantly bombarded by commercials, consumer’s reports, and word-of-mouth as to the latest fad. In many ways, it’s information and product overload. And it’s all done for us with no effort on our part. We only need to absorb what we want to hear, make a choice, and then spend our money

So what about advances in science and technology and our attempts to prepare for the next research funding initiative or to ride along on the crest of the latest innovation wave? What choices do we have and how should we invest our time, resources, and money? Of course, research administrators at universities, inventors, investors, and innovation gurus have always played the game of searching out the next “new new” thing. But it’s getting harder to do. “What is easy has already been done!” is my favorite mantra.

Today, it’s all about inter-, multi-, and now trans-disciplinary activity with STEM being only a part of the equation. Complexity and convergence networked as systems of systems rule the day coupled to the integration of broader goals including ones focused on education, diversity, commercialization of university research, and engagement of universities in communities of innovation, to name a few. It’s the era of big everything including team science and even the science of team science. It’s universities and some industry sectors greatly expanding their R&D capacity through the construction of new laboratories and the attempt to transform local universities into research powerhouses to fuel regional innovation ecosystems. In short, it’s an explosion on all fronts to achieve a competitive advantage, whether local, national, or global.

But there are limits to the explosion as the amount of federal R&D dollars grows at a slower pace and the number of competitors increases. The American economy remains stagnant following what might be described as a lost decade. The Tea Party and others of the same ilk want no government and no spending. Science is no longer respected by many as the ultimate arbiter of what is real as global warming scientists are accused of “manipulating data” and evolution is debunked as “just a theory.” How does one compete in such an environment as we push harder on the proverbial accelerator pedal only to find our racecar trapped by an ever-growing tangle of vines?

One potential solution – or at least a tool to be used in the space of research institutions – is the RD professional. Unheralded and unsung, the RD profession has slowly grown from being an unwanted but acquired skill by central research administrators to a true profession. Its practitioners have banded together to form the National Organization of Research Development Professionals (NORDP) and even have a Wikipedia page. According to last count, there are 243 such professionals in 120 institutions covering a wide range of entities and not limited to universities. In The University of Texas System, for example, two such individuals are easily identified: one at UT Dallas and one at UT San Antonio.

So what exactly is RD? I quote from the NORDP literature:

Research development is a set of strategic, proactive, catalytic, and capacity-building activities designed to facilitate individual faculty, teams of researchers, and central research administrations in attracting extramural research funding, creating relationships, and developing and implementing strategies that increase institutional competitiveness.

A brief list of the activities of RD professionals includes the following:

• Identification and targeting of funding opportunities,
• Proposal development including preparation of budgets and forms, review, and submission,
• Formation of institutional strategic initiatives,
• Team building within and across institutions and stakeholders through partnerships and alliances,
• Interaction with agencies and stakeholders,
• Coordination,
• Outreach and training, and
• Research on the growing field of RD as a discipline.

The NORDP website and the Wikipedia site have expanded discussions of the definition and activities of RD.

Network theory, as a tool in the social sciences, has played a major role and become an accelerant in the growth of RD as mappings of words, phrases, interactions, publications, and other conceivable packets are datamined to search for emergent groupings or to advance the concept of “group theory.” Websites such as Vivoweb and Elsevier’s Scival promote the growth and the use of such tools.

I applaud those industrious people who have created the RD profession. It is a needed addition to the innovation enterprise and one that all should become familiar with. But I believe there is a bigger story to be told and a bigger role for the RD concept. RD serves as the facilitator of the feedback loop between how and where we spend our R&D dollars and the creation of emergent STEM areas. A similar concept informs entrepreneurs, venture capital, and angels as they invest money and time on inventions, innovators, and innovations that create emergent industries. In mathematical terminology, both activities are homologous. Computer jocks would call them different instantiations of the same object.

What’s missing? Missing is a national innovation policy that melds the two together to form a comprehensive and competitive American innovation ecosystem and enterprise. Grand challenges to solve the pressing problems of our global society could be one element to such a policy. And there are plenty of other worthy ideas. But ultimately what’s missing is the will to create, adequately fund, and carry out a national innovation policy – the Obama innovation plan and his activities notwithstanding. The word “no” must be replaced by “yes we can.”

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The mapping image was downloaded (Fig. 5) from the Plos One article Clickstream Data Yields High Resolution Maps of Science by Bollen, et al. The article is an excellent example of mapping and datamining as an RD activity.

To Be or Not To Be: University Incubators

By Keith McDowell

From a whimper to a shout out! Such is the history of university business incubators over the past decade. From the existence of a countable few before the year 2000, universities, colleges, and even community colleges have “manned up” on the issue of creating incubators at every crossroad and in every community. It’s all about community engagement and prosperity through innovation and economic development. And as might be expected, the “incubators” come in so many varieties that they are no longer countable. Is it an incubator or an accelerator, virtual space or leased real estate, profitable or subsidized? It’s certainly a career path for those people who enjoy definitions and taxonomy!

For the moment, let’s pretend that we know what we mean by the term “university incubator” while using the adjective “university” to include any and all forms of educational institutions and the noun “incubator” to include business accelerators, but not the classic small business development centers at universities funded by the U.S. Department of Commerce. Should universities create, own, and operate an incubator? That is one of the most important questions to be addressed and answered by American universities in the era of global competition.

Some would argue that the explosive growth of university incubators over the past decade proves that the question has already been answered in the affirmative. I have one foot in that camp, but claim the situation is more fluid and complicated.  The fact that most incubators are not profit centers at universities and often exist in name only doesn’t augur well for their future existence as cost containment continues to remain the byword at universities and will likely do so for the next decade. But before we probe further and deconstruct what we mean by a university incubator and whether they should or should not exist, let’s quickly review the situation in Texas and, specifically, The University of Texas System.

The University of Texas System is comprised of nine academic institutions and six health institutions spanning the spectrum of size and location. In many ways, it is a microcosm and representative cross section of American public universities and their treatment of incubators. Thirteen of the institutions host “incubators” in one form or another. The list is provided below with hyperlinks to the appropriate webpage for the incubator.

The University of Texas at Arlington

The University of Texas at Austin

The University of Texas at Brownsville

The University of Texas at Dallas

The University of Texas at El Paso

The University of Texas at Pan American

The University of Texas at Permian Basin

The University of Texas at San Antonio

The University of Texas Health Science Center Houston

The University of Texas Health Science Center San Antonio

The University of Texas Medical Branch at Galveston

The University of Texas Southwestern Medical Center, Dallas

M. D. Anderson Cancer Center, Houston

For those interested, the State of Texas provides a directory of its business incubators including non-university ones. Unfortunately, it does not include all of the university incubators in Texas due to their rapid emergence.

The commercialization of university research and specifically the notion that universities should participate in the formation of startup companies as well as their incubation represents a dramatic change for most in Academe over the past decade, especially vice presidents for research. I still remember my first days in 2001 at UT Arlington as a newly minted vice president for research. One of the units reporting to me was technology transfer. Like most faculty members and university administrators at that time, technology transfer was something one understood mostly in the abstract. The broader concept of commercialization was unheard of and not part of the vernacular. Instead, such notions and concepts were swept into the basket known as classic economic development and housed under university vice presidents for community relations and other such titles.

In even more of a surprise, President Robert E. Witt informed me that I was supposed to work with the City of Arlington and the Chamber of Commerce to help bring in funding for an incubator project and get it up and running. I knew next to nothing about business incubation, much less did I have a clue about working with community leaders. But such has become the fate of university vice presidents for research in recent times. Subsequently, the incubator associated with UT Arlington was formed and has continued for nearly a decade. Witt later became President of The University of Alabama and together we created the Bama Technology Incubator. As Bob Dylan famously informed us, “the times they are a changin’.” Commercialization of research through the formation of local communities of innovation and the requisite engagement of universities in the communities is the mantra of our times. And at the heart of the innovation community is an incubator or accelerator, often owned and operated by a university.

So, what are the characteristics of university incubators? What defines the functions, resources, and services they provide? Here is my list keeping in mind that no one incubator has them all and incubators are regional phenomena having a variety of forms and structures. The list is not in rank order since ranking of the characteristics is a pointless exercise, nor is the list all inclusive.

Rental Space: Typically at below-market lease rates, the space can be part of a dedicated facility such as the Austin Technology Incubator or “virtual space” on the campus temporarily assigned as workspace for the company and often part of the laboratory of the inventor of the licensed intellectual property (IP).

Administrative and Infrastructure Resources: The possibilities are limitless including pooled clerical and secretarial support, common business facilities such as conference rooms, human resources and personnel management, and information technology services.

Mentoring: Professional staff members and a variety of university centers provide help to startup companies in activities such as the paperwork of company formation, hiring of a management team, creation of a business plan, evaluation of product(s) and market analysis, and marketing.

Outreach: Incubators serve to bridge the gap to public and private investors as well as grants (SBIR, for example) by serving as matchmakers.

Access: Universities provide access to high technology laboratory space – such as wet labs or a BSL-3 lab – and sophisticated equipment and technologies, engineering support, and experts across the spectrum of disciplines.

Relational Networking: Startup companies require innovation through the exchange of ideas among their peers in an incubator.

Potential Employees: Students and postdoctoral fellows, especially those serving as interns or those from an inventor’s laboratory, are an excellent source for employees.

Training: Entrepreneur “boot camps” and programs such as “Ideas on Fire” championed by Cathy Swain in El Paso, Texas, are key to accelerating startup growth and success.

One unexpected characteristic of university incubators in The University of Texas System deserves special attention. Over 80% of the startups housed in these incubators do not derive from IP of the associated university! For example, over 70 companies at the UT Brownsville incubator have been started since 2003, but none of them derive from university IP and none of them are reported in AUTM statistics. They don’t fit the tight AUTM definition of a university startup, even though the university clearly invested indirectly in their formation and mentoring. Furthermore, the companies are not high technology, so they don’t register on the innovation sex appeal meter.

So, why should universities own and operate incubators, especially if most of the companies don’t derive from their own IP and the incubators usually don’t have a positive balance sheet? There are many reasons and here are some of the most important ones:

• Twenty-First century universities must engage their local community as engines of innovation and partners in a regional innovation ecosystem.
• Universities have many unique resources required to sustain a startup environment.
• Commercialization of university research has become part of the mission space of universities and is expected by faculty.
• Incubators are a source of revenue both immediate and long-term including rental income, equity in the companies, partial ownership of new IP, royalty from successful companies, monetization of IP, downstream gifts, and many other mechanisms both direct and indirect.
• Practice-oriented education in the launch of startup companies – including early-stage student companies – and innovation must be a part of the modern university, similar in spirit to the vaunted hands-on research experience.
• Incubators are an increasingly important mechanism for knowledge transfer and dissemination from universities to industry. They serve to bridge the gap in the misalignment of cultures between Academe and industry.

Universities should approach business incubators with great care and planning recognizing that they are not sustainable under a real estate model and must be subsidized to achieve the larger mission of the university. But the risks and costs involved in managing an incubator or in supporting startup companies do not have to be borne solely by a university. For example, the incubators at UT Arlington and UT El Paso are joint ventures with the local community. In short, there is no one-size-fits-all best business model for a university incubator.

And there are other hidden issues that confront and confound university incubators. They include conflict of interest in the use of university laboratories as workspace for companies, conflict of interest and commitment for faculty entrepreneurs, abuse and mistreatment of students and postdoctoral fellows as de facto company employees, commitment of the company founders, selection process for companies entering the incubator and their length of stay, leasing of state property at a fair-market rental price in conformity to state law, research compliance, and stress on under-resourced offices of technology commercialization. These are but a few of the difficulties facing university incubators.

But the “times they are a changin’” as Academe jumps on the innovation bandwagon through startup company formation and incubation. Are we headed for an incubator bubble as recently suggested? Personally, I think American universities are in the midst of an exciting and important transformational phase in which incubators are being tested as a practical learning experience for students, as an instrument for the commercialization of university research, as a means to accelerate the successful formation and growth of startup companies, and as a tool for the broad engagement of universities in communities of innovation. Not everything happens on the East and West coasts of America. Maybe they’ve got a bubble; the rest of us don’t.

Search for the Elusive Universal Licensing Agreement

By Keith McDowell

In an unheralded and mostly unreported event in the spring of 2010, a team of technology transfer licensing experts from across the wide spectrum of institutions of higher education in The University of Texas System including small, mostly undergraduate universities, the flagship University of Texas at Austin, five health science centers, and the M. D. Anderson Cancer Center achieved a success that many thought was impossible or, at least, extremely difficult to do. They created two patent licensing agreement templates suitable for most deal structures – one for the physical sciences and one for the life sciences.

The history of such attempts likely goes back many years and even centuries. The story of Hans Lipperhey and his failure to obtain a patent for the telescope in the early seventeenth century from the Netherlands and the subsequent production of telescopes certainly reveals that technology transfer management has been around for a long time. One wonders what old Hans would have said about his failure and the process had he been interviewed by a reporter?

Many, including the author, view the deal-making process as situational management where one listens to the “customer” or potential licensee and pulls from the shelf a deal structure in the form of an agreement template that best meets the particular “sweet spot” for that deal. Unfortunately, the shelf is filled with many such “sweet spots,” although only a few dominate most of the action.

In some measure the concept of many sweet spots and situational management condensed into the modality known as the “menu” or “drop-in phrase and clause” agreement template, driven principally by the advent of advanced information technology computer or web forms and the ability to click one’s way to the desired deal structure and licensing agreement in language pre-approved by the legal office. The best-known computer programming effort in this regard is TurboNegotiator. Its’ usage is supported by the University-Industry Demonstration Project.

In Texas, the story over the past decade unfolded in a somewhat different manner. Some people in leadership roles, including those at the Texas Emerging Technology Fund – a State agency that invests in startup companies associated with universities, came to believe that the speed of deal-making was the critical factor and that speed could only be obtained by a fixed deal structure and a one-size-fits-all license agreement. Although such fixed agreements have their place and sometimes achieve their putative goal (see, for example, the Carolina Express License), university technology transfer managers in Texas balked at the idea of a statewide one-size-fits-all agreement.

Recognizing that even the multitude of “sweet spot” templates required some negotiation – hence the appellation “template,” the question was raised in 2008 as to whether a single “template” could be constructed as a reasonable step toward satisfying the demand for a “one-size-fits-all” agreement, whether enhanced speed of deal-making was achieved or not. Most answered that question in the negative, including the author. But a team was formed in the spring of 2009 to make the attempt. I’m happy to say that I was proven wrong.

Immediately, the team recognized that there truly were two classes of deal structures: those associated with intellectual property from the physical sciences and those associated with intellectual property from the life sciences. But amazingly over time, a consensus emerged that it was indeed possible to create a separate template for each of the two classes. In a tour-de-force effort by the team that consumed the better part of a year and involved discussions with many experts in Texas outside The University of Texas System, such templates were created and were announced in the spring of 2010.

Conceptually sound, balanced, and readable, these templates are a testament to both the genius and the hard work of the team members. Two versions of each template were created: one in a traditional agreement format and a second in a two-part format in which the business terms that change from deal-to-deal are included in a cover document and the standard legal/operational matters are isolated in Exhibit A (Terms and Conditions). For the benefit of the general technology transfer community and given that their existence is not widely known, I have posted copies of these templates for download and use by the general community as follows:

Life Sciences: traditional format [word version or pdf version]

Life Sciences: two-part format [word version or pdf version]

Physical Sciences: traditional format [word version or pdf version]

Physical Sciences: two-part format [word version or pdf version]

My hat goes off to the members of the team. They demonstrated that universities are able to take on difficult technology transfer issues and achieve success. Despite claims to the contrary, technology transfer and the broader arena of the commercialization of university research are transforming themselves at universities to meet the needs and demands of the twenty-first century. The search for the elusive universal licensing agreement format and the improvement in deal-making will continue at universities, but for now, we celebrate a major step forward along that path.

Innovation Drought in Texas

By Keith McDowell

You gotta luv Texas! Only in the midst of a record drought would the Texas Tea Party movement find a new use for divining rods. And this time the mysterious new water source is guaranteed to bring an end to our troubles. It’s all so simple say the dowsers. All we have to do is drink from the fountain – just don’t bother to check the purity of the water.

Folks, we’re not talking about the lack of rain or the parched farm and grazing land in Texas – a true crisis for the State. We’re talking about the latest version of the Texas two-step: a new dance routine designed to reinvent research universities in Texas. The stage for the dance was set by Governor Rick Perry in 2008 when he supported and requested the adoption by university-system regents of “seven breakthrough solutions” advocated by the Texas Public Policy Foundation (TPPF) – a plan hopefully being slowly cooked to death on the hot Texas asphalt. That endeavor was soon followed by a new brainstorm from Perry – the $10,000 university diploma. We’ll blame that one on Perry for spending too much time in the Texas sun enhancing his tan.

More recently, the water witches have been at work fabricating a new bogeyman to be cured by their divining rods. Yep! Believe it or not, we have a drought in faculty productivity at American research universities. Or so say Rick O’Donnell, Richard Vedder, and others associated with TPPF and related organizations in recent reports deconstructing data provided by the university systems of Texas. Let me be clear! They have a right in America to publish such reports and to hold whatever views they want, no matter how distorted or ill-advised. But the rest of us have to get out of the Texas heat, cool down, review the reports, and weigh the consequences for our State and our Nation.

So what constitutes faculty productivity according to O’Donnell and Vedder? It’s a mixture of teaching and research. Okay, that makes sense. But teaching is measured by the number of credit hours taught by a given faculty member – or some refinement of that number. And research is measured by the external grant dollars procured by a given faculty member. In a simple two-dimensional plot of such data, “stars” are the high performance faculty in terms of productivity with lots of grant money and lots of credit hours taught. “Dodgers” on the other hand teach few students and bring in no grant dollars. And there are other categories of performer on the so-called productivity grid.

“Sherpas” carry the heavy teaching load but bring in no grant dollars. “Pioneers” blaze the research trail with lots of grant money, but a low credit-hour count – guilty according to some of opting out of teaching by buying “release time.” And then there are the great unwashed – did I mention it’s a drought – “coasters” who teach slightly over a hundred students a year and average several hundred thousand dollars in external funding per year. For the record, I was a “coaster,” even though I worked long hours, published many research articles, was an Alfred P. Sloan Fellow, and was honored with a Chancellor’s Council Award for Excellence in Teaching in 2000. But then, theoretical chemical physics just wasn’t a hot spot for grant dollars.

How accurate is O’Donnell’s deconstruction of faculty productivity? I’ll make it easy for you. It is pure phony baloney laced with amusing titles for the faculty groupings and spiced up by the appearance of being data driven. But sadly, a great deal of valuable time and effort is being spent and is going to be spent as the discussion degrades into a Texas style pissing contest to refine the data definitions of the productivity grid and to recast the faculty characterizations that are so wrong and so completely misleading.

Others responsible for the safekeeping of the American research university will take on the task of refuting O’Donnell as the difference between inputs, outputs, and outcomes rule the day. But as a retired faculty member from UT Arlington and a former vice chancellor at UT System, I’m compelled to digress for a moment and comment briefly on two important hidden assumptions that underpin O’Donnell’s productivity deconstruction as examples of how irresponsible O’Donnell’s deconstruction truly is and how easily refuted. Unfortunately, a full explanation of each point would far outstrip the confines of this article.

Credit hours are fungible: On the contrary, credit hours come in “chunks” and cannot be easily redistributed to achieve O’Donnell’s notion of efficiency. For example, each year at UT Arlington, I taught a one-semester graduate course on the thermodynamics of materials. In a given year there was always a cohort of ten to fifteen graduate students ready to take the course – no more, no less. It was a number that could not be changed to make me more “productive.” The same is also true for freshman undergraduates! I regularly taught the honors freshman chemistry course at UT Arlington. Although the course was not capped in terms of the number of students, it attracted about thirty students on average. Most students simply didn’t want to undertake the extra workload to obtain honors credit. Again, it was a “chunk” of indivisible credit hours for a program absolutely essential to a first-rate university.

Dollars are fungible: The notion that research grant dollars are fungible and count toward the average cost to teach one student is complete nonsense. As with many other sources of revenue at universities, grant dollars are restricted in their use and are audited to insure such compliance.

Enough said on the specific details of O’Donnell’s grid and his claim to a productivity drought. What’s the real motivation behind this furor? What is it that drives people to produce such seriously flawed reports? I call it the Texas two-step: an old fashioned jostling where a dance routine provides the flash that covers up the deadly bang. The flash whirls and twirls around the putative goal of saving money for taxpayers and the parents of college students through tea-party driven efficiency. It’s the smokescreen of embracing the protestant work ethic and pretending to rid the world of those faceless and feckless bureaucrats and administrators who consume our dollars while producing little of value – no matter that teachers, firemen, union workers, and other members of the middle-class get swept aside in the cause of “more for less.” It’s the creed of personal greed trumping the common good.

And then we have the deadly bang! The hidden goal of shutting down the imagined nesting and breeding place of liberal and left-wing America: the great American research university. Folks! That’s what it’s really all about. Let’s call it for what it is. Sadly, a small but extremely vocal group of Americans backed by enormous wealth have chosen for various reasons to eliminate the American research university. Appeals to reason or thoughtful and correct analysis are to no avail. It’s not about truth and the advancement of America. It’s about a political agenda coupled to an extremist ideology. And for the record, I’m a moderate independent who balances being a social liberal with being an economic conservative.

Will we pay a price for the Texas two-step? The congressional farce masquerading as a debate on raising the debt limit demonstrates what we can expect. Bringing an end to research universities as we know them will destroy the American engines of innovation. It will cripple, if not defeat, efforts to built and accelerate regional innovation ecosystems and communities of innovation.  Entrepreneurs searching for ideas to nucleate new startup companies and create jobs will find only a desert filled with efficient automatons who teach large sections of students at the lowest possible unit price and grant writers who excel at attracting the lowest-common-denominator dollar far from the risky frontier. It won’t be the putative liberal who disappears from our universities, but our best and brightest who no longer find academe to be an attractive career. In short, Texas will have an innovation drought!

The path advocated by O’Donnell and others, such as it is, is manifestly in the wrong direction. Productivity in our universities – a concept that I wholeheartedly support and believe should be and is being measured – is not about the efficient manufacture of student widgets. It’s not about the simplistic breaking apart of teaching and research into budget categories to achieve some perceived one-dimensional cost containment. Instead, university productivity is about bringing teaching, research, and service together in a holistic manner through the engagement of students in both the research and the entrepreneurial frontiers of our Nation. It’s about the engagement of the research university across the full spectrum of activities in a community of innovation. Therein lies our true future.

Am I angry? You bet! We as a Nation must stand up to those extremists who would waste our time on crazy notions of turning our research universities into cheap diploma mills where degrees are bought and sold as a commodity and consumer product with no measure of quality through standards, or to those extremists who would convert the great American engine of innovation into a mere research assembly line geared to procure the most grant dollars while eradicating the great scholarly activity that has made us who we are. We the people are better than such silliness. Our children deserve our best, not our worst. It’s time to invest in America, not bring the Nation down by base appeals to rank and intolerant ideology or appeals to personal greed through no taxes and no government. I believe in responsible government and balanced budgets. And like many, I have hope that comity and clear thinking enlivened by responsible debate will once again rule the land. If not, global competition will overtake our great Nation and the droughts that we are now enduring in Texas will leave behind only a dried-up wasteland. We can do better. We must do better!