Wednesday, April 18, 2012

So You Want To Be An Entrepreneur?

By Keith McDowell

Have you noticed those strange new people lurking in the halls of academe, garbed in the modern version of geek-wear, and conversing in a language putatively unknown to the older savants? Some appear to be driven by the prospect of money and wealth. Some by an intense focused activity anticipating the outcome. Some by the adrenalin highs and lows of their work as they tirelessly attempt to convince others of their version of reality. And some by simple addiction to the process, whatever the specific reason. Who are these strangers? They’re called entrepreneurs!

The popular press would have us believe that entrepreneurs are the salvation for a declining American economy – the “job and wealth creators” for the next generation, notwithstanding the peculiar view by some conservatives that wealthy Americans create jobs. Others see them as the “new new” thing that we as a society have somehow failed to nourish in our educational system or to incentivize by our rules and regulations.

And yet others would have us transform the American research university into a training camp for entrepreneurs and a hotbed of entrepreneurial activity with discovery-based research focused on innovations for the commercial marketplace as the driving force for the formation of startup companies by a new breed of entrepreneurial faculty. But is any of this real or new? Do we truly want faculty members to become entrepreneurs? And how many do we need?

In my day, science entrepreneurs dominated the halls of academe as opposed to business entrepreneurs. They were no different than the modern business version in their behavior, but were simply the hot item of the mid-twentieth century. But then there were also faculty members who spun out magnetic resonance imaging as a medical tool and who marketed computational chemistry to the pharmaceutical industry. Indeed, it seems almost trite to say that we’ve always had entrepreneurial activity in its many flavors in academe and that our attention span for a specific flavor ebbs and flows over time, but yet it’s true. That doesn’t mean, however, that the academic culture doesn’t change and evolve. It does! Witness the growth of grantsmanship as a prime exemplar of such evolution. Or how about the impact of research compliance?

In many ways, coming to grips with new-age entrepreneurial faculty is nothing new and mostly a replay of past history. As always, one finds a spectrum of people with a diversity of skill sets and a need for someone to manage expectations. Can such business entrepreneurial skills be taught or is that effort a waste of time? Most faculty members are overworked with little or no time to engage in technology commercialization and business entrepreneurship, much less with time to learn a new trade.

And the business entrepreneurial skill set is indeed distinct from creating a brand for one’s science skills, or generating a flow of grant funding, or placing one’s graduate students into suitable jobs, or any of the other activities engaged in by faculty. Let’s be clear. Discovery, innovation, technology transfer and commercialization, entrepreneurship, and economic development are different activities.  Done right, each takes time and effort and a particular set of skills. But let’s assume for the moment that we have a faculty member eager to engage in business entrepreneurship including possibly the formation of a company based on some of their research. Exactly how does that happen? Will they be rewarded? And should it be encouraged?

In most universities today, the explicit process of converting a research discovery or innovation into intellectual property and transferring that property to a commercial entity including a startup is straightforward and routine despite the braying one often hears from the pundits. Even better, many universities have tight contractual arrangements with companies that permit joint R&D with shared revenue return and wealth creation. Suffice it to say that the culture and practice of technology commercialization is alive and well at most universities and rapidly transforming itself into an effective, efficient, and well-understood process. Faculty as innovators is mostly a done deal. If you don’t believe me, read my previous articles!

The same can not be said yet for faculty as business entrepreneurs, although major experimentation is underway. There are several significant barriers and even “show-stoppers” that must be surmounted including faculty acceptance of entrepreneurial activity as evidence for tenure, promotion, and salary increases; conflict of commitment; conflict of interest; compliance with federal and state rules and regulations for grant funding; and ethical treatment of graduate students and postdoctoral fellows, to name my favorites. Let’s briefly review each of these barriers.

Faculty acceptance of any activity as proper and acceptable performance has always been shifting ground, not to mention entrepreneurship as a permissible activity. For example, industrial funding for scholarly activity or research was considered “dirty money” in the mid-twentieth century. I perfectly well recall the debate at faculty meetings during the 1970s when that prejudice finally fell by the wayside. But today, industrial funding is back on the table again as we demand transparency in the support of our research. Should we distrust published research from a faculty member in support of fracking when that research is supported by a major oil company? Certainly such funding should be acknowledged in the publication.

And exactly what is conflict of commitment? In very simple terms, it has to do with the fact that when one signs their university contract – more often, a line at the end of an offer letter, one agrees to full time employment as a faculty member – usually as an “exempt” employee. In other words, it doesn’t matter how many hours per week you work, you are an employee of the university. So what happens if you start a company or business on the side? Then you have a conflict of commitment! Universities have long dealt with the issue of a consulting business and typically permit one day per week for consulting. Serving as an officer in a company is a trickier undertaking and to date has been treated using a so-called “management plan.” Personally, I don’t think we’ve figured out how best to handle the conflict of commitment issue, especially at public universities where tax dollars partially support faculty salaries. Do we really want tax dollars potentially supporting employees of a private company and being laundered through the university? It’s a tough question!

Conflict of interest for a faculty entrepreneur is usually straightforward, although faculty members are sometimes blind to the conflict. Often the conflict resides in the federal rules and regulations that supported the original research. More often, the conflict comes from the faculty entrepreneur as an officer of the company having the responsibility to decide the distribution of income directly to himself or to himself through the university.

The ethical treatment of graduate students and postdoctoral fellows is also a significant issue and one that I’ve personally had to adjudicate on several occasions. In simple terms, it goes like this. Should a faculty entrepreneur have the ability as a faculty dissertation advisor to require a graduate student to work at their startup company? It happens, it can be abusive, and it’s not settled policy on how to handle it. The mantra that it’s good for the student to experience the “real world of business” isn’t sufficient.

Despite these hurdles, “faculty as entrepreneurs” is a growing and challenging part of academe, although not new. It should be nourished, managed, and permitted to grow as research universities move from a service role in their local communities to one of active engagement as engines of innovation. But don’t be fooled by the hyperventilated rhetoric coming from some quarters about transforming universities into entrepreneurial mills or the potential pot of gold at the end of the rainbow if we only “hurry up” and change how universities function. We shouldn’t ditch academe and our time-honored practices just because someone has their “hair on fire,” is too blind to see what’s actually before them and how scientific research truly gets done, and foolishly ignores the past. Been there, done that! It’s called re-inventing the wheel.

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