What is Leadership?

By Keith McDowell

The recent televised debates by candidates for the Republican presidential nomination bring to mind expressions from a bygone era such as “gadzooks” and “ye gods!” “Holy Toledo, Batman” is much too modern. Who would have thought that a return to the nineteenth century would be embraced with such fervor by those who want to lead the nation, especially in the current environment of global competition? No taxes, no regulations, no EPA, no infrastructure investment, no social nets, no health coverage – in short, no federal government. It’s every man for himself with government restricted to local communities and states. Oops, this sounds more like a feudal society. Maybe the nineteenth century is also much too modern for the candidates. And, shucks, I’m told those folks in the nineteenth century actually invested in public financed infrastructure!

Of course, we have the latest anointed white knight in shining armor destined to save the Republican party, Governor Chris Christie. Unfortunately for most of us, his management style on the surface appears to be that of the school yard bully. It’s “in-your-face” and “none-of-your-business” on steroids. I’m sure that style will work well for a president on the international scene, especially for those who believe in the George W. Bush “bring-it-on” Texas version of being a bully around the globe. The New Jersey version should be even better – cement boots instead of cowboy boots.

For those of us who enjoy political satire ala Saturday Night Live, the current crop of Republican candidates and the behavior of the supporting cast – otherwise known as an audience, couldn’t possibly get any better … unless, of course, Donald Trump and Sarah Palin decide to joint the fray. But as humorous as the political spoofing can be, the performance of most of the candidates is deeply troubling, not to mention some of the crazy notions they espouse. Do any of these candidates really posses the necessary leadership skills and the basic understanding of how the modern competitive world functions to serve as president?

The concept of leadership has always been difficult to define and characterize. What works? What doesn’t? Is it dependent on the time and the circumstances? Is it situational? Does it depend on the desired outcomes and the metrics used to measure the outcomes? Can it be learned or does it reside in one’s genes? There are many questions to be asked and many points of view.

Like many who have served in positions of responsibility, I’ve been asked on a number of occasions to address the issue of leadership, often at leadership academies or training programs for rising managers and administrators. Over time, I’ve thought about my own particular brand, especially as regards the all important activity of making decisions. Three decades of management experience, both at universities and a national laboratory,   have taught me that there are four basic principles to be obeyed that cover just about all scenarios. These principles are as follows:

• Be number one, otherwise you won’t be – or more explicitly, always function with the highest level of professionalism using the highest possible standards.
• Get it right to start with; it takes less time.
• You get there one step at a time.
• You have to spend money to get money.

Simple? Yes! Effective? These principles worked for me.

Leadership can also be dissected by revealing lessons learned. Here are mine.

• People get things done, not plans, processes and technology, and people make mistakes – stand behind your people.
• Never admonish/discipline/criticize an employee in public.
• Find out what the rest of the story is.
• Deal immediately with personnel problems – the hardest part is telling people news or evaluations they don’t want to hear.  Saying no is hard.
• Deal immediately and professionally with a problem.  Auditors love it.
• It is better not to pass your personnel problems along to someone else by moving an employee.
• Activity is not the same thing as productivity. 
• Let the people who work for you do their jobs and constantly congratulate and thank them when they do.
• Be informed, but don’t micromanage.
• Keep your stories simple, straightforward, and honest – you rapidly become too busy to keep up with different versions of the story.
• Decisions:  do your homework, get the best synthesis from staff and others, but make the decision in a timely manner recognizing you often won’t have all the data needed.
• Encourage open and frank debate in your staff meetings.  Use a better idea than yours when someone gives it to you.
• Pick a target, get moving toward it, and do mid-course corrections as needed – but avoid ready, fire, aim.
• Email rage is real.
• Periodically assess your accomplishments.
• “Go to where the future is going to be, not where it is now.” (Revision of Wayne Gretzky and the hockey puck aphorism.)
• Have fun!

Ultimately, leadership is all about moving an organization or nation forward while avoiding unnecessary collateral damage. It’s about maximizing the greater good while protecting the individual. And for the economy, it’s about saving the middle class in order to protect the consumer base. Business and industry without customers is a certain path to decline and decay in America.

Leadership at the federal level also means investment in building an innovation ecosystem and infrastructure second to none. Just say no – the mantra of the Tea Party movement – is not acceptable. We can debate the specifics of the ecosystem, but failure to build one or strengthen our current one is not an option unless we plan to concede defeat in the global marketplace.  So, why is the United States moving forward at a snail’s pace – other than blaming our dysfunctional Congress? My answer has remained the same for well over a decade. The only thing holding us back is ourselves.

Anatomy of a University Incubator

By

Keith McDowell

University incubators for startup companies are popping up all around the United States with many pundits and bloggers suggesting that we have unsustainable bubbles, both in number of incubators and number of companies being incubated. We’ve saturated the market goes the litany. Maybe so, but I doubt it.

More relevant to many in the commercialization of university research community is the issue of how one creates a university incubator. What are the steps and, in particular, how much does it cost and how does one pay for it? Having personally created two such incubators and having watched the creation of numerous others, I have a simple message to relay: there is no bottom line and no single formula for creation, let alone success. Indeed, even teasing out the costs of forming and sustaining an incubator is difficult and often inextricably tied to other activities. Two examples prove my case.

The University of Texas at Brownsville paid approximately $3 million for a defunct 600,000 square-foot shopping mall and converted part of that space into an incubator. Obviously, the mall was purchased to expand university space, not to build an incubator. On the other hand, The University of Texas at Arlington (UTA) worked with the Arlington Chamber of Commerce and obtained a grant for approximately $1.8 million from the Economic Development Administration of the U.S. Department of Commerce to purchase a building next to the campus specifically to be used as a university incubator. The university provided matching funds of several hundred thousand dollars as part of the grant fully expecting to move the Office of Sponsored Projects from expensive rental space into the facility, thereby converting a recurring cost into a one-time cost and a long-term cost savings. So how much was spent in these two cases on the incubator and over what time period? Only an accountant wearing a green eyeshade and using a sharpened pencil would attempt to answer that question.

Having dispelled the notion of a simple formula, I hasten to point out that there are key factors that play into the creation and maintenance of university incubators. Such factors are best understood not in the aggregate, but by appeal to case studies of individual incubators and how these studies can inform both the general practice of university incubation and the specific instance of creating an incubator. In that spirit, I review in this article the anatomy of a single incubator: the Bama Technology Incubator.

The story begins with Robert E. Witt, former President of UTA and currently President of The University of Alabama (UA). Visionary in his leadership, Witt recognized in the late 1990s the need for a new model on how universities engaged economic development in their local communities. The incubator at UTA was a direct result. Upon assuming the presidency of UA in the spring of 2003, Witt determined that a similar effort was required in Alabama and I happily joined his transformational team in November of 2003 as the first vice president for research at UA.

The situation at UA in 2003 was similar to many universities at the time. There was an associate vice provost for research and a sponsored projects office with a director reporting to him. Grant accounting reported to the business office. Technology transfer was sporadic and commercialization of university research mostly didn’t exist. No one was to blame. Such activity simply wasn’t a part of the general culture of academe at the time, although the commercialization tsunami was rapidly taking hold and about to burst onto the American scene. Witt took the most important step needed to transform UA. He created a new budget line of approximately $2 million for my office and challenged everyone to get the job done to the highest standards. Second best was unacceptable to Witt.

We needed a team of the very best people who understood the integrated and symbiotic nature of research, research administration, technology transfer, commercialization of university research, and – yes! – innovation. Dr. Marianne Woods, a national leader in research administration and subsequently a member of the COGR Board, was the first onboard in the spring of 2004 as an associate vice president for research. Under her leadership, grant accounting was brought into the Office of Sponsored Programs under a new director, Cindy Hope. Cindy is nationally known for her knowledge and training programs in grant accounting through NCURA. In today’s marketplace, such seasoned leadership requires a minimum salary of $200,000 while going as high as $250,000 or more in some cases.

With respect to the creation of an incubator, UA had a most unusual advantage in 2004. It was called the AIME building. A 50,000-square-foot facility completed in the year 2000 and paid for by a $9.3 million grant from the Department of Energy, AIME housed the Alabama Institute for Manufacturing Excellence. The building was multi-purpose with space and utilities for wet labs (several labs not yet built out), a large high-bay facility, a giant projection screen capability, state-of-the-art IT infrastructure, classrooms, conference rooms, and an administrative wing. It was the perfect facility for an incubator. And, furthermore, the original AIME program had died away quickly leaving the facility with no identifiable occupant in 2004 other than general usage by various colleges. Witt rectified that situation and permitted its use as an incubator.

But there was much more to the equation than merely creating an incubator in the AIME building. After much brainstorming, the concept for an innovation center coupled to the incubator emerged. Although “proof of concept” was an essential ingredient of such a center, the UA team recognized that the full panoply of functionality for the commercialization of university research would be required in order to take UA research from the lab to the marketplace, particularly as a startup company. We would need a UA Office for Techology Transfer, the Bama Technology Incubator, and the new innovation center, all reporting to the Office of Research.

As part of the brainstorming, we listed all possible functions and activities that might be required across the spectrum including entrepreneurship and the engagement of students, both for training as entrepreneurs and as innovators. The new innovation center was named the Alabama Innovation and Mentoring of Entrepreneurs (AIME) Center. [As a humorous side note, we chose to keep the acronym AIME. What can I say? The letters were chiseled in stone on the front of the building!] Rather than enumerate herein all the functionalities reviewed and exactly how they were broken out among the four entities, I defer to two annual reports at the end of the creation period for the details – OTT 2007 Annual Report and AIME annual report for 2007 – and the websites hyperlinked above for the four offices. An Alabama news release also contains useful information. I’ve also addressed the issue of innovation centers in a previous article.

With respect to staffing levels for the new UA infrastructure, the Office of Technology Transfer has a director, a licensing specialist, and an administrative assistant. AIME has a director, a staff research engineer, a staff research scientist, and an administrative assistant. Postdoctoral fellowships are also offered by AIME. The AIME director serves as the director of BTI since AIME and BTI are integrated into the AIME building. Although AIME sponsors and pays for “proof of concept,” developmental, and innovative research directed toward university intellectual property (IP), partially with revenue return from all university IP, a principal source of funding is direct industrial funding with support from a number of international companies. Such funding requires flexible IP policies and a willingness to negotiate and build trust relationships with industry.  Startup companies located in BTI also pay a rental fee, although as always with university incubators, the deal structure can be very complex and involve equity in the company.

An important ingredient in forming the UA model and in coalescing the team dynamics was the incorporation of one of the UA attorneys onto the team by paying for one-half of their salary. The attorney was involved at all times in the decision-making and made a real member of the “commercialization team.”

The UA model didn’t stop with people and infrastructure. Activities such as the formation of an online research magazine and the creation of the Alabama Launchpad in collaboration with the Economic Development Partnership of Alabama took place. Alabama venture capital and angel investors were brought on board. Every conceivable function or activity that could be used to accelerate the commercialization of university research was reviewed and added as appropriate.

In summary, the Bama Technology Incubator was created as part of an integrated whole built from existing infrastructure and facilities. How much did it cost to create it? How much does it cost to maintain it? These questions are not easily answered when one understands the full commercialization structure at UA or the history of the program. For example, how does one separate out the cost of AIME from BTI? Should one divide the energy costs for the AIME building among all the users including the colleges that use the classrooms? When student entrepreneurs work with the startup companies in BTI, is that a cost for BTI or part of the general education budget? These are all difficult questions, but ones that must addressed by a university when forming an incubator. Of course, each case is different and that’s my essential point. How many universities have an AIME building sitting and waiting to be used as an incubator?

But there are some lessons to be drawn from the BTI story. First, visionary leadership at the top from people such as President Robert E. Witt is critical. Second, always shoot for the highest standards and always hire the best people, no matter the costs. The return on that investment is almost incalculable. Third, it helps to have a budget line, but more important is to have a flexible budget line. Fourth, rigid IP policies and, more broadly, rigid policies to manage the incubator are problematic in the modern age of reduced funding for universities. One can’t engage industry easily with such policies. And fifth, university incubators divorced from the bigger picture of innovation are dead on arrival from my perspective.

The anatomy of BTI is only one story and likely not one widely realized in other situations. But it is one of many stories that need to be told as we attempt as a society to understand the role of university incubators in the age of global competition.

Ignorance: the Bane of Innovation

By Keith McDowell

EVACUATE! The dreaded message popped up on the computer screen only moments before the power went out, forcing my son to grab a computer gone dead and head for his car. The computer marked the final item in our attempts on the 4^th of September to take valued possessions with us as we fled the firestorm growing by the second and rampaging near the entrance to the Steiner Ranch subdivision in Austin, Texas. We had no choice but to obey the order. Being trapped by a raging wildfire potentially blocking the only way out, other than a swim across Lake Austin, wasn’t the most innovative idea on how to spend a Labor Day weekend. Ultimately, Mother Nature did her worst as winds gusting at better than forty miles per hour drove the flames to destroy 23 homes and seriously damage 3 others. We were lucky. Many were not.

Fire has always played a major role in the daily lives of people – both as a source of energy and as a destroyer of property. Coupled with earth, air, and water, it served for centuries as one of the four elements comprising a theory of the universe. Yet, one has to wonder if early caveman thought of the concept of fire as “just a theory” as he watched wildfires consume the savannah that provided his essential needs.

Even today, the power of the four mystical elements captures our attention in movies and books such as The Fifth Element and Angels and Demons. Dan Brown in particular drove home the classic struggle between reason and faith as the Illuminati plotted against the Catholic Church. Of course, obeisance to such ancient thinking is all in jest since humankind has long since left the 15^th century behind and passed through the Renaissance and the Age of Enlightenment and Reason. We now live in the information age with science, technology, engineering, and math coupled to data-driven analysis from economics, sociology, history, psychology and many other fields paving the path for an era of innovation and enlightened leadership as America competes in a rational global society … or do we?

Global warming driven by human factors is “just a theory” according to Texas Governor Rick Perry, the current leading contender for the GOP presidential nomination. Facts and data don’t matter to him. After all, they’ve been manipulated by scientists to attract research grants. The fact that June, July, and August in Texas were the hottest months ever for any state in the United States with respect to average temperature as well as breaking records for the most days hotter than a hundred degrees is just an inconvenient fluctuation. The fact that Texas is on fire with a land mass larger than the State of Connecticut having been burned this year is just an aberration. The fact that the drought in Texas has cost farmers more than $5 billion is simply an act of God and one that we should pray about at a mass meeting in Houston. Yes, we all understand that local weather is not the same as climate change, but they are linked and Texas as well as the rest of the Nation is clearly displaying this year the pattern of large-scale weather deviations predicted by global warming. And then we have evolution – also “just a theory” according to Perry.

But Perry is not alone in his anti-science stance and views. Indeed, according to Paul Krugman in his article Republicans Against Science from The New York Times, such anti-science, anti-intellectual, and anti-knowledge views are pervasive in the core right wing of the GOP – a core made up of cold-war warriors and neo-conservatives still searching for “commies” on every corner including our research universities, evangelicals confused and misled about faith versus reason, pro-life advocates who support selective government intervention matching up to their particular religious beliefs, tea-party members supporting no taxes and no government, and right-wing pundits who claim to be Americans but actually support anarchy and “just say no” to anything progressive. When and why did it become so fashionable for “deniers” of science or data-driven knowledge to take center stage?

John Atcheson is his excellent review entitled A Review of the Must-Read “Inquisition of Climate Science provides us with one answer speaking specifically about global warming: “the reason deniers rail against the science is because they hate the solution: government intervention in the marketplace.” Personally, I believe the answer is much more deep-seated and much more than one driven by economics. It’s a visceral dislike of those “uppity” intellectuals – likely to be liberals, socialists, atheists, and non-believers according to the mantra – and a dislike of new ideas and change – hence, the anti-intellectual and anti-knowledge flavor of the denier movement. While sometimes rooted in religion, the denier movement is not fundamentally a battle between faith and reason. Instead, it is exploitation of religion and people of faith by the deniers for political and economic gain. President Jimmy Carter in his book Our Endangered Values: America’s Moral Crisis spoke eloquently to this point.

But just as surely as the biosphere of Planet Earth including humankind will continue to evolve and just as surely as the effects of global warming will be manifested in more dramatic weather events – including firestorms and drought in Texas, the inexorable march of scientific observation, experiment, and data collection as well as scholarly activity in other fields will reveal new truth and new knowledge. As James Lawrence Powell stated in his book, The Inquisition of Climate Science:

Most professions can be no better than their individual practitioners, but Science is far better than scientists. It is the best system we have for getting beyond human frailty and folly to the truth.

Sadly, the “deniers” haven’t stopped with simple denial of truth or proven knowledge through claims of it’s “just a theory” and other such gimmicks. They’ve adapted the trappings of science and created “scientific theories” such as “intelligent design” as a counterpoint to the theory of evolution. Governor Perry takes great pride in claiming that intelligent design is taught to students in Texas in just this manner. [His claim is false!] Don’t get me wrong! If anyone wants to believe that God (the intelligent designer) created the universe as a matter of faith, so bit it. But, it’s not science and it’s not proven truth. Even one of the most conservative of religions and the slowest to change, Catholicism, doesn’t normally advocate denial of scientific knowledge and facts discovered in the modern world.

Of course, when bogus or easily disproved theories don’t win the day, “deniers” take the ultimate step. They attack our educational institutions and our teachers and researchers. Quoting from an article entitled Attacks on Science Education Intensify by Chris Mooney, they “accuse ‘liberal’ teachers of forcing ‘beliefs’ upon a captive audience of impressionable children.” The Mooney article is a summary of a report appearing in Science magazine “on the state of affairs out there in this place called America, and it’s ugly.” How ugly? He’s what Jeffrey Barke says about our classroom teachers and global warming:

Most teachers are left to center, and if we leave it to teachers to impose their liberal views, then it would make for an unbalanced lesson. Some people believe that global warming is a crock of crap, and others are zealots.

Is this an enlightened America ripe for innovation? And how about the Americans for Prosperity Foundation who want to end “frivolous” research projects at our modern research universities? Of course, they’ll use their own version of common sense and a gut feeling to decide what is frivolous.

As Mooney points out in his article, the deniers want to educate – and I use this word with tongue in cheek – a new generation of politically dysfunctional citizens unable to compromise or find a real solution for America with respect to global competition. The “whatever” generation is about to be replaced by the “don’t think; just shout!” generation.

Do we really want to return to the Dark Ages in America and dim the light bulb of innovation? Are we really prepared to kill the goose that lays the golden eggs? As Atcheson states in his article:

If we don’t reassert the primacy of the scientific method and the knowledge that it creates, we will soon be a country with the best 15^th century alchemists and healers – and the kind of economy that implies.

When I was growing up in North Carolina in the 1940s and 1950s, we had a word to describe the behavior of “deniers” and the state of affairs that we now find ourselves embroiled in. It was the one thing that all parents tried to overcome in their children through education. It was the other “i” word. It was called ignorance. 

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!