Innovation and the University-Industry Interface

2/19/08

Editor’s note: This article was published last July 2, during our first week in existence. Given the attention to last week’s post by Chris Gabrieli questioning Harvard’s legacy of tech transfer, we wanted to share Sahin’s thoughtful observations with a wider audience.

The buzzword of the 1980s and ’90s was “entrepreneurship.” This decade, the obsession is with “innovation” as the presumed path to riches for people and nations. Since the key generators of innovation are research universities and the key implementers of innovation are companies, there is an ever-increasing focus on making the university and industry interface more effective. But will the twain meet? It could be very difficult.

The question is critical, and there is no better place to ask than here in Kendall Square, at the confluence of great universities, multinational companies in both the life sciences and information technology, and scores of start-ups.

Though hugely complementary, academic and industrial entities hold different values and are motivated by different incentives. One key to surmounting the many obstacles to successful collaboration is to better understand the two worlds, identifying those differences that are truly reconcilable, temporarily reconcilable, and totally irreconcilable. There’s no point in dealing with irreconcilable areas.

Universities are akin to malls: they have a common roof and share services. The mall manager, like the university president, cannot dictate to the stores or close them at will. But a company is more like a department store. The president can reorganize the store whenever he or she wants. So, even as they share the same title, the two presidents hold vastly different powers. Think of the former president of Harvard, Larry Summers, who was forced out last year under pressure from his “store managers,” and the current president of the UMass system, Jack Wilson, whose “store managers” in June passed a no-confidence measure against him.

University faculty are excellent at starting novel things and very poor at completing them in industrial terms. The rewards for starting a novelty are reporting it in publications. But for industry, starting is secondary to finishing in terms of bringing successful products and services to the market. Realizable market value far outweighs novelty.

Universities have a peculiar secondary workforce: students. A lot of work in academia is accomplished by students who actually pay to work. Not only that, but after they are “fired” (i.e., graduate) they continue to pay. What company has employees who pay to work and continue to pay? This “paying,” “transient” workforce gives academia unique characteristics and strengths not found in industry. Further, this workforce never ages. Students in any era tend to span the same age bracket.

Partly because of the transitory nature of the workforce and partly because the faculty focuses on novel “starts,” true production prototypes from which commercial products will be created do not get built. Most universities do not have, and cannot have, pilot plants. As a result, most university-generated innovations do not make it past the early stages.

Academic institutions have huge reputations and visibility, but a very small or dedicated core staff. For instance, MIT is huge in reach, breadth, impact, and reputation. Yet its core faculty has hovered around 900 since 1950. Contrast this with IBM at some 350,000 employees.

Then there are the differences in perception. A lot of academics view themselves as selfless workers at the service of humankind, while viewing business/industry as the contaminated world. Industry holds similar negative views of academia, believing it to be populated by people who are disconnected from reality and hold irrelevant—or even dangerous—ideas. While the distrust between academe and industry is less pronounced today than in the past, it certainly still exists.

Faculty members think they work very hard. Business executives think academics hardly work. Academics tend to think business people are vastly overpaid.

Businesses think academic institutions have very poor business models: they shun growth and charge prices (tuition) well below cost. Yet, on the average, companies survive barely a few decades. Universities mark time in centuries. So one wonders who has the better “business model.”

The challenge is to connect a long-lived entity that is loosely organized and that distrusts or at least is suspicious of the outside world with one that is results oriented and ruled by an iron-fisted and truly empowered “unitary executive” president, but has a much shorter business life.

It’s critical to make this connection stronger and more enduring if we want to receive the full benefits of the university innovation machine. The first step is to understand and respect the differences. What a loss it would be if universities become like businesses (likely) and businesses like universities (unlikely). The second step is to live with the irreconcilable differences (the university president cannot order change; universities have a “transient” workforce, etc.) and build the interfaces accordingly.

I don’t have definitive answers, and I’d love to hear some great ideas from readers. In a future column I will offer what I have come up with and to an extent experimented with as someone who is squarely between the two worlds, and part of both.

Kenan Sahin is the founder and Chief Executive of TIAX LLC, a leading collaborative product and technology development firm based in Cambridge, MA. He serves on the executive committee of the Council on Competitiveness and is a Life Member of the MIT Corporation. Follow @

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  • http://www.iris.com.au Janaki Joshi

    A thought provoking article by Keenan.

    The strength of Universities is that their workforce (Students) are unhampered in their intellectual pursuits and therefore can conduct fundamental research or question current thinking.

    This really forms the basis for breakthrough innovation, while businesses are constrained in their long term thinking as there is pressure to deliver to shareholder expectations. Businesses have become increasingly driven by short term concerns especially with the tyranny of quarterly performance targets. The opportunity for both lies in close collaboration.

    A true collaboration between businesses and Universities will leverage the strength of each party. Faculty members and students who “Start” a novel concept will see their concepts come to fruition when they are commercialized by their business counterparts who are good at “Completing”.

    In exceptional cases such as Silicon Valley & the Route 128 area, this collaboration shines where Stanford/Berkley for the valley and MIT/Harvard/BU for Route 128 have been the incubators for taking novel concepts from academe to commercial success. It is of course ironic that in spite of Massachusetts’ higher patents per capita compared to California, Silicon Valley still outstrips Route 128 as the seed bed of research based industrial development.

    The question is how to replicate this extra-ordinary marriage of academe & industry. Perhaps the answer is for a metropolitan area to apply Michael Porter’s Diamond of Competitive Advantage to pursue specific areas where all key players – research universities, industry and the government can focus their efforts to achieve regional competitive advantage.

    A shared vision among the leaders in all three spheres could act as a catalyst to propel a region forward.

  • Michael Schrage

    a provocative ‘analysis’ that, to my mind, is a tad self-servingly simplistic…

    who has the ‘better business model’? well, great universities can measure their durability in centuries while great companies may be lucky to measure theirs in decades…

    all too true – except that most great universities (unlike most great companies) are explicit creatures of subsidy… american universities are subsidized by the state, by the nation and by tax policies that insulate those institutions from market pressures that sometimes crush their for-profit counterparts…indeed, try to deduct a donation to intel or microsoft or ge on your tax form and say ‘hello’ to the irs…your donation to harvard, mit or berkeley (talk about state-supported!) will get you a pass…

    similarly, while i would never call graduate students ‘slave labor’ (although i know many, many, many graduate students who call themselves that), it is kinda remarkable that much of the world’s smartest ‘human capital’ works for below market wages – sometimes below minumum wage! – for professors doing ‘novel’ research at places like mit, stanford and carnegie mellon…

    my point is not that kenan is ‘wrong’ or ‘inaccurate’ in the provocative ‘false dichotomy’ he presents, it’s that he has been extraordinarily selective in the way he makes his economic case…simple changes in tax policy, cost accounting and intellectual property law could bring a stanford or an mit or a university of california systems to their knees in less than a decade…

    …yes, there are subsidies for business…but businesses on average – as kenan well knows – compete in markets with rules and regulations and restrictions far harsher than those endured by the average tenured professor of computer science or molecular biology @ a world-class university…

    …i both dislike and despise the ‘start/complete’ dichotomy kenan proposes as a model…and it will cause a good laugh at places like google and akamai (among others)…but that’s a subject for another post :-)

  • http://www.adthermtech.com Desmond Aubery

    Universities offer the opportunity for young, fertile minds to be trained, focused & nurtured, in a safe environment – without much care for the rough-tough world of profit-&-loss, dog-eat-dog & Darwinian competitive fitness.

    Upon entry into Industry, the young, trained, focused, nurtured graduate is suddenly faced with the daunting prospects of having to start at the bottom rung of a seemingly hostile, multi-layered, impermeable, corporate environment. All his/her University experiences are suddenly of no apparent usefulness. This is the Mother of all Rude Awakenings.

    To my mind, at least, there needs to be a smooth passage leading between Universities & Industry, with constant skill interchange mechanisms. The day academia & industrialists can smoothly inter-connect, inter-operate & forge alliances of equals, will be the beginning of an era of smooth, continuous innovation.

  • http://subrassmartdfm.blogspot.com/ ksramalingam

    Mr Keenan has opened up well on the complexity of cooperation/ function of Institutions and Industries. He has rightly put forward the irreconcilable differences between the Institutions and Industries.

    I would like to quote from my own statement, which I shared with the leaders of Institutions and Industries while at the Indian Institute of Science some months back in connection with the Engineering Design India 2007.

    Institutions and Industries are two separate ‘biological phenomena ‘ like a Man and Wife.

    A Mother- the University-can only give births to a child- the Student.
    It is only the Father – the Industry- that can help a woman to become a Mother.I mean to say that the Father can not give birth to a child.

    The father can never do a mother’s job and vice versa. And for further growth or expansion of humanity the man needs another woman and naturally it won’t be the mother again. For development of human knowledge we need both. In fact both the father and mother are only facilitators. They are only the means and not the ends. The real end results are got from the contributions – whether positive or negative from the Human Resources.
    To put it in another way theory is only based on practice and a record of the practices. And practice is based on the theory, which is a continuous up gradation

  • Takuro

    Mr. Sahin’s post is true and has been true for long time. There’s a solution proved to work, at least partly, which is place “middle-men” between academia and the industry. Most of tech transfer office plays a role of middle-men, bridging cultral gap. I think tech transfer office has still large room to be improved, which will contribute to more concerted efforts between both parties.

  • Aynur Moustafa

    I have found Mr.Sahin’s ideas very interesting.

    I suggest to take a look at the EC (European Community ) applications to bring universities and industry together. EC scientific projects are very succesful to bring those different parties together and to turn the innovations to the real products. And the cost is shared between the EC governments and the project partners.

  • http://selfmasteryclub.com Sajid Ali Khan

    Dr. Sahin’s analysis is very perceptive. Indeed there exists an opportunity here to create a new area of research of how to take the theoretical findings of the universities and put them on a fast track through the avialable resources of the industry leaders. Also any problems that the industry encounters in practically implementing their
    cutting edge new ventures they must take to the academia. There must be one fully staffed unit in each university for back and forth with industry leaders. Perhaps Dr. Sahin can help start one such unit at MIT or Havard.

  • http://www.doublehelixtwin.net Avi Dey

    12 July, 2008

    RE: “The Innovation Center Project” (ICP) as a “bridge” between innovation supportive research university faculty & small tech biz on a regional cluster basis (A “scalable Tech Innovation Demo” Project)

    Thank you for your thoughtful discussion on the “interface”.

    I have working to enable such an “interface” inspired by my own “tech innovation experience” and the few “success models” exisitng at research university communities here in the east coast.

    I am also an independent tv producer at the Fairfax Community TV, Channel 10, working to educate my community on the value of “innovation supportive culture” for strategic (long) perspective.

    My “visual model” for the ICP is given in my above mentioned website, at “Tech Innovation Center”.

    I welcome an opportunity for dialogue with anyone interested in connecting our two communities in Boston Regionnl Cluster and Northern Virgnia/DCM Cluster perspective in future.

    Thanks

    Avi Dey,
    Coordinator,
    The Innovation Center Project (ICP Northern Virginia Module)
    Northern Virginia