1. The number one online magazine for innovation management practioners Feature Article # 003-2011University Partnershipsin the Era of UniversityInnovation Merchants– a Practical Guidefor Companies by Melba Kurman senior thought leader, analyst and expert on university intellectual property strategy and innovation management ©Ymer&Partners AB All rights reserved. www.innovationmanagement.se ISBN: 978-91-86829-06-3
2. Knowledge in brief Universities can be natural engines of open innovation since they do not develop their own in-house research into products, nor do they compete for revenue in the same marketplaces as companies. In the United States, innovation partnerships between research universities and companies offer companies a number of competitive advantages. University researchers conduct cutting edge research, much of which they share freely and publicly. U.S. universities own hundreds of patents that they license to companies. Universities have specialized facilities and lab equipment that is usually available to companies for a fee. Despite the potential benefits, partnerships between universities and businesses can be complicated by ownership issues of intellectual property rights, misaligned expectations, and differing culture and priorities. Companies should approach potential university collaboration with appropriate expectations and the awareness that there’s no single correct way to structure a university partnership. This article offers practical guidance for innovation managers, product managers and executives who are considering making university technical resources part of their open innovation product development strategy. This article focuses on the innovation ecosystem in the United States but many of the dynamics described may be recognized by innovation managers worldwide. Knowledge in practice As companies today compete on their ability to create and sell innovative products and services, universities continue to be a source of new ideas, expertise and cutting-edge inventions. There’s no correct way to structure a university partnership. Consider the experience of three companies: a small biotech company, a medium- sized software company, and a large semiconductor company. Each approached the university for different reasons and with different needs. Three years later, the small biotech company licensed the rights to a university- owned patent to develop a promising skin cancer treatment. The medium software company owns two patents on an algorithm developed by a university professor while she was under a consulting agreement; the company did not license these patents from the university. The large semiconductor company sponsored $300,000 worth of new lab equipment in a professor’s lab in exchange for receiving regular updates of detailed testing data of new types of chip materials. These examples demonstrate the range and variety of ways that a company can tap into university know-how, resources, and technology. Many channels, both formal and informal, connect university research labs to the commercial marketplace. An innovation manager must carefully consider which channel works best for her goals, and recognize the university’s unique academic culture and differing priorities.2 Feature article #3-2011 brought to you by InnovationManagement, ©Ymer&Partners AB All rights reserved. To order please visit www.imstore.se.
3. University Partnerships in the Era of University Innovation Merchants – a Practical Guide for Companies about the author Melba KurMan Melba Kurman is an expert in university technology transfer strategy with over 15 years of experience in bringing innovative technologies to market. She has managed the commercialization of innovative technology in both industry and university settings. She was responsible for marketing Cornell University’s intellectual property portfolio to industry partners and spent several years at Microsoft as a product manager. Melba writes the popular Tech Transfer 2.0 blog, and is the president of Triple Helix Innovation, a consulting firm dedicated to improving university and industry innovation partnerships. The changing role of U.S. universities In the U.S., the innovation landscape has changed Open innovation is defined by Henry Chesbrough as dramatically over the past 30 years, particularly a product development process in which companies the innovation partnerships between company commercialize internal ideas by combining in-house product development teams and university research knowledge and resources with those created outside labs. In the 1970s and 1980s, as they shifted their the company. In Chesbrough’s terms, universities are focus to shorter-term results, many Fortune 500 innovation explorers, performing basic science and companies closed their in-house R&D labs. Today, discovery research that they hand off to companies with some notable exceptions such as Microsoft, to develop into commercial products. Universities IBM and Proctor & Gamble, most companies no can be a vital source of product innovation since longer maintain their own in-house, early-stage, their primary focus is to discover new knowledge exploratory scientific research organizations. that sometimes results in cutting-edge technologies. Another powerful force that changed the innovation landscape was the passage of federal legislation Companies look to universities for new product called the Bayh-Dole Act, which in 1980, gave U.S. ideas, data and game-changing research and universities the legal right to own patents on the technology. In contrast to the lingering stereotype results of on-campus federally funded research, as of the academic ivory tower, today’s U.S. long as the university was willing to pay to patent universities are well-funded research hubs that the invention, and make a reasonable effort to create game-changing knowledge across a broad find a business partner to develop the patent into range of industries. Universities receive billions a commercial product. Finally, companies are of dollars in research sponsorships and grants increasingly more comfortable with the process of from the government and companies. According open innovation as a mode of product development. to data from the National Science Foundation, Many companies, both large and small, have more than 60% of government funding for basic become increasingly adept at feeding their product research flows to university labs. According to the development pipelines by tapping into the expertise Association of University Technology Managers, in and resources available at other organizations. 2009, companies paid for over $4 billion worth ofFeature article #3-2011 brought to you by InnovationManagement, ©Ymer&Partners AB All rights reserved. To order please visit www.imstore.se 3