Category: Blog

Dinner In China

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By Phyllis Speser, CEO

Wherever you are, much of the real business takes place over coffee and meals. Here in China that has been raised to an art form. Here I am at a dinner with the mayor of Qingdao, the city best known in America for Tsingtao beer. Seating is important, as the closer to the host, the greater the honor. Over toasts and courses of wonderful food, discussions of how to work together mingle with jokes, laughter and all the delight of a pleasant social setting. When you hear about the importance of relationship building for doing business in Asia, this is what is meant. Friendships and trust are built simultaneously. As the Classical Chinese Daoist philosopher Chuang Tzu put it:” If it was not for the fish, the net would be unnecessary. When the fish is caught, the net is not needed. If it was not for the bird, the snare would be unnecessary. When the bird is caught, the snare is not needed. If it was not for the meanings, the words would be unnecessary. When the meanings are caught, the woods are not needed. I am looking for someone who understands the meanings so I can have a world with him.” If we do not spend time together how can we understand the meanings. It is a wonderful Chinese custom.

Review of Ron Adners “The Wide Lens”

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By: Don Marioni, Senior Foresight Board Member

This short book is a timely and focused guide to navigating the choppy channels of 21st century commerce and bringing new technology-based products to market. It is simply written for everyman, presents a step-by-step approach to implementation of the principles espoused and includes a rich field of vivid examples (both successful and otherwise).

Against my own experience as an aerospace systems engineer during the last half of the 20th century the message is merely basic system engineering applied to entrepreneurship. It consists of the two main precepts I have observed for success in all such endeavors:

  • Get the big picture, i.e. take a system wide view. In the case of Tech Transfer and/or marketing, examine all aspects of the proposed technology that can affect the mission goal, including all external interfaces. The goal here is to make the maximum profit through maximum sales, not just be first to market or just be profitable or just be the most profitable or just some other metric. All aspects has to include all costs to get to market, all target market segments, all competitors, all obstacles to sales Etc.
  • Do your homework, i.e. due diligence, before you commit to take on the project. In the case of Tech Transfer and/or marketing, research the experts/veterans of the market for in-depth assessments of the proposed technology. As my favorite former boss used to say “Do a penetrating analysis to get piercing insights into the system before you present it” – all while forcefully poking his finger into my sternum.

It also reminded me of a field I dallied in briefly during the early ‘60s (as a member of a national technical committee of the AIAA) viz. Reliability & Maintainability Engineering, where one of the techniques was known as Failure Effects & Modes Analysis (FEMA). In plain language it was “figure out how many ways things can go wrong, describe the effects and propose ways to mitigate/prevent them in the future.” Prof. Adner has written here a much more succinct and comprehensible thesis for entrepreneurs than what we typically had previously for developers of various vehicles of military and commercial uses. He should be commended for this contribution.

A couple of nits are noted from my oblique perspective:

I suggest the term econo-system of innovation vice eco-system, since eco (from the Greek “oiko“ meaning “house”) and ecosystem (meaning “the interrelated physical and chemical environment of the community of animals, plants and bacteria”) are less well-suited than econo-system (from the Latin “oeconomicus”) meaning “the management of the income, expenditures Etc. of a household, private business, community or government”).

Secondly, I suggest the title Wide Field of View, vice Wide Lens. I have some familiarity with characteristics and performance of lenses and antennae for collection of electromagnetic spectrum signals and am quite certain that the diameter of these components is inversely proportional to the image resolution (optical signal) and half power beam width (electronic signal), rather than directly. Perhaps Prof. Adner’s Mechanical Engineering professors at Cooper Union neglected that chapter in his physics classes.

On a practical note, an enterprise with which I am currently involved is developing an innovative software tool with the aim of reaching a global customer community (Technology Transfer) via cloud access on the Internet; we will explore the application of the principles in Wide Lens to this effort to increase our chances of success.

Technology Transfer and Knowledge Sharing in the Post-Recession Global Economy

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By: Dr. Phyllis Speser, Foresight Founder

Technology transfer/knowledge sharing are skating along the edge of a cliff. Read the mission statement of the Office of Technology Transfer at the Upstate Medical University of the State University of New York: “The mission of OTT is to promote the transfer of Upstate technology for society’s use and benefit while generating unrestricted income to support research and education.” Take a careful look the second mission: generate unrestricted income to support research and education.
The Great Recession has made that second mission increasingly critical, especially for all but the wealthiest schools. According to Donal Farish, President of Roger Williams University in Rhode Island USA in January of 2015: “Well over half of the nonprofit private colleges failed to meet either their enrollment or revenue targets this fall. Despite this, I predict that the overwhelming majority of these schools will continue to increase both tuition and discount rates next year, and even more of them will fall short of their enrollment and revenue targets.” (http://www.universitybusiness.com/article/higher-ed-thought-leaders-forecast-2015-trends). We might be inclined to discount this statement as Roger Williams is not a first or second tier research university. However the European University Association found in their Trends 2015: “The duration of the economic crisis is worrying even for the countries that have not been affected directly while it is jeopardizing for the mid- and long-term future of some higher education systems. Some National Rectors’ Conferences indicate that universities are expected to supplement the shortfall in public funding with increased European funding from programs such as Horizon 2020. At the same time, however, budget cuts also weaken their capacity to attract this type of competitive funding (EUA 2014c: 21).” (http://eua.be/Libraries/publications-homepage-list/EUA_Trends_2015_web.pdf?sfvrsn=18)

As a source of revenue, tech transfer is, for most, a bust. The Brookings Institute found in a 2013 study that “only a small number of universities consistently produce lucrative breakthroughs and collect the vast majority of the money. …The vast majority of licensing deals yield little or no money, and for most universities the royalty returns are low. …In a typical licensing deal, the royalties are split three ways — by the researchers, their academic department and the university’s general fund — an arrangement that can seem very generous to the scientist but paltry to the school. In a typical year, Mr. Valdivia estimated, that last one-third covers the cost of operating technology-transfer offices at only 13 percent of research universities.” (http://www.nytimes.com/2013/11/21/education/patenting-their-discoveries-does-not-pay-off-for-most-universities-a-study-says.html?_r=0) In other words, the great irony of Bayh-Dole is it is bleeding money away from research and education to support out-licensing of technology industry either does not want, or will only want on the cheap or for free. From a strict cash flow perspective, most universities would make money by eliminating their technology transfer office and turning tech transfer into a clerical function using easy access licensing controlled by the faculty inventors and corporate counsel.
Simply emphasizing spin-outs more is not the solution. Research suggests the current model for spin-outs is not a very good recipe for long-term net income. The reason is no matter how good universities are at spinning out companies, they really are not very good at spinning out winners – meaning companies that endure, thrive, and grow and thus can return money to the university in royalties, equality sales, or donations. Elizabeth Garnsey, Paul P. Hwang & Erik Stam of Cambridge’s Centre of Technology Management found university spin-outs were generally disadvantaged when compared to corporate spin-outs because of their lack of industrial experience and networks, adding “Although university or corporate origin exerts path dependent influence on the early development of these firms, the problems they face in scaling up are relatively unrelated to their origins. Critical problems arose from the shift in target market from technophile and early adopters to more mainstream customers as they moved from customized to standardized products, characterized by very different purchasing decisions of customers.” (“The Growth and Exit of University and Corporate Spin-outs in the Medical Instrumentation Industry,” http://www.academia.edu/2788734/The_Growth_and_Exit_of_University_and_Corporate_Spinouts_in_the_Medical_Instrumentation_Industry.)

A related view is expressed by Paul Nightingale and Alex Coad in “The Myth of the Science Park Economy. They found I a different UK analysis, “There is a role for supporting small firms during their early stages, and good arguments for concentrating some activities, but it is not clear this needs to be subsidized or universities are the best organizations to do it. This is part of a more general point. The number of start-ups in the UK is very high and possibly excessive. The vast majority fail quickly and add little to the economy beyond generating unproductive economic churn. It might be better to focus on encouraging poor quality firms to leave the market faster so that their resources and markets can be recycled by higher productivity firms. Too much subsidy can distort the market and make it harder for high potential firms to grow.” (http://quarterly.demos.co.uk/article/issue-2/innovation-and-growth/).

Just to be clear, I am not saying there is no reason to do tech transfer and knowledge sharing. I am only saying, if a goal is to make money, it is not doing that for most. In a business, top management would have by not bitten the bullet and either changed the business model or killed the office. Universities are not businesses of course, but then in the spirit of the English poet John Donne, “therefore never send to know for whom the bell tolls; It tolls for thee…”

So where does that leave us. The first takeaway is we need to serious rethink what it means to “promote the transfer of [your institution’s] technology for society’s use and benefit.” It is odd from that perspective, to give the same weight in our success metrics to the licensing of a skin whitener as to a better way to desalinate water, make a drought and heat resistant food crop, or cure cancer. The second take away is the business model for tech transfer needs a ground up rethinking.

Prioritizing the Good Stuff

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By: Dr. Phyllis Speser, Foresight Founder

There is a presumption in the tech transfer and commercialization world that the good stuff is the stuff that will have market traction and thus make you money. That is because the metrics we use to measure success are primarily financial. One example: Here is the first sentence from AUTM’s “Highlights of the FY2014 Licensing Survey Now Available” at https://www.autm.net/advocacy-topics/newsroom/highlights-of-fy2014-licensing-survey-now-availabl/. “Highlights of annual licensing activity survey show steady growth in the patenting and licensing of new technologies, net product sales, and new products and startups in fiscal year 2014.”

This is all “good” stuff, if we assume net product sales, new products, and start-ups are “good” things. Of course the point is what is good is slippery. Plato wrote a whole book (The Republic) about what is good and how we recognize it as good. Recall in the last blog post we discussed the two primary metrics for TTOs: make money for the university and create social benefit. Clearly this “good” stuff can be defined as good under the first metric, make money. The question I want to poise here is whether this is “good” under the second metric.

The argument here is:

  • product sales create social benefits because …
  • new products create social benefits because …
  • start-ups create social benefits because …

Now let’s look at some advice from “Fallacies” offered by The Writing Center at the University of North Carolina at Chapel Hill at http://writingcenter.unc.edu/handouts/fallacies/.

“Each argument you make is composed of premises (this is a term for statements that express your reasons or evidence) that are arranged in the right way to support your conclusion (the main claim or interpretation you are offering). You can make your arguments stronger by

  1. using good premises (ones you have good reason to believe are both true and relevant to the issue at hand),
  2. making sure your premises provide good support for your conclusion (and not some other conclusion, or no conclusion at all),
  3. checking that you have addressed the most important or relevant aspects of the issue (that is, that your premises and conclusion focus on what is really important to the issue), and
  4. not making claims that are so strong or sweeping that you can’t really support them.”

The logical fallacy here the … Why are these good? We do not know. We have not been told these are products heal the sick, feed the hungry, clothe the naked, stop the wars, or protect the environment. The implicit argument is:

  • Premise 1: Being useful is a good thing
  • Premise 2: Technology is useful when applied.
  • Therefore: Technology when applied is a good thing

Of course, we can all come up with counter examples. For example:

  • Being useful is a good thing
  • Mustard gas is useful in war
  • Therefore mustard gas is a good thing

There are two particular fallacies here. The first is Hasty Generalization according to the Writing Center. The fallacy is a generalization to all technology based on results from a small sample of technology. We know not all applications of a technology necessarily create social benefits. The solution to the first fallacy is to Premise 1 to say sometimes being useful is a good thing.

The second fallacy is Missing the Point, which means the premises do not support the conclusion. Usefulness in the second premise refers to the fact the technology allows us to manipulate nature. To be good, the conclusion refers to the fact the application is socially beneficial and hence anything that facilitates creation of social benefits is useful for that purpose and thus is good. But not all applications are good so the fact the technology is useful is necessarily but not sufficient.

The implication for our discussion is we need a set of metrics by which we can judge applications as to whether they are socially beneficial or not. Technologies which facilitate social benefits should rank higher in priority for action by TTOs than those which do not. Then among these we can apply the second criteria of do they make money.

Just what the criteria for good should is of course an issue to be addressed. I suspect if we were serious about doing good things, such criteria could be developed either by the AUTM or on a university by university basis. Creating a list of criteria would not be hard if we are willing to paint broad brush. For example, AUTM could poll its members and ask them what are the five greatest challenges facing humanity. Disclosures, licenses, applications of technologies that can address those challenges should be tracked. An award could be given each year to the TTO that did best. That would be the first thing reported on it in the licensing survey summary.

Bottom line, it’s time to take social benefit seriously rather than just assuming it is captured by financial metrics. Or, as Plato put it. All professionals practice two arts. The first is the art of their profession which is where they do good. The second is the money making art, which is necessary to have the resources to practice the first art.