Some Thoughts on Academic-Corporate Relations in the 21st century
Da Hsuan Feng
Senior Executive Vice President
National Cheng Kung University
Keynote speech delivered for the Advisory Board of Texas Institute of Science (TxIS)
November 3. 2008
I am deeply honored to be invited to say a few words about this subject which, as you know, is dominating the academic and corporate worlds today globally. Since I am more familiar with the American system, and more recently the Asian system, I will confine my discussion in these two systems. There are experts in the audience, such as my good friends Alain Bensoussan, former Professor of University Paris-Dauphine and Director General of the European Space Agency and Professor Miroslav Vicek, Vice Rector of the Czech Technical University, also Academician Laszlo Kapolyi of Hungarian Academy of Science who can speak about the situation in Europe far better than I can. I shall defer to their knowledge and wisdom.
About two years ago, Lazlo Olah, CEO of TxIS met me in my office in Dallas and gave me a description of his grand vision. Since all of you are well aware of what TxIS has already achieved, and how far Laslo has propelled the Texas Institute of Science, from concept to operation with gusto, I will not discuss it in detail here. Suffice to say that the essence of TxIS is to be a proactive “intermediary” between the corporations with significant technical challenges and academia worldwide which can provide them.
I should tell you that I was so impressed with what I heard from Laslo. In the past two years, I kept telling myself that “with so many transformation taking place in the globe, with rapid changes in the way people physically move about, intellectually, economically and “telecommunicationally,” (and even the economic meltdown as recently as a few weeks ago which has profound impact on the US election tomorrow) what Laslo had outlined to me may, in my opinion, very well be the “missing link” for academia-corporate relations, one that is taking the 21st century’s conditions fully into account!”
I think the success of TxIS in the past two years is a testimony of the success of his vision.
I will come back to this at the end of this discussion.
Pearl S. Buck, the world renowned author said that “If you want to understand today, you have to search yesterday.” To understand the current situation of academia-industry relations in United States today, we need to pay some attention to history.
As the cliché goes, we have now entered the 21st century and the “earth is flat!”. It is interesting that for the United States, this story as the title of this speech suggests began, more or less, in the 19th century. I should mention that universities existed well before that period. Some of you who watched the recent TV Series about John Adam noticed that he and his son, John Quincy Adam, were both alumni of Harvard College. However, as Harvard’s website states:
“…During its early years, the College offered a classic academic course based on the English university model but consistent with the prevailing Puritan philosophy of the first colonists. Although many of its early graduates became ministers in Puritan congregations throughout New England…”
It is worth noting that by the time that John Adam attended Harvard in 1751 and John Quincy Adam graduated from Harvard in 1787, Europe’s era of scientific methodology via several hundred years of the Renaissance was already in full bloom. After all, nearly a century earlier from the Adams’ time, in 1688, Sir Isaac Newton already published his monumental, profound and ageless scientific epic PRINCIPIA. As you all know, PRINCIPIA contains one of the most important body of human knowledge. It literally lifted humanity into a scientific methodological era which is still operative today.
However, it appears that in North America this great intellectual revolution that was in full rage in Europe did not affect North America significantly until much later. Indeed it came in the 19th century.
19th century, the age of academic and industrial awakening in United States
I have to say that 19th century was really an exciting century for North America. It was indeed the century where academia and industry began, but only began, to rear their heads. Let me bring in a few giant names for our discussion.
- Alexander Graham Bell, a Scotsman, who was born in 1847 and became a professor at Boston University, was widely credited for inventing the telephone. He attended the University of Edinburgh. I suspect that without the monumental body of knowledge of his countryman Sir James Clark Maxwell (born 1831) who gave the world a complete and succinct understanding of electromagnetism, I doubt very much that Bell could have made his invention. Still, what Bell did could be considered, in modern language, as an application of basic science!
- Henry Ford who was born in 1863 founded the Ford Motor company and introduced the so-called assembly line. Henry Ford was self taught.
- Thomas Edison who was born in 1847, the same year as Bell, was an incredible inventor, including the phonograph. In today’s language, he could be credited as a man who built “technical devices.” Just as Ford, Edison did not have formal education.
I have an interesting story about Ford and Edison which I learned from Mr. Ross Perot during one of my memorable meetings with this “maverick!” Mr. Perot said that in the beginning, Ford initiated a assembly plant where the floor workers would have to go from car to car. He was very proud of his “invention.” Edison, who was a friend of Ford, was invited to visit the plant. Ford wanted to show his frined his great invention. When Edison saw the system, his knee-jerk reaction for Ford was “have you considered moving the cars and not the workers in the assembly line?”
The rest, as one would say, is history!
This story is as amusing as it is profound. It is profound because it tells us that in any human endeavor, there are always ways to do it more efficiently, more out-of-the-box, more in the “break-through” mode. It was self-evidently true in the 19th century as it is today.
For our present discussion, you noticed that apparently neither Ford nor Edison had much interaction with universities. While Bell did have some interaction with universities in Boston, after all, he was a professor in Boston University, it was probably not deep. In many ways, all three industrial giants of the 19th century did not have academia-industrial relations, either directly or indirectly, on their radar screen.
So why was that? One of the reasons, in my opinion, is because US universities are still “immature” and there were only a few and far in between.
Let me demonstrate this fact by quoting one of my most respected higher education leaders in United States today, President Richard Levin of Yale University about a great president of Harvard University, Charles William Eliot. Eliot was Harvard's longest serving and most successful president whose term was between 1869 and 1909. The quote was taken from Levin’s speech delivered in the Chinese-Foreign University Presidents’ Forum in Beijing on August 4, 2004.
President Levin said that
“…Charles Eliot …was, almost certainly, the most influential university president of his time. I believe that it is fair to say that, cumulatively, the changes he wrought at Harvard had as significant and as enduring an impact on higher education in the United States as the accomplishments of any university president before or since. He became a national figure during the second half of his tenure as a spokesman for liberal individualism and an advocate of school reform…….”
There are two things worth noting here.
First, it is incredible and magnanimous that a sitting President of Yale is willing to publicly acknowledge how great his fiercely competitive institution is!
Second, Levin is basically saying using modern vernacular that “Harvard was not Harvard until Eliot was finished with it!”
Another critical change in the 19th century was the proliferation of the so-called “Land-Grant-Universities.” There was a pivotal political leader in the 19th century in the United States. His name is Justin Smith Morrill. Morrill was a US congressman from (1855–1867) and a Senator (1867–1898) from Vermont. Why do I mention him? The reason is because there is a Congressional Act that was proposed and named after him, the so-called “Morrill Land-Grant College Act.” The language of the Act is
“…without excluding other scientific and classical studies and including military tactic, to teach such branches of learning as are related to agriculture and the mechanic arts, in such manner as the legislatures of the States may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life…”
The follow up of this ACT was that the Federal Government of the United States, by bestowing a whole bunch of goodies such as land, was the primary reason for the creation of what is today commonly known as “Land Grant Universities.” Great state universities of today, such as University of Arizona, University of California Berkeley, Purdue University, Texas A and M University, University of Wisconsin and so on are created under this Act. You can palpably imagine that if these universities did not exist today in the United States, the intellectual and economic might of the nation would surely be very different, if not significantly weaker.
It is obvious that the fundamental driving force behind the creation of these land grant universities is that just ensuring and educating students to be fluent in Greek and Latin, however important those bodies of knowledge were to be learned, was no longer adequate for society. University education needs to align its education with the industries of the day, agriculture and mechanical arts in the mid 19th century. I think if one looks at higher education today, this vision of the Morrill Act is still very much applicable. And it has a great deal of relevance to the vision of TxIS.
Three metamorphosis took place in the 20th century
Three metamorphoses took place in the 20th century that made higher education in North America what it is today.
First: Two world wars in fire power and destruction of the scale never before seen in the history of man ravaged Europe and Asia in the first half of the 20the century. The end result of these two horrible wars essentially lifted, lock-stock-and-barrel, thousands and thousands of the truly great intellects in Europe and “dumped” them on American intellectual communities. People who not only were great, but truly great in the sense that their works were epoch changing, like Albert Einstein, Eugene Wigner, Enrico Fermi, Theodore von Kármán, Edward Teller and so on, in my opinion, would never had left Europe if Europe did not become the epic centers of WWI and WWII. Indeed, if the intellectual supremacy built up from three to four centuries of the Renaissance was not so significantly disturbed, if not destroyed, there would be no such massive brain-drain from Europe to the United States. In my opinion, I dare say that such a brain-drain was never before seen in the history of man, nor will it ever happen again to that magnitude. With this as background, with the gushing in of such an intellectual Tsunami, it is no surprise that the quality of research and development in US universities’ made several quantum jumps and became the envy of the world in merely 50 years of the first half of the 20th century.
Second: Right after WWII, a great American named Vannevar Bush, a US senior science and technology administrator who was responsible for the War Weapons program called Manhattan Project during WWII, realized that to sustain R&D for the United States, which was important for the country’s education and economic well being in the post-war period, successfully convinced the administration to create what is now called the National Science Foundation. Bush realized that in order to promote research excellence in universities, Federal Government should and must play a pivotal and fundamental role. There is a well known cliché which says that “imitation is the best form of flattery.” Well, if you look around Asia, where the National Science Council of Taiwan, Natural Science Foundation of China and National Science and Engineering Foundation of India all have the NSF flavor, you would immediately realize how fundamental the concept of having an NSF-like institution in any aspiring nation! I suspect in Europe, there is also similar outfits which have NSF flavors.
So, with the combination of a significant up-lift of quality people from Europe, and with funding from the Federal Government for research, US universities went from good to great.
But, there is still one step missing for a robust academia-industry relation. That step is intellectual properties, or IPs!
Third: The final step finally came in 1980. With US Federal government funding research after WWII before 1980, it was sort of understood that the IPs created in universities should and did reside with the Government. Yet, the US Federal Government was not and will never be an entrepreneurial outfit. This means that all the IPs will simply be sitting on the shelf somewhere in Washington D.C., collecting dust. Two Senators, Senator Birch Bayh of Indiana and Senator Bob Dole of Kansas, recognized this shortcoming, created probably one of the most profound Acts of the 20th century, the so-called “Bayh-Dole Act.” Instead of government owning the IPs, this Act permits a university, small business or any non-profit organizations to retain intellectual property ownerships. This fundamentally altered the landscape of university-industry relations. Universities now can take their IPs and negotiate various relations with industries, such as license, co-ownerships and so on. Much of the sweeping changes one noticed within US universities today, I dare say, had their genesis in the Bayh-Dole Act.
I should say that even with outstanding faculty, government funding for research and with the Bayh-Dole Act, the number of successful universities in capitalizing on this landscape have been few and far in between. In his recent speech at the University of Tokyo, President Levin made the following important comment regarding the lack of success of technology transfer among US universities:
“… Historically, most U.S. universities did not actively seek to participate in the translation of discoveries into new products, processes, and services. An exception was the Massachusetts Institute of Technology. By the mid-1990s, graduates of MIT had founded over 4,000 companies nationwide, and were continuing to create an additional 150 companies a year. Illustrating the impact a university can have on its local economy, more than 1,000 of those companies are based in Massachusetts, accounting for about 25 percent of all manufacturing activity in the state….”
So, why is that the case? Why are there not more MIT’s?
The issue is the core question reverberating in many administration corridors and conference rooms within research universities worldwide today.
Indeed, what is the mission of a 21st century research university? Well, from every corner of the globe, you would hear the chorus that it is “to be the economic and intellectual engine!” While this “sound-bite” sounds awfully good, the challenge is whether universities can put it into practice? My answer is that it can only be if we can stimulate economic and intellectual development synergistically.
So let’s get into today’s subject.
Let us as academics step back and view this issue from an entrepreneur’s point of view. A good friend of mine who is an extremely successful entrepreneur once told me in no uncertain terms that “A business is there to make money, ethically!” There is no “ifs” or “buts” after this statement, he said.
What are the fundamental and generic ingredients of creating businesses, large scale ones such as Microsoft in Seattle or Chi-Mei in Tainan or small start-ups in Silicon Valley or Hsinchu in Taiwan? They have to have, in my friend’s opinion, and I fully concur, the following components:
A good idea;
A burning desire to do business;
A way to obtain business finance;
A way to turn a prototype into products. This is a euphemism for manufacturing;
A way to sell products successfully. This is a euphemism for marketing. With this in mind, I propose that there are two ways where academia can interact with business.
I will call them “Inside-Out” and “Outside-In”!
”Inside-Out” is when within the university, we find the best possible “prototypes” created by faculty, students or what have you, and then push it outside the university. Now let’s examine inside-out from the business ingredients I mentioned above and see how it works.
A good idea. This is certainly not in short supply within the university. After all, most research done inside the university are curiosity driven by very smart people.
A burning desire to do business. On the average, this is a little less abundant inside a university. Generally speaking, we do not adequately train and/or educate our faculty and students to be highly entrepreneurially minded.
A way to obtain business finance. This is even more difficult. Finance for business is very different from obtaining research funding from the Science Research Council of Taiwan or National Science Foundation of the United States. Here the conversation needs to be between faculty and venture capitalists, angels, investment bankers and so on. Bringing people of such different background together to have a meaningful conversation, or collaborate on business, is a highly unusual, if not unlikely scenario.
A way to turn a prototype into products is a euphemism for manufacturing. This is almost impossible task inside the university. I know of NO university that can manufacture anything in large and highly regularized manner, nor should they try. A university should never forget the only products it should “manufacture” is knowledge and a work force for the society. Therefore, seeking the right manufacturers for products is in itself a significant business enterprise which is outside the realm of a university.
A way to sell products successfully is a euphemism for marketing. Marketing takes on all forms. Although there are business or management schools within universities, to find expertise on or for a specific technology’s market, and to promote the sells through a sophisticated marketing and sales channel, is not a simple task within a university. Yet, without it, the products will simply “sit on the shelf,” a most undesirable business scenario.
These difficulties have collectively been given a very ugly name, and it is called the “Valley of Death!” Few universities in the US were able to overcome it without dispensing significant internal scarce resources and hire outstanding professionals. In fact, it is often true that the ROI is negative. The glaring successes which are few and far in-between: the example of MIT as mentioned by President Levin, and the famous Vitamin B-12 of the University of Wisconsin and Gatorade of the University of Florida are some of the often, but lonely, examples.
I should also mention that there is another issue which challenges universities. It has to do with the nature of academic research. We all know that many faculty members tend to carry out the work alone. This has the effect that he/she can create only one or a few prototypes which have the undesirable feature that generally it/they have reduced functionalities, if not a single functionality. However, often technological breakthroughs of today are more in the form of “internet-like,” where the “we are smarter than me” concept of the well known business futurist Keniche Ohmae is more applicable then of the form of ‘semi-conductors,” a profound and global economic transformation of three scientists from Bell laboratories. This means that it is more likely than not that what is needed is a set of prototypes put together, as in system integration, in order to have serious commercial value. Taken to the extreme, which TxIS is confronted with, is if a large industry has a major project which needs a multitude of prototypes from different universities, and heaven forbid, from different countries, who should the industry contact?
What about “Outside-In”?
Now let’s examine how outside-in works.
A good idea. This is certainly not in short supply from the outsiders. Without a good idea, they do not have a business.
A burning desire to do business. Ditto.
A way to obtain business finance. For outsiders to survive, at least initially, they better know how to obtain business finance. Or else, they do not have a business.
A way to turn a prototype into products. This is a euphemism for manufacturing. They must know how to do this. Or else they do not have a business.
A way to sell products successfully. This is a euphemism for marketing. Marketing is fundamental to any business. It is the “soul” of business. Without it, outsiders do not have a business.
It is clear that if there is a way to create a platform for outsiders and insiders to interact, i.e. by synergistically linking up outsides with insides, I am convinced that we can go a much longer way than each doing it one its own.
Both inside-outers and outside-iners need finance. For inside-outers, this sort of funding is fundamentally different from those they compete-for in National Science Foundation in US. They are funding in the form of venture, angel, investment bankers (the Lehman Brothers, heaven forbid!) and so on. The language deployed in negotiations to gain access for such liquidity is fundamentally different from research funding. Most faculty and students inside the university lack such training, if at all.
A few months ago, in order to try to comprehend the thinking process of entrepreneurs housed in either in the incubator of my current university, National Cheng Kung University (NCKU) in Tainan, Taiwan or Southern Taiwan Science Park incubator (under contract from Minister of Economics and is operated by NCKU,) the director of NCKU’s incubator Professor Y. L. Lo, his team and I had a three hour heart-to-heart meeting with this group of about 30 CEOs.
My impressions of the meetings are as follows.
First, they are all highly sophisticated entrepreneurs. They have solid grasp of their products and the marketability.
Second, they are all frustrated with the VC communities. Perhaps the most poignant comment made by one very bright CEO is that the Taiwan VCs are highly “risk averse,” and hence there is essentially no opportunity for startups. I am not sure whether this would be an accurate blanket description of Taiwan’s VC communities, and I am equally not sure whether US VCs, after the disastrous DOT.COM era of the last decade of the 20th century is not equally “risk averse” today. Never the less, I suspect that at least in southern Taiwan, VCs play little role in “kicking up an entrepreneurial storm.”
Third, some of the CEOs appear to hope to, or rely on Taiwan’s SBIR from the Government. I told them that my gut feeling is that while one should never dismiss such handouts from the Government, here or in the US, I think it is nevertheless true that such funding is a little too late and too slow. Speed, I learned when I was in the industry, is one of the important ingredients of business success.
Fourth, they want to find ways to work with universities beyond merely technological collaborations.
As I mentioned earlier, when I started to learn about IPs about twelve years ago, I was so impressed by two US senators, Senator Birch Bayh and Senator Bob Dole who had the great foresight to release ALL IPs developed from research in universities utilizing Federal government funding will be owned by the universities.
To this end, I believe that universities must maintain high degree of flexibility in its treatment of IPs. For example, we must maintain very flexible and pro-faculty in our license agreements with the inventors. Also, I believe that all universities must have, if not already have, robust and forward looking university-wide Patent Committees? These committees must not be “pro-forma” committees, but one must have significant components from legal as well, if possible, VCs. It is important to bring to the entire university that IPs, or patents, are statements of “commercialization,” not just another line in one’s resume, as in a publication.
I hope I have convinced you that even though one sees significant transformation in academia-industry relations (and collaborations,) in the 20th century and the 21st century, where the situation went from non-existent to a relatively sophisticated interaction, the situation is still far from optimum.
For one thing, it is clear that more and more industries, because of the nature of the business, are getting out of R and do only a minimum amount of D. With the world facing the possibility of a economic downturn and/or meltdown, more and more corporations are going to be very stingy in holding on closely its liquidity to protect themselves from takeovers, friendly or hostile. Obviously, within the priority of sacrifices corporations need to make, R&D will surely be near the top, if not the top. Yet, without R&D, corporations may not be able to follow and/or lead in the fast changing world of business.
Also, Laslo and I have had many discussions about TxIS. Let me give you one example which Laslo and I have discussed explicitly, and it is the oil and gas industry. In this business, there are still significant number of important technical problems which can render the business more economical, efficient and environmentally friendly. Many of the technical projects would require different faculty members from different universities in different countries to work together. You can easily imagine how bewildered the CTOs of such companies will feel to bring such a team together. Indeed, how great these CTOs would feel if there is indeed a “who to call” such as TxIS, when such situations arise. Of course the situation is not only common to CTOs of oil and gas industry, it is true for any major scale industry.
Finally, can corporations and/or universities create a TxIS-like platform? Maybe, but I doubt it. The reason is that the mission of corporations and/or universities is completely different from the mission of TxIS and therefore while it may not be impossible, it is difficult for them to bring in such a platform internally, which can serve themselves and their counterpart. This is why the mission and operation of TxIS is so important, not only for North America, Asia, but for the entire globe.
This is why I said from the beginning that TxIS may be an idea whose time has come.
Thank you very much for your attention!