Accelerating Commercialization and Innovation: The U.S.

Experience with the Triple Helix

Richard A. JohnsonKEFVIII – INSEAD, Fontainebleau, France

29 April – 1 May 2009

johnsri@alum.mit.edu

Triple Helix: Accelerating Commercialization By Reinventing the Role of U + I + P: 5 U.S. Examples

• Technology Transfer and the U.S. Bayh-Dole system

• Shift to Industry-University-Government Collaborations and Public-Private Partnerships as the Emerging Model for Commercialization

• National Laboratories and Government Departments as Commercialization Accelerators and Facilitators

• Experimenting with a Diverse, Flexible and Changing “Toolkit” through Increased Entrepreneurship and State/Regional Initiatives

• Viewing Commercialization and Technology Transfer as Integral Parts of a “Systems Framework” for Innovation in a KBE

Bayh-Dole and U.S. Commercialization of Publicly-funded R&D: 30 years of

experience• Universities, Non-profits, SMEs obtain title to IPR developed with public funding by faculty, students or employees (IPR is not the goal of publicly-funded R&D, just a by-product)

• Universities/Public research labs/Non-profits must seek to commercialize research that results from publicly-funded R&D

• Government receives royalty-free, non-exclusive license for procurement but no right to government pricing control over products/services from it

• Government retains “march-in” rights if university/public lab/SME fails to adequately commercialize

• Preference in licensing to SMEs

• Royalties/payments must be shared with the inventor(s) and reinvested

7

Transferring University and Public Research Organization Technology to Firms

RESEARCH $$ INVESTMENT $$

SALES $$

UNIVERSITYCOMMERCIAL

COMPANYNEW PRODUCTS

& PROCESSESINNOVATION

LicenseAgreement or Equity

• Licensing to existing companies – brings royalty $

• New company formation – brings royalties and/or equity

• Other, less direct, contributions to regional economic activity

ROYALTIES

or EQUITY PAYOUT

SBIR

Drawn from C. Gabriel, Carnegie Mellon University

U.S. Technology Transfer in Operation • Each university/public laboratory establishes its own

policies, royalty-sharing, and governance system– TTO deducts ≈ 15-20% for overhead and costs (►net royalty)– Common allocation (Stanford, U. of Washington) – create

incentives among all key stakeholders:• 1/3 inventor(s)

• 1/3 academic department or lab at public research centers

• 1/3 School and/or University general funds

– Scaled allocations depending on size of payments (Harvard, Brown, many state universities – public): inventor receives greater % for smaller amounts

• General rule: All research must be publishable • Increasing trend to equity-sharing deals for start-ups• Department/University/Labs must reinvest returns

Promoting Commercialization Benefits for Faculty and Researchers – It’s Not Just about the Money

• Financial – important incentive but often not the key reason – Additional personal income– Research funding to PI’s lab or center– Paid consulting arrangements with licensee or start-up (consistent with strict

university policies on Conflict of Interests and Conflict of Commitment)– Service on Scientific Advisory Board of start-up companies

• Career and prestige – faculty/PIs want innovation/commercialization– Enhances and improves quality of investigators’ Fundamental Research (asks

new questions; provides new feedback; ensures rigor and quality)– Key selling point for attracting and retaining best academic/research talent– Considered for tenure and advancement at some universities/labs– Access to additional Human Capital and talent beyond the university– Ability to leverage and use equipment, tools, and cutting-edge infrastructure– Successful Serial Entrepreneurs have high prestige in their field and with public

(Examples – John Hennessy (Stanford President); John Donahue (Brown neuroscientist); Phil Sharp (MIT Nobel Laureate – Biogen and Alnylam); Robert Langer (pre-eminent MIT chemist and engineer, created >60 successful companies);

Slide 10

The Entrepreneurial University and Technology Transfer Enables Excellence in Core Academic Missions – Research,

Education and Public Service• Universities as Engines of Economic Growth and Hub of 21st Century

Knowledge-based Economy (Research, Education, Public Service)

– Google, Genentech, Cisco and thousands of sustainable SMEs

– Entrepreneurs and SMEs drive the U.S. economy and job creation

– 27 universities >$10 million/year in gross income from licensing and fees; >200 American universities active in U+I tech transfer

– >$42 billion/year in new economic activity in United States

– Invention disclosures = 19,827; 3,622 new university patents (2007)

– 555 new start-up companies from universities in 2007

– 686 new products introduced to markets in 2007 (5,036 in 10 yrs.)

– 12,000 + licenses and options producing income

– Significant new job creation with higher wages

Some American Triple Helix Commercialization Results

• 550,000 small businesses created 1996-2004

• 17% of GDP and 9% of jobs came from venture capital-back start-ups, most of which originated in universities or with public R&D

• IPR and university/national lab revenues are not the primary goal – it is not about the money; it’s about driving new interactions, insights, collaborations and solutions that accelerate commercialization across the knowledge supply chain and entrepreneurial ecosystem

• “People don’t buy technology, they buy solutions” (Lita Nelsen, MIT)

• It’s much more than just S&T, R&D inputs, patents and publications, and it is not a linear process

MIT May Be Sui Generis, BUT It Shows What an Entrepreneurial University and Ecosystem Can

Achieve

• Commercialization from the MIT entrepreneurial ecosystem = the 11th largest economy in the world

• MIT- related companies globally = 25,800• Job creation = 3.3 million jobs around the world• Global world sales from MIT companies = $2 trillion/year• New company formation from the next generation MIT

entrepreneurial environment is accelerating > 5,600 new companies in United States since 2000

• Huge regional and local impacts – not just economic, and many outside the United States

6 New Tech Transfer Trends in the United States

• Universities increasingly viewed as key parts and leaders of complex Entrepreneurial Ecosystems

• Promote Access and Diffusion – e.g., license IPR more creatively to spur innovation and meet social needs: 9 core principles now guide licensing to balance public and private needs

• No longer just S&T, biomedicine and engineering

-- Design and New Media

-- Knowledge-intensive services

• Focus on collaborative research and broader/deeper partnerships• Social Innovation and Relational Nets are key, new aspects for

commercialization of public R&D – focus on relationships, organizations, interactions and trust; align with social networking

• Globalization of the American universities and international universities creates new challenges and opportunities for accelerating commercialization: new global networks/linkages

Government Departments Have Increased Propensity to Commercialize Their Research – e.g.,

National Institutes of Health (NIH)• Largest publicly-funded R&D to advance public health; Budget ≈

US$27 billion; 27 Institutes, Centers and Divisions: 60,000 awards/yr; 18,000 employees; active Office of Technology Transfer

• NIH views commercialization as key to promoting public health• Robust NIH pipeline and >2,500 patents• Novel, fundamental research discoveries and inventions• “Supermarket” for research tools and materials in biomedicine• >2,000 active licenses with product sales > US$3 billion/year• NIH researcher/inventors also get royalties – capped at $150K/year

(30 researchers at NIH are at annual cap)• NIH has commercialized more than 250 biomedical technologies• Social capital (broad interactions and collaborations) increases the

likelihood that NIH researchers will commercialize their research

Increased Industry Role for Commercializing Public R&D – The 3 R’s (IBM) for Creating Mutual Value and Accelerating

Innovation

• Reach and Modes of Engagement– Skills development and support for educational infrastructures– Lifelong learning, retraining and courseware development– Virtual, face-to-face, peer-to-peer, partnerships

• Research (Discovery-driven and Solutions-driven)– Increased focus on Innovation and leveraging public R&D– Collaboratories and sustained partnerships (bi- and multi-

directional among U+I+P); deep exchanges and mobility– Access to and sharing of equipment, tools and infrastructure

• Recruiting and Human Capital– Top talent for the future– Internships, co-ops, post-docs, team based project challenges

U+I+P Strategic Partnerships – “No One Size Fits All”

• Sponsored Research and “windows into research”• Increased trend toward “Collaboratories” and other

longer-term, multi-directional partnerships • “User-driven Innovation” and distributed R&D networks

create new commercialization opportunities• Integrating entrepreneurial ecosystems and investments• Public-private partnerships for addressing societal issues • Social Entrepreneurship and Venture Philanthropy• Pre-competitive consortia (National Institutes of Health --

GAIN, TCGA, SNPs, HapMap) and shared infrastructure• Location-specific competencies: the role of clusters/hubs

U.S. National Laboratories: A New Role as Commercialization Accelerators

• Major shift toward commercialization in last 10 years• Technology-based economic development at all levels• Wide use of CRADAs and de-centralized collaborations• Affiliated incubators and S&T research parks• Technical assistance and brokering services for SMEs• Mentoring, educational outreach and career metrics• Leveraging expensive government-funded research

equipment and tools; shared access and services• Small Business Assistance programs: 650 at Sandia Lab• Sponsor venture capital forums and link to capital flows• Commercialization Incentives – financial and personnel

The Current U.S. Toolkit for Accelerating Commercialization is Marked by its Diversity

• Incentives, not mandates: flexible and market-oriented• Innovation awards for start-ups and SMEs – the SBIR

program and others• Entrepreneurial ecosystems – universities, regions,

national labs, 50 American states, and industry clusters• Incubators, research parks and clusters (some virtual)• Entrepreneurship best practices, competitions, mentors• Champions, meritocratic and sustainable funding• Pre-competitive public-private consortia• Public-private partnerships for societal grand challenges

© Charles W. Wessner

22

The SBIR “Open Innovation” Model

PHASE IFeasibilityResearch

PHASE IIIProduct

Developmentfor Gov’t orCommercial

Market

Private Sector Investment

Tax RevenueFederal Investment

PHASE IIResearchtowards

Prototype

Socialand

Government Needs

$750K$100K Non-SBIR Government Investment

$143 billion

Some Lessons from the U.S. Experience in Accelerating Commercialization from Public R&D

that Are Overlooked

• Key Role of “Soft Infrastructure”, Intermediaries and Risk Investors

• Commercialization Critical to Basic Research and University Role

• Supportive Entrepreneurial Climate and Policies– Technology Seeds Must Land on Fertile Fields– Failure is Tolerated (and Celebrated) and Risk Taking viewed as a “positive”

• Immigration as a Source of Talent and Drive – 35-40% of U.S. start-ups and entrepreneurial activity in last 25 years came from persons not born in the United States

• Vigorous Domestic Competition and 50 States Funding (not federal) – the competition for economic activity, jobs and investment among the 50 U.S. states is intense (regions, clusters) and accelerates commercialization and innovative activity with publicly-funded R&D

• Increasing Focus on Whole-of-Government Framework Conditions – Tax Policy, Labor Mobility, Competition, Human Capital, Innovation

An Emerging New Toolkit for Accelerating Commercialization in SMEs at Global Scale

• Focus on Knowledge Markets and Intellectual Assets • Virtual technology accelerators (plus physical incubators)• On-line matchmaking and social/business networking

tools for SMEs and national innovation infrastructures• Linking global “brain circulation” strategies with global

and regional commercialization and clusters• Harvestable Innovation – a new approach• Open Innovation collaborative mechanisms to overcome

the limitations of size, geography, and global “bandwidth”• The hub of U.S. initiatives is at the local, regional and

state level (“bottom up” driven with “top down” support)

Slide 25

The Innovation Framework