Bloomberg BusinessWeek: Turning Research into Inventions and Jobs
A recent BusinessWeek article called for the investment of billions of dollars more in "basic research" to create millions of new jobs. It's hard to argue against the importance of scientific research.
But too often overlooked in discussions over research spending is a fundamental fact: We've already got an abundance of research. The next transistor, semiconductor, or breakthrough in MRI technology may already have been discovered.
The problem is, we've dropped the ball on translating this science into invention. The vast majority of great research is languishing in filing cabinets, unable to be harnessed by the entrepreneurs and scientist-businesspeople who can set it free. We consider this shortfall academia's equivalent of Alaska's "bridge to nowhere."
Let's Nurture Science Startups If the federal government and academia could improve how well technology is commercialized, we could quickly create millions of science jobs. And those jobs wouldn't be reserved just for PhD researchers; they would go to employees of science-based startups. This would provide a far swifter economic boost for the U.S. in terms of actual new goods and services on the market. Rather than wait decades for the new basic science to trickle out of the Ivory Tower and into products, a mechanism to quickly assess inventions and build associated companies with real potential would show real returns and major job growth within as little as one or two years.
It's not just recently launched startups and their investors who would benefit. Ultimately, this focus on tech commercialization and company formation would also generate more royalty dollars for universities and, in turn, more money for the basic science they so want to expand.
Before we can help scientists make businesses from breakthroughs, we need to understand how broken the current system is. For starters, many universities are underequipped for the monumental task of licensing technology. Major universities have broad research complexes, ranging from anaerobic chemistry to zoology. But too often, when a scientist makes a discovery, the responsibility for finding the right partners to license the technology lies with a single office.
The Art of Technology Transfer Even a good-size technology transfer office would struggle to master this task effectively, much less provide sufficient industry-specific contacts for proper marketing of discoveries. When university technology licensing offices try to find an investor or licensee for a specific piece of technology, they lack the inventor's insight into the technology's potential. The upshot? According to the National Academy of Sciences, roughly 0.1% of all funded basic science research results in a commercial venture.
Another hindrance to commercialization of science: Very few scientists are equipped to go into business. They do not know the difference between an S Corp and an LLC. They don't know how to navigate a state or local permitting bureaucracy. And few have a clue about marketing or managing company finances in a way that could withstand an intense audit.
These mismatches ensure that stunning amounts of stellar science remains tucked in the lab forever.
If we want to create jobs, we must first train scientists how to start companies. Tom Katsouleas, dean of Duke University's engineering school, has a potential solution, called PhD+. For PhDs who wish to start companies and have marketable technologies, Katsouleas proposes that the federal government provide funding for training in entrepreneurship to teach the lab geeks how to get along better in the startup world.
He arrived at this theory after watching his graduate students eschew expertise gained in his lab, which specializes in the workings of so-called compact particle accelerators, to go into other technical fields. This pained Katsouleas because these tabletop-size accelerators had huge potential for medical uses. But launching a medical device company is a daunting prospect even for a seasoned entrepreneur, let alone a recent PhD recipient unskilled at running a business.
Science + Business = PHD+ Here's how PhD+ would work. Marketing, finance, HR, and product development would all be taught to chemists, physicists, and computer science students and professors enrolled in the program. Scientists who successfully run a gauntlet of these courses would then graduate into an incubator program that matches them with successful company founders or senior executives in their field as well as top-notch providers of the professional services required to launch a science-based company. The scientists would also get a nominal amount of seed funding as well as lab space and other basic ingredients to help them achieve critical mass and bring their concept close enough to product stage to interest venture capitalists or angel investors.
We also need to rethink the importance we ascribe to technology licensing. It should be subordinated to entrepreneurship as a scheme for pushing technology into the world. Instead of being rewarded for generating license revenue, technology transfer offices should be measured on the number of startups they help spawn, and by the employment and revenue created by these startups.
When these companies succeed, the university benefits as well. Consider Stanford University, widely perceived to have the best technology transfer program in the world. Stanford received technology licensing fees of only $62 million in 2008. At the same time, the school received nearly $1 billion in philanthropic contributions. At Stanford, the largest givers are typically alumni entrepreneurs such as Google (GOOG) founders Larry Page and Sergey Brin. Page and Brin took their basic research work on search engines and converted it into one of the world's most valuable companies.
By vastly improving how people find information online, Page and Brin improved the world. Their work epitomizes how innovation flows from people, not patents. The PhD+ model would cost a tiny fraction to implement—perhaps several billion dollars—compared with bolder plans to boost basic sciences. And it puts money into the right place: the people—not the new lab building.
Basic science is a key to our future. But capitalizing on past discoveries and using what we have by equipping people to unlock the potential in their science and themselves will offer a faster path to those million science jobs as well as a bigger boost to our struggling economy.