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Academia (vs. Industry)

Innovation, at Universities and in Industry

Some thoughts this morning on universities and industry and their contributions to research – and for once, this isn’t going to be another long screed on drug research in particular. No, I’m particularly talking about what each of these brings to R&D in general, and about the places (both conceptual and physical) where they seem to intersect the most productively.

The last ten or twenty years have seen an awful lot of talk about innovation and entrepreneurship, and in general, I don’t have a problem with that. Well, let me restate that: I certainly have no problem with innovation, but perhaps I do have one with just talking about it all the time. That sentiment seems to be shared by this piece from last year at the Chronicle of Higher Education, with its testy title of “Enough With All the Innovation”. The author, John Patrick Leary (an English professor at Wayne State), had recently attended the kickoff of a new “innovation center” at the university:

It was a success: Students were excited, the free food was unusually good, and the whole production could have probably paid for a couple of adjunct history professors. I left disheartened by it all: the unskeptical embrace of buzzwords, the unexamined enthusiasm for the marketplace as a wise referee of ideas. I also wondered whether the reason students were so enthusiastic about running a potentially lucrative start-up at school was that their Wayne State education wasn’t as affordable as it was two decades ago, when the state of Michigan accounted for two-thirds of the university’s operating budget, as opposed to one-third today.

Private universities like Princeton, Yale, the University of Pennsylvania, New York University, and Rice are locked in what some have called an “innovation arms race,”competing to open new entrepreneurial “labs,” “hubs,” and “makerspaces” to facilitate student and faculty start-ups. Public universities like mine are racing to keep up. The Innovation Hub is part of a major new initiative, explained university officials in a statement, to “prepare our students with innovation and entrepreneurship skills” while also leading “the revitalization of the Detroit region.”

He’s (justifiably) a bit skeptical about the ability of Wayne State’s new innovation center to contribute much to that last part, and he’s also worried about the trend in general for schools to be caught up in a race to see who’s the most innovative, who’s spinning out the most startups, etc. It seems (as it certainly would seem, especially, to someone on the English faculty) that this is part of a change in the relationship that most universities have with their students and with their surroundings, and it’s also part of a long-running debate about what a college education is for, anyway.

We’re not going to solve that one any time soon. But another one of Leary’s questions would seem to admit of an answer: how effective have all these innovation centers been? Data on that are not easy to come by, as you might well expect. Leary cites this paper from a few years back by Marc Levine at Univ. Wisconsin-Milwaukee, who brings in a good deal of evidence that UMW’s talk at the time of becoming an entrepreneurial hub was, in fact, just talk – expensive talk, and unlikely to lead to anything like its stated aims. If that has changed over the ten years since the paper was published, it would be interesting to hear about. Here’s a more recent study trying to address the question directly: in 53 different “college town” environments, does the presence of such innovation centers, research parks, entrepreneurship programs, etc. actually seem to affect startup rates and small business formation in the area? Apparently not. Meanwhile, this paper (which is the source for this article, also at the Chronicle) suggests that while such programs might benefit students, it’s not necessarily in the ways that the university is intending.

Which takes us up to this latest article, “The Campus Innovation Myth”, which summarizes those papers and more. And it quotes from two British researchers who state that “In Europe and the US, it is probably fair to say that there is not a single example of a successful cluster” created by top-down policies intended to start such research hubs. I believe it, and if that’s a goal of these campus innovation centers, then good luck. If we knew how to create another Boston/Cambridge or Silicon Valley/Bay Area, there would be more of them, and that’s just here in the US, where as it stands, it can be notably harder to get a tech company (broadly defined) off the ground in many regions outside the concentrations of venture capital. Much less create another concentration of venture capital itself.

But now we add this new paper into the mix. The authors are looking at a problem that has caught the attention of many economists over the years, that is, the plateau in productivity despite continued scientific and technological advances. There are plenty of explanations for that, ranging from demographics to changes in social structure to claims that we’re not even measuring productivity the right way, and more. But this paper assumes that the stagnation is real, with one part of the problem being a decline in actual industrial research in general.


What you can see from that graph is that business’s share in total research in the US has been pretty flat – that despite increasing amounts of money being spent. Most of that has been going into development work, with less of it in early-stage stuff (the “share of research in business R&D”) line, and I think that these data would reflect the experiences of most readers of this blog, especially the ones who remember the Central Research departments at the larger companies.

That last part, the authors say, suggests that another big part of the problem has been a breakdown in how universities and industry split up the R&D world:

. . .This evidence points to the emergence of a new division of innovative labor, with universities focusing on research, large firms focusing on development and commercialization, and spinoffs, startups, and university technology licensing offices responsible for connecting the two.

In this chapter, we suggest that this division of innovative labor has not, perhaps, lived up to its promise. The translation of scientific knowledge generated in universities to productivity enhancing technical progress has proved to be more difficult to accomplish in practice than expected. Spinoffs, startups, and university licensing offices have not fully filled the gap left by the decline of the corporate lab. Corporate research has a number of characteristics that make it very valuable for science-based innovation and growth. Large corporations have access to significant resources, can more easily integrate multiple knowledge streams, and direct their research toward solving specific practical problems, which makes it more likely for them to produce commercial applications. University research has tended to be curiosity-driven rather than mission-focused. It has favored insight rather than solutions to specific problems, and partly as a consequence, university research has required additional integration and transformation to become economically useful. . .

Which takes us back around to the universities themselves trying to become more commercial and corporate. I think that the authors of this paper would find that to be the exact way not to fix the problem. But fixing the problem (and avoiding the ineffective ways to try to do so) is not easy. Companies worry about setting up blue-sky research divisions disconnected from their business realities (and worry about what the shareholders would say about that), while universities worry about becoming (A) irrelevant and (B) poor, as state funding (for example) has dried up and new sources of money have had to be identified. The incentives are in place to do the opposite of having the universities be more academic and having industry shoulder more of the R&D costs. Funding basic research is always a contentious topic, Vannevar Bush’s endless frontier aside. We’re not going to solve that this morning, but it’s good that people are thinking about it, and I welcome the research that’s going into how to do best do research. And pay for it.

21 comments on “Innovation, at Universities and in Industry”

  1. luysii says:

    Here is some University (Harvard, MIT, Japan) research that no drug company would carry out, as even if correct it wouldn’t lead to a drug. However, if it pans out, it would be a way to treat a variety of neurodegenerative diseases (think Alzheimer’s, Frontotemporal dementia, etc. etc.).

    It is probably too good to be true.

    1. WWCody says:

      An example that tests the idea: ” Cognito Therapeutics is a clinical stage company developing device-based therapies and services to pioneer this approach. Gamma stimulation is a non-invasive brain stimulation technique that could provide dramatic benefits in Alzheimer’s Disease.” A small company with enough cash to move from a model concept to testing a product concept.

      1. luysi says:

        From my original post on the work.

        “This is very exciting stuff, but I’d love to see a different group of researchers reproduce it.”

        “Cognito Therapeutics is a clinical stage company developing device-based therapies and services to pioneer this approach.”

        But the principals are among the authors of the papers I cited.

        Carl Sagan said it best ““Extraordinary claims require extraordinary evidence.”

  2. SirWired says:

    My parents were once driving down an Interstate near the Blue Ridge mountains, and passed a sign proclaiming that you were now driving through the “MiddleOfNoWhere Technology Hub”.

    At around the same time, they passed right into a cell phone “dead” area that lasted several miles.

    If you run a good University, and the students would like to live there after they graduate, I guess it’s a good thing to encourage entrepreneurship, and hopefully provide some mechanism to hook them up with financiers, but I agree that you can’t create a geographic area for technology by fiat, at least not without several decades of effort, and the initial version of which will look nothing like your final goal.

    (North Carolina’s Research Triangle Park is a good example of this. It started in the 60’s with three decent and large local universities, and some light manufacturing operations from IBM and Nortel… it expanded later (*much* later) to substantial R&D operations for a wide range of industries.)

    1. anon the II says:

      North Carolina’s Research Triangle Park is a good example of something else. These technology hubs require some kind of constant nurturing to keep going. For whatever reason, these days there are essentially zero jobs for organic chemists in the area. If openings do show up, starting salaries for PhD’s are about the same as for BS’s in the mid 90’s.

  3. Sken says:

    One question is also how long lasting are these new hubs? Like will they recover if there is a recession or if their field is in a bubble and it burst.

    Like SV has shown to keep bouncing back pretty well, but who knows if other places can do so with such ease and quickness.

  4. Dr. Manhattan says:

    Scott Berkun’s book “The Myths of Innovation” comes to mind as well. A good examination of how things really get done.

  5. Anon says:

    “If we knew how to create another Boston/Cambridge or Silicon Valley/Bay Area, there would be more of them”….well there is a way. Both areas got their “innovation” rocket fuel from the Stanford/Berkeley/Harvard/MIT/VC Hub roots. The reason the Universities are such big hubs is because a huge portion of federal R&D dollars (grants etc) get funneled their way. A simple way to foster more innovation across the country would be to mandate that federal funds supporting R&D get channeled equally into 4 “zones” across the country. This would give non-MA/CA universities to rebuild their departments, get rid of R&D groupthink that arises from concentration of power/funding and help the rest of the country rise as well. There is nothing magical about MA and CA that fosters innovation, it’s the clustering of funding. Go to an equitable nationally distributed system, and then you will see “hubs” begin to thrive in the Midwest, South and elsewhere as well.

    1. Nesprin says:

      I disagree- there’s a definite economy of scale in entrepreneurship. Companies tend to start where venture capital already is, and venture capital tends to be where startups are.

      1. Anon says:

        But doesn’t that support the point? The bulk of startups these days spin out of academic or academic-industry collaborations, which both Boston and the Bay area have (in addition to VCs due to historical financial hub reasons). So if academics at Kansas/Iowa/Michigan/etc had adequate funding, great work would be done there too. This “coastal” obsession is stunting the rest of the country and is the core reason for today’s political divides as well. It would be sound public policy to redistribute all those federal research dollars more equitably across the nation. Heck move the NIH and all those other agencies out from the DC area as well, just to break the flyover country mindset!

        1. NotAnEconomist says:

          The counter argument is that there is real value in concentration of R&D spending, VC, start-ups, etc etc, and that by diffusing federal research money you are just going to prevent any one place from achieving the threshold to a “hub”.

          1. Sken says:

            Also if you are not a large enough “hub/location” you will run into issues attracting qualified labor as you try and grow.

            Like when Amazon made a new HQ they ended up deciding on two expensive locations, but those were the locations were top talent already exist. It’s typically easier to convince someone to take a new job down the street than to relocate their whole family to a small town/city.

          2. Orv says:

            @Sken: Not to mention the social barriers. e.g., if I or a significant number of my friends are gay I’m unlikely to move to a smaller Southern or Midwestern city where LGBT people aren’t welcome. This is actually a significant concern for a lot of people I know, especially lately.

    2. Greg says:

      I need to disagree I part – in terms of federal funding, the largest recipient back through the 1970’s until 2000’s was Johns Hopkins APL. There was certainly no incubation of any start-ups that came from that expenditure.

      1. Stu West says:

        There’s a pretty straightforward reason for that: the APL is a classified research lab. By contrast, the research that led to Route 128 was military-funded but not classified. (As long ago as 1969, the Pounds Commission at MIT found that the only classified research at the university was being done off-campus at places like Lincoln Labs.)

  6. anon3 says:

    “What you can see from that graph is that business’s share in total research in the US has been pretty flat”

    Big pharma management has pretty much decided that if its a great idea, some biotech should do it, and they will just buy the invention later.

  7. yfp says:

    Really innovation requires a grand vision and endless patience in execution. Most of people only possess one of them at the best.

  8. myma says:

    Surprising quantity of Biotech, three major vaccine sites (Merck, Pfizer, Sequiris), plus a couple of fill+finish places, plus a pile of CRO’s (RTI, whatever Quintiles is called these days, others).
    Depending on the survey, RTP is either 4th or 5th for total biotech employment. (but not for organic chemists)
    And the cost of living is fantastic.

  9. Escapee says:

    First time commenting after reading this blog for 8 years since I started my PhD, but I’ve got some experience of this myself, having gone through the mill of a postgrad startup with all the “innovation” coaching, makerspaces, digital catalysts, virtual-incubators etc. and a subsequent role in tech transfer.

    Frankly I look at all of the entrepreneurial hub buildings shooting up at Universities here in the UK with significant skepticism. There were enormous hurdles infront of my and my friend when we tried to spin out our own digital company for researchers, but absolutely none of them involved finding somewhere to sit down.

    Accessing stress-free funding was the absolute #1 hurdle. Being able to have a small amount of working capital dedicated to the spinout effort, paying for server space or other costs, without it being a decision to sacrifice my measly stipend, was essential. Then the regulatory side came next: how to open a business bank account? What are my obligations as a new company director? How do I file my own tax returns and accurate records for the company? These are the real world issues that scare away potential university student/researcher entrepreneurs. The university innovation team bouncing between their own innovations; “summer hackathon” to “business plan competition” to “mentorship program” to “2 month incubator” just makes it a disjointed and confusing mess when someone is dealing with actually trying to make something new and innovative. Personally, I would prefer a consistent port of call where help and advice are available, even if that seems like a boring office admin function rather than a papier mache rocketship to eat lunch inside.

    Frankly, if the billions being spent on “innovation lofts” or ping pong tables in warehouses for “drop-in incubators” were instead made available for grants and paying for a couple of free sessions with lawyers, tax advisors & giving students/postgrads a business & PO box address for correspondence, then I think the money would be far more productive. Better yet, partner with a VC/angel firm and set up actual meetings for people serious about their new ideas, and provide some links to people who have previously had success as advisors.

    An “innovation catalyst” should work like an actual catalyst, by lowering the energy barrier young researchers have to climb before they can actually apply their exciting new ideas in the real world. Not by offering a pointless desk in a noisy sports hall on the other side of the campus.

  10. Scott Snyder says:

    As far as I can tell the problem with having an innovation hub centered around a university is that the incentives for professors to patent and commercialize are precisely squat. Write 4 good publications on cancer research and you may just get a new grant and tenure. Turn one of those discoveries into an effective cancer treatment and the APT committee sees nothing of interest. Then the university sends someone over to tell you to sign over your intellectual property. I have known 3 professors who commercialized research discoveries. All of them had to leave their university under adversarial circumstances.

  11. 1braincell says:

    The sad fact is that industry has made the business decision to shy away from discovery research efforts in favor an in-licensing/development model. With the rise of the university tech transfer offices, innovation hubs, biotech the approach now is acquire and develop. While this appears like a reasonable division of labor I’m not sure whether the emerging data supports this as being a successful strategy. This is compounded by the fact that a worrying proportion of the academic literature is poorly reproducible and the efforts to validate consumes valuable resources and results in a death spiral of endless experiments, often with a significant opportunity cost. At this point I can’t help but cringe when I hear about another innovation hub opening or how tapping into the academic/biotech space will solve industry’s productivity problems. Not to say that there may not be a way to harness those activities in a successful way – I just haven’t seen it as yet.

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