Benchmarking Ecosystems

University-based Entrepreneurial & Innovation Ecosystems

I recently ran across a report on a Phase I study commissioned by the MIT – Skoltech organization. The final report is due out this Summer (2014) and I am looking forward to seeing the final deliverable if it is made publicly available. The initial report contained some interesting points that I think warrant some comment and amplification. 

The Phase I Report by Ruth Graham polled over 60 thought leaders in Entrepreneurial and Innovation Ecosystems. A solid dozen of them are folks I know and deeply respect, including my dear friend Vinit Nijhawan (serial entrepreneur, now Boston University’s chief commercialization officer); Greg Horowitt at T2VC at whose signature event, the Global Innovation Summit, I spoke this year; Henry Eztkowitz of Triple Helix renown; and Bill Aulet from MIT.

A lot of high-profile experts were missing from the roster, including my dear colleagues Al Watkins who retired from the World Bank and Charles Wessner who just left his position as Founder and Director of the Technology, Innovation and Entrepreneurship group at the US National Academy of Sciences. The selection of experts polled by Dr. Graham via a superficial literature search and “snowballing method,” relying on other experts’ recommendations, could well have biased the outcome. That doesn’t diminish the fact there are some excellent points for further discussion.

Models and Metrics for Skoltech: what’s really important? 

The purpose of the exercise was to identify potential models for Skoltech (Skolkovo Institute of Science & Technology) in the environs of Moscow. The idea was to identify and examine key success factors and benchmarks to inform decision-making processes around Skoltech. The domain of investigation are university-based, Entrepreneurial and Innovation (E&I) Ecosystems.

I take particular interest in this report for two reasons:

• The Skolkovo Innovation Center was launched in 2009; I was involved in the tech- entrepreneurship sector in Russia for nearly two decades until just before the launch; and,
• There are obvious parallels between SkolTech and my current institution, KAUST, which started-up around the same time – but in Saudi Arabia – with the expressed intent of catalyzing an E&I ecosystem.

There are two points that deserve exploration:

• Standard metrics of technology transfer office throughput from university-generated intellectual property are misleading, even detrimental proxies for E&I Ecosystem development; and, related to this,
• Technology is overemphasized at the expense of knowledge transfer and innovation capacity.

E&I ecosystems are a web of human interactions, whereby creativity is effectively, systematically harnessed to address humanity’s challenges and create value in the process. Sometimes that creativity manifests itself through discovery of new knowledge, it may develop into a technological solution to a problem. However, that creativity may have a lot of other types of embodiments from business model innovation to masterpieces of music and art. Clearly a shift in thinking about ecosystems is needed, to focus more on people: the students, graduates, faculty and staff of universities; entrepreneurs and their enablers; and the economic & community development of the human environment, as well.

Human Capital, not Intellectual Capital, at the Heart of Ecosystems

There is a tendency to measure what is easy to measure. Technology transfer offices have a host of metrics ranging from invention disclosures per 100 fulltime STEM faculty and issued USPTO patents, to licensing revenue and industry-sponsored research as a proportion of overall R&D funding. These are easy because there are distinct quantifiable units (disclosures, patents, dollars).

In the systems biology analogy, using intellectual-property based metrics for the E&I Ecosystem is like measuring the robustness of a biological ecosystem by counting abiotic (non-living, physical environment) factors only. It misses the whole point.

Patents and industry money aren’t a true reflection of what is really important for university-centered E&I ecosystems. As the SkolTech report points out, focus on these ‘easy’ metrics distorts the perception of how a university catalyzes the ecosystem, and has detrimental operational impacts on the institution as a whole:

Most experts noted that identifying a set of metrics to evaluate the performance of a university-based ecosystem was a considerable challenge, with concerns expressed about whether the standard metrics collected by organizations such as AUTM (Association of University Technology Managers) were fit for the purpose… Many spoke at length about how the application of currently accepted metrics can be misleading at best and retard ecosystem growth at worst. Expert feedback centered around two key issues: firstly that these measures do not adequately reflect the true knowledge transfer capability or performance of a university; secondly, that their widespread application has had a significantly detrimental impact on entrepreneurship and innovation strategy at a institutional-level across the world. (pp. 6-7)

This trend belies an overemphasis on intellectual capital, at the expense of human capital. Intellectual capital refers to the discrete embodiment of new knowledge in a technological development, which is protected through legal constructs, patents, that enable the originator or owner to maintain a monopoly on the use of that technological embodiment for a period of time, or grant exclusions to that monopoly through licensing.

Human capital is all about people, the world’s most underutilized resource. People are the conduits for gaining and transferring knowledge and realizing the potential of new knowledge through entrepreneurship and innovation. They are nodes in the network that is the ecosystem. The policy literature refers to “KTI” or knowledge, technology, and innovation. An exclusionary focus on intellectual capital leaves out people, their knowledge, and innovation capacity from the equation. As the Skoltech report points out:

…experts in particular talked about the significant role played by university graduates in ecosystem development and the value of the Kauffman Foundation study on the impact of MIT alumni in this regard – ‘… this tells us about the number of entrepreneurs we are turning out. This tells us about creating the fishermen and not the fish’. (p. 6)

To effectively catalyze robust Entrepreneurial and Innovation Ecosystems, universities need to focus on people, developing and leveraging a diversity of human capital, the real fuel that drives the innovation economy.

References

Ruth Graham, Technology Innovation Ecosystem Benchmarking Study: Key Findings from Phase 1. (January, 2013) downloadable at: http://www.rhgraham.org/RHG/Recent_projects_files/Benchamrking%20study%20-%20Phase%201%20summary%20.pdf