University Ecosystem Building

University Ecosystem Building in Challenging Environments: Bending the Ivory Tower to the Grassroots

Globally, leaders seek to leverage the power of technology and innovation to drive economic growth. They look to universities – generators of new knowledge – for answers. Knowledge transfer from academia is the cornerstone of efforts to develop a “knowledge economy” (KE). Universities around the world grapple with the question of how to foster ecosystems that fuel technology-driven growth and address local, regional and global development challenges.

The secret to robust University-centered Entrepreneurial & Innovation (E&I) Ecosystems is a balancing act, making top-down meet bottom-up. This is enabled by a will on the part of university leadership to defy gravity: go against the prevailing metrics and practices, adapting them to the challenges faced by the ecosystem.

The MIT – Skolkovo Final Report

A month or so ago, I posted my thoughts on the recently released MIT-Skolkovo report, “Technology Innovation Ecosystem Benchmarking Study: Key Findings from Phase I,” by Dr. Ruth Graham. The effort was aimed at defining success factors and metrics for university-centric ecosystems. The purpose of the exercise was to identify potential models for Skoltech (Skolkovo Institute of Science & Technology) near Moscow.

Phase I involved polling sixty thought leaders; phase II focused on examining four case studies of university-centered ecosystems outside of the established technology-driven innovation hubs like Silicon Valley and Kendall Square (where I launched my career). In a nutshell, Phase I looked at where to go (metrics) and Phase II looked at how to get there from somewhere that isn’t ‘there’ yet.

A key finding from phase I, was the need for more honest and beneficial metrics that go beyond those traditionally associated with university technology transfer operations. The structured ‘top-down’ view of counting invention disclosures and royalty revenue from IP licenses (distorted by happenstance ‘blockbusters’) and ‘tight’ IP controls undermines the critical role played by the grassroots – the regional economy – in the equation.

The Good: Ecosystem building in Challenging Environments

What I like most about the Phase II MIT-Skolkovo report is its emphasis on how to grow E&I ecosystems in challenging environments. By challenging, Dr. Graham means, “cultural, economic and sociopolitical environments that may not be naturally conducive to E&I.”

Everyone always talks about replicating the Silicon Valley model. Silicon Valley is the tantamount conducive environment for entrepreneurship and innovation. It works for the Bay Area of California. However, the model is not so great for other places.

According to Josh Lerner’s account relayed in Boulevard of Broken Dreams, Silicon Valley arose organically in the WWII era through the convergence of:

1. close ties between local universities and startups, relatively uninhibited by social and legal barriers, as exemplified by Stanford University’s encouragement of the spin-out of Hewlett-Packard in 1938;
2. public sector – mostly US Department of Defense – spending, which buoyed the early stage development of firms such as Fairchild Semiconductor, Magnavox and Litton from which, new startups and seasoned serial entrepreneurs emerged; and,
3. financing of angel investors, wealthy individuals having a risk profile that favored tech startups over investment opportunities in sectors that compete for capital on the basis of traditional growth models. (Lerner, pp. 32-35)

Some of these factors are hard to find (or recreate) decades later in other places. Further, given its penchant today for internet and social media startups when the world desperately needs to decarbonize the global economy, and provide adequate food, water and healthcare for a burgeoning population, the Silicon Valley model is of questionable relevance.

The prevailing approaches need to be examined and adapted to local strengths and regional needs. The MIT-Skoltech Report addresses this by focusing its attention outside of traditional, well-established tech hubs and examining in-depth what are arguably the next-generation of successful university E&I ecosystems.

The environments most in need of E&I ecosystems are challenging places. I love this study for the applicability of its observations and conclusions to developing and transition economies. What’s more important, is that its lessons learned are applicable now. An important precondition for these ecosystems has already been met: many of developing countries have already established a new generation of universities, specifically mandated with an economic development mission. And they were put there to catalyze the formation of E&I ecosystems.

A testament to how many countries are launching new KE institutions: Times Higher Education (THE) started a new list in 2012 called the, “100 under 50,” which ranks relatively new universities. As I wrote in a previous post:

• THE’s 2012 top100 ‘newbies’ list included institutions from thirty different countries.
• THE’s overall top 200 ranking represented only twenty-six, predominantly Anglo-American countries.

This greater diversity of the “under fifties” shows just how relevant Graham’s report is. Many of these upstart universities are in places not naturally conducive to E&I ecosystems, yet they have been established with the mission to create them. The groundwork has already been laid – not only at SkolTech, but also at dozens of new and transforming universities around the globe. This report fills a critical need for how these universities should view the prevailing E&I paradigms in the context of their own challenging environments.

The Bad: Lack of Diversity is a Missed Opportunity

What I disliked about The MIT-Skoltech report was its choice of case studies. Of the four in-depth case studies selected for phase II of this study:

• two are Anglo-institutions (University of Auckland, New Zealand and Imperial University, UK); and,
• the other two are non-Anglo, European universities.

From a developing and transition economies perspective greater diversity of “challenged environments” would have better served. But for Skolkovo in the environs of Moscow, these four case studies may fit the bill. Still, I sense a missed opportunity.

… and The Beautiful: Bending the Ivory Tower to the Grassroots

The ‘good’ of Graham’s report is its relevance: the focus on environments where the cultural, economic and sociopolitical barriers make them least conducive to E&I ecosystems developing naturally. ‘Bad’ is the lack of diversity among the case studies. Now for the beautiful.

In her characterization of the models for developing E&I Innovation Ecosystems, Dr. Graham articulates an important ecosystem dichotomy in a new and interesting way:

• Model A: ‘bottom-up’ and community-led, catalyzed by students, alumni and entrepreneurs in the regional economy, with a ‘loose IP control’
• Model B: ‘top down’ and university-led, working through established university structures, with a ‘tight IP control’ (page 40)

Model B represents the way that traditional universities generally operate. When it comes to the impacts of academic research on the economy, the traditional university culture generally finds only university-protected intellectual property worthwhile. Ecosystem metrics become synonymous with the TTO’s performance indicators, particularly licensing revenue and industry sponsored research (discussed in greater depth in Benchmarking Ecosystems). This model is ultimately more driven by generating revenue from university research, which manifests itself in tight control over university-owned intellectual property and alignment with lucrative international markets.

One statement in particular surprised me for the emphasis it places on this intellectual asset territorialism inherent in Model B: “the division between university-owned IP and non-university IP casts a long shadow.” (page 44) This “long shadow” bespeaks the chasms:

• between faculty and the regional ecosystem; and,
• between grassroots ecosystem participants and the R&D capacity and networks to which faculty have access.

The traditional university top-down model, “risks marginalizing student- and alumni-driven entrepreneurship and integration with the regional… community.” In contrast, Model A is motivated by local, national and regional economic needs and constraints. Model A is generally agnostic to IP ownership. On the downside, success milestones and metrics are notoriously difficult to identify and measure. (page 41).

My discussion of a “Third Pathway” described a middle-ground between Graham’s two models. I highlighted efforts made to build absorptive capacity enabling local, entrepreneurial SMEs to recognize the value of, assimilate and commercialize new technologies coming out of university research. Absorptive capacity is a more acute problem in developing and transition economies, and a significant barrier to the facilitation of spillovers of university research into these challenging environments.

Addressing this issue requires an adaptation of traditional technology transfer models. The idea is that providing value-added operational support at the interface between faculty and domestic companies enables more effective technology and knowledge transfer. This is in essence building bridges between entrepreneurs in the regional economy (Graham’s bottom-up, model A) and established university structures (Graham’s top-down, Model B). In developing and transition economies, the gap between university research and local business tend to be wider, calling for a more robust conduit facilitating knowledge and technology transfer.

Dr. Graham notes, “an entrepreneurial university is one that supports and integrates both of these domains.” I could not agree more. Of paramount importance is the fact that that bridging and balancing must be done in a way that is adapted to the specific conditions of the emerging ecosystem: “Shaped by the regional environment and culture, the content of these strategies … varied considerably and this adaptability appears to be integral to their success.” (page 39) Diverse approaches informed by knowledge of the ecosystem itself, are critical.

Conclusion: Go Against the Flow

The key to universities’ success is an understanding of the local and regional environment, and the institutional will to challenge and adapt global ‘best practices’ to suit the ecosystem. A culture of experimentation needs to be nurtured not only in the research labs, but also in administration. Dr. Graham’s narrative on the Tomsk State University case study expresses it well; the university’s senior leadership has:

“…a willingness to ‘travel against the current’ and take unconventional approaches to nurture the entrepreneurial capacity across both the university and the region… The university’s intimate understanding of the regional and national startup environment also provides them with a capacity to anticipate, and adapt quickly to, emerging challenges and opportunities, a capacity not often associated with academic institutions.” (page 32)

Universities aspiring to becoming a knowledge hub in their emerging ecosystems would do well to foster a profound and pervasive understanding of local business dynamics as well as an openness to challenging traditional university metrics, policies and processes.

The secret to robust University-centered Entrepreneurial & Innovation Ecosystems is a balancing act, making top-down meet bottom-up. Mechanisms for bridging or balancing top-down and bottom-up models need to be localized. That is, they need to be adapted to the specific characteristics of the cultural, economic and sociopolitical environments that inhibit it from being naturally conducive to E&I.

References

Ruth Graham, Creating university-based entrepreneurial ecosystems: evidence from emerging world leaders. (June, 2014). Downloadable at: http://www.rhgraham.org/RHG/Recent_publications_files/MIT%3ASkoltech%20entrepreneurial%20ecosystems%20report%202014%20.pdf

Josh Lerner, (2009). Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do About It. Princeton: Princeton University Press.