From Science to Business: How firms create value by partnering with universities

In today’s knowledge-based society, it is becoming increasingly imperative for companies to mine knowledge and technology generated by universities. Why? Because the outcome of such industry-university collaborations is to help companies create new business and jobs.

Three main ways to transfer university knowledge and technology

Companies tap into the new knowledge and technology generated by universities in various ways, from hiring graduates, to giving endowments and commissioning contract research.

Only a small fraction of universities in Europe and the US carry out collaborative research with companies. According to a 2009 AUTM (Association of University Technology Managers) report, even in the most active cases, the amount funded by the private sector represents only about 6 per cent of the total research budget of these universities. It remains the case that the lion’s share of research funding comes from the public sector, with a very small number of universities capturing the bulk of private sector funding.

When it comes to patent-based licensing and/or selling intellectual property (IP), most universities do not generate enough income to cover the expenses of their technology licensing office. One notable exception is Northwestern University, which received more than $480 million in licensing income and royalties in 2008 from Pfizer.

The creation of start-ups

The third vehicle for commercialisation is the creation of start ups. This is a complex path and many universities do not have resources required to follow it, as they are rightly concentrating on excellence in teaching

Typically, universities work with external partners on spinning out companies. Pharmaceuticals and biotech is an example of a sector where companies are open to engaging in such science-to-business process.

Partnerships between companies and universities are particularly critical as we face mounting issues around energy, water, food and climate, as well as demographics and healthcare. Industry and academia must team up to move our world towards a more sustainable future. Only China, Germany and Japan have made substantial commitments in this area.

And never before have non-technical innovations, such as novel business models or managerial practices that are often enabled by information and communication technologies, been so critical to business success.

The changing landscape for universities and industry

Universities worldwide are confronted with diminishing growth in public funding, with Japan for example facing cuts of 1 per cent per year. As a result, they are being forced to adapt by raising funds from private sources. But, they probably can’t count on a commercialisation bonanza in the foreseeable future. But universities must take steps to make the difficult transition, by changing academic mindsets and moving towards becoming more business-friendly and solutions-oriented.

Industry is also changing its approach to innovation. With ever-increasing pressure to focus internal R&D activities on short-term payoffs, many companies are beginning to pursue their long-term strategies through collaborations with universities. As a result, new partnerships are emerging that will ultimately change the roles of both.

A growing number of companies are thus making changes in the ways they run their current business, or plan their business development activities, as a result of inputs from universities. The following are examples of some of the avenues that companies are pursuing:

Match your objectives with the appropriate institution. Once a company has defined its business development objectives, it must identify those institutions with which it should engage. It is important for firms to make sure China and India are on their radar screens, as universities in these countries are emerging as strong contributors.

Leverage graduate students. Every year, the 40-staff start-up, HiFiCom (not its real name) in Copenhagen, welcomes 20 graduate students from a local engineering school. Managers from the company also do sessions for the Master’s course, which enables them to spot good candidates to work with the company on their Master’s thesis. A few of these students are hired, and as a result of the constant flow of fresh talent and their ideas for new commercial offerings, the company has been growing steadily.

Participate in collaborative research. The computer company HP has more than 100 collaborations with universities worldwide. Many of these are with leading Chinese universities, such as the universities of Beijing and Tsinghua. Collaborative research is often focused on difficult issues and often related to long-term research. Even though the projects are often peripheral to HP’s business, they frequently result in the modification of the business development plans of specific business units.

Buy licences or intellectual property. NovImmune, a Geneva-based company specialising in the use of monoclonal antibodies to immune-related disorders, was founded in 1998 after obtaining a licence from the University of Geneva. With 70 staff, it is now profitable and relies on an array of collaborations for discoveries to further develop its core activity of producing therapeutic monoclonal antibodies.

Create spin-out companies. Cambridge University launched five start-ups in 2009, including Metalysis, which has commercialised a process for producing high-value, specialist metals and alloys for use in the electronics, medical, marine, aerospace, chemical and defense sectors.

Beyond the financial returns, there are may other benefits of knowledge transfer for universities, businesses and society as a whole. For example, collaboration will help universities focus their research on the wider needs of society and industry. And it has socio-economic impacts in the form of new jobs, new companies and new products such as pharmaceuticals.

Georges Haour is Professor at IMD, the International Institute for Management Development in Switzerland. Laurent Miéville is Head of Technology Transfer at the University of Geneva.