Universities as Engines of Innovation

June 9, 2011

On June 9, 2011, AGI was delighted to host a conference on “The New Role of Universities in the Twenty-first Century: Universities as Engines of Innovation and Entrepreneurial Hubs.” The discussion was generously sponsored by the Deutsche Stifterverband.

The conference began with keynote remarks by the Honorable Klaus Scharioth, Ambassador of the Federal Republic of Germany to the U.S. Ambassador Scharioth stressed that the conference was taking place at a good time, as Chancellor Angela Merkel had been on an official visit including a state dinner to Washington only two days earlier to meet with President Barack Obama. The visit underscored the importance of German-U.S. cooperation; both Merkel and Obama remarked that science, research, education, and technology are crucial components of the transatlantic partnership. The Ambassador pointed out that the future of our societies will depend on how we advance education, science, and technology. The German government is therefore committed to increasing overall spending on research to 3 percent of gross domestic product (GDP) and spending on education to 7 percent of GDP, the Ambassador explained. He underlined that the U.S. and Germany both place emphasis on these subjects and the two countries are striving to excel in these fields in an effort to increase their competitiveness and remain “champions of innovation.” Sharing know-how and resources through international cooperation is key in this respect. Universities need to use their strength and potential as drivers of innovation and entrepreneurship. In Germany, for example, universities must target their research to support the transition to the age of renewable energies while Germany at the same time ends its use of nuclear energy by 2022. The Ambassador highlighted that this conference offers an outstanding opportunity to exchange ideas and experiences and to learn from each other.

The Honorable Bart Gordon took the podium next, stating that Germany and the U.S. both have to become “nations of innovations.” It must be a bilateral commitment for the two countries to coordinate internationally and to set similar standards for the future so that colleges and universities can be more productive. He also illustrated there is a need for research and development cooperation between the U.S. and Germany as well as Europe. The National Institute for Science and Technology needs more international outreach, Mr. Gordon said, to align standards among major nations, namely the European Union. The U.S. and the EU account for half of the world’s GDP and must stay ahead of the curve in setting international standards.

After the morning keynote speakers, Prof. Dr. Andreas Pinkwart (Leipzig Graduate School of Management) presented the contributions made by universities to innovation in Germany and the United States. In both countries, the benefits to innovation produced by universities are immense. Universities turn out increasing numbers of well-educated students with a wide range of academic degrees that can be later utilized by future employers. For instance, the U.S. and Germany award 42,000 and 25,000 doctorates annually, respectively. Universities, with their vast diversity of knowledge, are also essential contributors to the breadth of ideas entering the innovative system each year. In 2009, 3,400 patents were filed by universities in the U.S., with an additional 700 patents filed by German universities. Finally, universities hold a strong entrepreneurial presence in the innovation markets of Germany and the U.S. through both the start-up of companies, as well as the cooperation with private business in research and development. In 2009 alone, U.S. universities launched 596 start-ups and 658 commercial products. However, despite these incredible numbers produced by our universities, much can still be done to improve their effectiveness.

One characteristic of universities that tends to obstruct their productivity is their inability to fully grasp the environments they work in. Often times, it seems, universities do not properly seek to understand the product needs of businesses and markets. Therefore, despite increased funding for research and development in universities, we do not see a proportionate rise in university patents. Here, the technology transfer agencies designed to match universities with businesses looking to conduct research must be more proactive. Universities can no longer afford to simply wait until a proposal falls into their hands. Universities in both Germany and the U.S. must also focus on bringing a stronger entrepreneurial aspect into their research. In doing so, universities will better understand the relationships they carry with businesses on idea incubation and, hopefully, lead to more efficient development. Finally, universities must focus on keeping researchers involved in work tied to their communities. This will foster a long-term commitment, a necessary step to understanding where the needs for stronger research lie. For universities to realize their full potential and to impact innovation systems, they must look to widen their spectrum of study and begin to better understand the needs of a changing market and society.

Following Prof. Dr. Pinkwart’s presentation was the first of three panel discussions looking into the role of universities for the future of innovation. Panel speakers Mr. Robert Cresanti (SAP America, Inc.), Mr. Burton B. Goldstein (University of North Carolina), and Mr. Peter Hoffman (Boeing) addressed the growing need for cooperation between experts across a multitude of fields in order to provide effective solutions to the issues facing Germany and the United States, as well as the global community. Specifically, there must be a focus on bringing scientists, engineers, and academics into the conversation with business leaders and policymakers in regards to transforming new ideas into tangible products for society. In order to achieve this, countries like Germany and the United States must focus their efforts on better fostering an environment that welcomes such cooperation. This begins with a greater willingness on both sides of the Atlantic to create policies that push research and development to even greater levels. Otherwise, we will continue to see an unacceptable number of new ideas lost in the so-called “Valley of Death,” the place between concept creation and obtaining necessary venture capital funding to go into production.

In the face of such demand for cooperation and better development of research, it seems that universities are the ideal setting for the future of innovation. In no other company or institution, aside from universities, can one find the needed diversity to reach solutions to complex issues under one roof. Furthermore, based on the fact that 70 of the 85 major institutions still around from the year 1550 are universities, it could be safely assumed that their impact will be long-term. The question is how do we increase this impact in the field of innovation?

Following the first panel was the luncheon keynote address given by Dr. Luis M. Proenza, President of the University of Akron. Drawing on the initiatives taken by the University of Akron, widely known as the “Akron Model,” Dr. Proenza outlined the importance of linking our universities to our communities at a local, regional, and even global level and of thinking of our universities in broad terms that allow them to serve as a robust platform for economic development. Universities act as anchors of innovation, as well as serving the role of conveners and developers, both of campus and neighborhood infrastructure and of initiatives that support innovation, partnerships, and new research proposals. Therefore, by increasing their interconnectedness with governments, businesses, and other organizations that comprise our regional economies and communities, we can improve the development of new ideas beyond this “Valley of Death.” This interconnectedness involves a greater level of cooperation pertaining to the economic vitality of our society, as well as a vested interest by universities in the strategies of our communities. Indeed, the financial success of a university is inseparable from that of its community and, thus, it is in the long-term best interests of the university to contribute to the economic vitality of its region. In this sense, according to Dr. Proenza, it is no longer solely the government’s responsibility to strengthen our communities. Instead, businesses and universities must look to play an integral role in this build-up. Universities, in particular, must utilize a more entrepreneurial approach than ever before by offering a place of incubation for new ideas and start-ups. Through the organization of greater involvement of entrepreneurial talent at the university level, we can increase both the productivity and relevance of universities as they begin to function as broad-based “tool chests” of economic development.

The second panel of the conference featured Dr. Bert Klebl (Lead Discovery Center), Prof. Dr. Thomas Martinetz (University of Lübeck), Mr. Michael Pratt (Boston University), and Mr. Daniel Zimmermann (WilmerHale), who discussed ways to more effectively bring new ideas into the market. The transformation of ideas into tangible products relies heavily on the investment of venture capital firms. However, the level of investment in new ideas and potential start-ups today is a fraction of what it was roughly one decade ago. So, what course of action can be taken to fuel the development of new ideas?

One major aspect of the strategy proposed by the panelists involves encouraging universities to actively seek out new ideas for research initiatives. It must be the job of the university to target an idea and then play a major role in overseeing research and development. However, in doing so, universities must look to make a long-term commitment in the projects they undertake. By allowing these ideas the proper setting and timeframe with which to grow in, universities are helping to introduce more fully developed, less risky products to potential investors. Universities must also look to make the transfer of technology and knowledge an integral part of their mission. They must focus on boosting the transfer of students to companies and organizations, as well as a more general boost in research and development of start-ups and spin-offs. We can no longer afford a system in which new ideas are picked solely on their perceived potential for success. In its place, we must encourage our universities to take in all ideas and offer them some level of support if we wish to see the full potential of each idea be reached. To achieve all of this, universities must seek out a balanced combination of public funding and support from academia on the one hand, and private funding and support from industry on the other.

The third, and final, panel of the conference, included Dr. Carlo J. De Luca (Boston University), Prof. Dr. Ursula Gather (TU Dortmund University), and Dr. Volker Meyer-Guckel (Deutscher Stifterverband) and addressed the necessary steps universities must take to maintain relevance and competitiveness in innovation. The university sector is becoming increasingly competitive, which is forcing many universities to seek out new ways to innovate and stay ahead of the curve. They are being pushed to expand the spectrum of education and formulate multiple approaches to solving the important issues of today’s world. Nevertheless, despite their ever-evolving approaches, universities are still losing out to businesses in many areas of research and innovation. Due to many of the internal structures in place in the universities that seem to hinder the capabilities of faculty members, many leave to do work in an industry setting. For instance, in the U.S. alone, there are more Ph.D.s carrying out research for companies than for universities.

To curb this exodus to the commercial world, universities must look to take more risks in terms of new ideas and innovation. They must cultivate a stronger entrepreneurial atmosphere within the university setting. They must also focus on new models for the partnerships they engage in for research and development by becoming more transparent in their capabilities. By doing so, companies will have a better understanding of which university best fits their needs and, therefore, be more willing to enter into a long-term relationship for innovative enterprises. These steps will go a long way in maintaining a competitive aspect for universities in the field on innovation.

See Photos from the Event:

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