This document discusses different modes of innovation between universities and industry and their potentials and limitations. It first addresses challenges to the university spin-off model, including issues related to specific industries, technologies, and commercialization. It then outlines other modes of technology transfer beyond spin-offs, finding that licensing, collaborative research, and informal relationships are also important. Finally, it examines how technology transfer relates to different types of local economic development, with the university playing varying roles in industries' creation, transplantation, diversification, or upgrading.

1. UNIVERSITE - INDUSTRIE:UNIVERSITE - INDUSTRIE:
POTENTIELS ET LIMITES DEPOTENTIELS ET LIMITES DE
DIVERS MODES D’INNOVATIONDIVERS MODES D’INNOVATION
Jean-Jacques Degroof
MIT Industrial Performance Centre
jdegroof@mit.edu
http://web.mit.edu/ipc/people/affiliates.html
Conférence Innovac
18-19 Novembre 2010

2. 2
INTRODUCTIONINTRODUCTION
 1990s: growing concern about techno-1990s: growing concern about techno-
logical gap between the USA and Europelogical gap between the USA and Europe
 Renewed interest in technology innovationRenewed interest in technology innovation
 Recognition of entrepreneurship as a validRecognition of entrepreneurship as a valid
mode of technology innovationmode of technology innovation
 Interest of policy makers in involvingInterest of policy makers in involving
academic institutions in technology transferacademic institutions in technology transfer

3. 3
INTRODUCTIONINTRODUCTION
 Multiple policy initiatives to supportMultiple policy initiatives to support
technology transfer from universities.technology transfer from universities.
 Support for spinning off new ventures fromSupport for spinning off new ventures from
universities.universities.

4. 4
INTRODUCTIONINTRODUCTION
However,However,
– Spin-off firms tend to come from a small number of topSpin-off firms tend to come from a small number of top
research institutions.research institutions.
– The firms’ size, growth rates, revenues are modest.The firms’ size, growth rates, revenues are modest.

5. 5
Callan, B. (2001). "Generating spin-offs: evidence from the OECD." Science Technology
Industry Review. Special issue on fostering high tech spin-offs: a public strategy for
innovation 26: 13-56.
•
Degroof, J.-J. and E. B. Roberts (2004). "Overcoming Weak Entrepreneurial Infrastructures for
Academic Spin-Off Ventures." The Journal of Technology Transfer 29(3-4): 327-352.
Heirman, A. and B. Clarysse (2004). "How and Why do Research-Based Start-Ups Differ at
Founding? A Resource-Based Configurational Perspective." Journal of Technology
Transfer 29(3-4): 247.
Clarysse, B., M. Wright, et al. (2005). "Spinning out new ventures: a typology of incubation
strategies from European research institutions." Journal of Business Venturing 20(2): 183-
216.
Mustar, P., M. Renault, et al. (2006). "Conceptualizing the heterogeneity of research-based
spin-Offs: a multi-dimensional taxonomy." Research Policy 35(2): 289-308
Wright, M., B. Clarysse, et al. (2007). Academic Entrepreneurship in Europe. Cheltenham,
UK, Edward Elgar

6. 6
1.1. CHALLENGES TO THE SPIN-OFFCHALLENGES TO THE SPIN-OFF
MODELMODEL
2.2. OTHER MODES OF TECHNOLOGYOTHER MODES OF TECHNOLOGY
TRANSFERTRANSFER
3.3. TECHNOLOGY TRANSFER ANDTECHNOLOGY TRANSFER AND
TYPES OF LOCAL ECONOMICTYPES OF LOCAL ECONOMIC
DEVELOPMENTDEVELOPMENT
Three partsThree parts

7. 7
1.1. CHALLENGES TO THE SPIN-OFFCHALLENGES TO THE SPIN-OFF
MODELMODEL
1.1.1.1. Generic ChallengesGeneric Challenges (*)(*)
1.2 Challenges specific to weak1.2 Challenges specific to weak
entrepreneurial environmentsentrepreneurial environments
(*) Adapted from Shane, S. (2004). Academic entrepreneurship. University spin-offs and wealth creation.
Cheltenham, UK, Edward Elgar

8. 8
 Industries:Industries: spin-offs are not adapted to all industriesspin-offs are not adapted to all industries
– + Industries in which patents are more effective.+ Industries in which patents are more effective.
– + Younger technology base.+ Younger technology base.
– + Segmented Markets.+ Segmented Markets.
– - Require large complimentary assets.- Require large complimentary assets.
– - Large average firm size- Large average firm size

9. 9
 IndustriesIndustries
– Most common in biomedical industries.Most common in biomedical industries.
• Protected by strong patents.Protected by strong patents.
• Commercialization allows more time than in the physical sciences.Commercialization allows more time than in the physical sciences.
• Universities are the locus of expertise in the life sciences.Universities are the locus of expertise in the life sciences.
• Performance of the products is more valued by clients than cost.Performance of the products is more valued by clients than cost.
• Low need of complementary technologies.Low need of complementary technologies.

10. 10
 Technology:Technology: spin-offs are not adapted to all types ofspin-offs are not adapted to all types of
technologiestechnologies
– Radical inventions vs. incremental innovations.Radical inventions vs. incremental innovations.
– Early stage inventions.Early stage inventions.
– Technologies with broad applications.Technologies with broad applications.
– Cutting edge technology providing significant economic value.Cutting edge technology providing significant economic value.
– Strong intellectual property protection.Strong intellectual property protection.

11. 11
 Commercialization:Commercialization: problematicproblematic
– Early stage ‘embryonic’ technologies: difficult to license.Early stage ‘embryonic’ technologies: difficult to license.
– ““Technology push” nature of product creation (>< “market pull”).Technology push” nature of product creation (>< “market pull”).
– Market uncertainty is very high: is there demand for the product (at what price)?Market uncertainty is very high: is there demand for the product (at what price)?
– Longer than average product development cycleLonger than average product development cycle
– Scaling.Scaling.

12. 12
1.1. CHALLENGES TO THE SPIN-OFFCHALLENGES TO THE SPIN-OFF
MODELMODEL
1.1.1.1. Generic ChallengesGeneric Challenges
1.2 Challenges specific to weak1.2 Challenges specific to weak
entrepreneurial environmentsentrepreneurial environments

13. 13
1.1. CHALLENGES TO THE SPIN-OFFCHALLENGES TO THE SPIN-OFF
MODELMODEL
1.1.1.1. Generic ChallengesGeneric Challenges
1.2 Challenges specific to weak1.2 Challenges specific to weak
entrepreneurial environmentsentrepreneurial environments
1.2.1 Tech transfer policy level
1.2.2 Firm level

14. 14
OriginationOrigination ConceptConcept
TestingTesting
ProductProduct
DevelopmentDevelopment
 OpportunityOpportunity
identificationidentification
 Opportunity selectionOpportunity selection
 IP protection testingIP protection testing
 Business conceptBusiness concept
testingtesting
 SelectionSelection
 Internal advisingInternal advising
capabilitiescapabilities
 Network supportNetwork support
Degroof, J.-J. and E. B. Roberts (2004). "Overcoming Weak Entrepreneurial Infrastructures for Academic Spin-Off
Ventures." The Journal of Technology Transfer 29(3-4): 327-352.
See: http://web.mit.edu/deshpandecenter/
Firm creation
1.2.1 Tech transfer policy level
Generic process of spin-off creation

15. 15
 Need to put in place a complex value chainNeed to put in place a complex value chain
requiring significant resourcesrequiring significant resources

16. 16
OriginationOrigination ConceptConcept
testingtesting
ProductProduct
DevelopmentDevelopment
 OpportunityOpportunity
identificationidentification
 Opportunity selectionOpportunity selection
 Technical conceptTechnical concept
testingtesting
 Business conceptBusiness concept
testingtesting
 SelectionSelection
Internal advisingInternal advising
capabilitiescapabilities
 Network supportNetwork support
TechnicalTechnical Research capabilities;Research capabilities;
management of research;management of research;
IP CapabilitiesIP Capabilities
R&D capabilities; IPR&D capabilities; IP
capabilities Business duecapabilities Business due
diligence and planningdiligence and planning
skillsskills
R&D capabilities; businessR&D capabilities; business
development anddevelopment and
management skillsmanagement skills
FinancialFinancial R&D financing; investmentR&D financing; investment
in TTin TT
Innovation grants; seedInnovation grants; seed
financing; investment in TTfinancing; investment in TT
Early stage VC; growth-Early stage VC; growth-
stage VCstage VC
HumanHuman Scientists; TT specialistsScientists; TT specialists TT specialists; businessTT specialists; business
coachescoaches
Scientists; management;Scientists; management;
board members; advisorsboard members; advisors
SocialSocial Scientific networkScientific network Scientific network; networkScientific network; network
in industry and in thein industry and in the
entrepreneurial communityentrepreneurial community
Scientific network; localScientific network; local
and international networkand international network
in industry and in thein industry and in the
entrepreneurial community.entrepreneurial community.
ResourcesResources

17. 17
– Issue of scaleIssue of scale
– Lesson: Individual institution or several institutionsLesson: Individual institution or several institutions
should join forces?should join forces?

18. 18
1.1. CHALLENGES TO THE SPIN-OFFCHALLENGES TO THE SPIN-OFF
MODELMODEL
1.1.1.1. Generic ChallengesGeneric Challenges
1.2 Challenges specific to weak1.2 Challenges specific to weak
entrepreneurial environmentsentrepreneurial environments
1.2.1 Tech transfer policy level
1.2.2 Firm level

19. 19
1.2.2 Firm level
SMESME
Growth-Growth-
OrientedOriented
VentureVenture
 ConceptConcept Substitute for a jobSubstitute for a job
and/or to pursue otherand/or to pursue other
lifestyle choiceslifestyle choices
Pursue opportunity withPursue opportunity with
high potential tohigh potential to
maximize economicmaximize economic
value for thevalue for the
entrepreneur andentrepreneur and
his/her supportershis/her supporters
 OwnershipOwnership ClosedClosed Open (outside funding)Open (outside funding)

20. 20
1.2.2 Firm level
SMESME
Growth-Growth-
OrientedOriented
VentureVenture
 ManagementManagement Weak – overlaps withWeak – overlaps with
ownershipownership
Growing professio-Growing professio-
nalization -Distinct fromnalization -Distinct from
ownershipownership
 UltimatelyUltimately ContinuityContinuity Exit – “liquidity event”Exit – “liquidity event”

21. 21
Too much focus on spin-off creation and not enough on growth?Too much focus on spin-off creation and not enough on growth?

22. 22
Too much focus on licensing university patents as a mechanism ofToo much focus on licensing university patents as a mechanism of
technology transfer?technology transfer?

23. 23
1. CHALLENGES TO THE SPIN-OFF1. CHALLENGES TO THE SPIN-OFF
MODELMODEL
2. OTHER MODES OF TECHNOLOGY2. OTHER MODES OF TECHNOLOGY
TRANSFERTRANSFER

24. 24
Agrawal, A. and R. Henderson (2002). "Putting Patents in Context: Exploring
Knowledge Transfer from MIT." Management Science 48(1): 44.
MIT faculty perception of relative importance of alternative
channels of knowledge transfer from university to industry (N = 68)
18%
5%
26%
6%
12%
7%
17%
9%
Publications
Conferences
Consulting
Conversations
Collaborative
Research
Patents & Licensing
Recruiting Graduates
Supervising
Patent & Licensing

25. 25
Types of University-Industry Interaction Contributing to Innovation (%Types of University-Industry Interaction Contributing to Innovation (%
Companies)Companies)
0 10 20 30 40 50 60
Non-exclusive licensing of University held patents
Innovation-related expenditure spent on universities
Exclusive licensing of University held patents
Internships
Joint research and development projects
Problem-solving / consulting by university staff
Recruitment at post doctoral level
Testing and standards
Conferences
Publications
Recruitment at first degree, or masters level
Informal contacts
US
UK
Cosh, A.D., Hughes, A. and Lester, R.K. (2006) UK Plc:Just How Innovative Are We? Cambridge-MIT Institute,
University of Cambridge and MIT.

26. 26
Use of Sources of Knowledge for Innovation: All CompaniesUse of Sources of Knowledge for Innovation: All Companies
Cosh, A.D., Hughes, A. and Lester, R.K. (2006) UK Plc:Just How Innovative Are We? Cambridge-MIT Institute,
University of Cambridge and MIT.
0 20 40 60 80 100 120
Private research institutes
Government research organisations
Commercial labs or R&D enterprises
Universities/higher education institutes
Other public sector, eg Business links
Consultants
Trade associations
Professional conferences, meetings
Environmental standards and regulations
Technical standards or setting bodies
Technical press, computer databases
Fairs, exhibitions
Health and safety stds and regulations
Competitors in your line of business
Knowledge within the group
Suppliers of equipment, materials etc
Clients or customers
Internal knowledge within the company
US UK

27. 27
1. CHALLENGES TO THE SPIN-OFF1. CHALLENGES TO THE SPIN-OFF
MODELMODEL
2. OTHER MODES OF TECHNOLOGY2. OTHER MODES OF TECHNOLOGY
TRANSFERTRANSFER
3. TECHNOLOGY TRANSFER AND3. TECHNOLOGY TRANSFER AND
TYPES OF LOCAL ECONOMICTYPES OF LOCAL ECONOMIC
DEVELOPMENTDEVELOPMENT

28. 28
3. TECHNOLOGY TRANSFER AND3. TECHNOLOGY TRANSFER AND
TYPES OF LOCAL ECONOMICTYPES OF LOCAL ECONOMIC
DEVELOPMENTDEVELOPMENT

29. 29
Four Types of local economicFour Types of local economic
developmentdevelopment
 Indigenous creation of new industryIndigenous creation of new industry
– Silicon Valley: personal computer, semiconductorSilicon Valley: personal computer, semiconductor
– Boston: biotechBoston: biotech
 Transplantation of new industry into regionTransplantation of new industry into region
– I-85 corridor (NC/SC): automotive industryI-85 corridor (NC/SC): automotive industry
 Diversification of existing industry into new industryDiversification of existing industry into new industry
– AkronAkron, OH: tires -> advanced polymers., OH: tires -> advanced polymers.
– Rochester, NY: cameras, copiers -> opto-electronicsRochester, NY: cameras, copiers -> opto-electronics
 Upgrading of existing industryUpgrading of existing industry
– Tampere, Finland: industrial machineryTampere, Finland: industrial machinery
– Turku, Finland: biotechnologyTurku, Finland: biotechnology
Lester, R. (2005). Universities, innovation, and the competitiveness of local
economies. Summary report from the local innovation project — phase I.
Industrial Performance Center Working Paper Series. Cambridge, MA, MIT
Industrial Performance Center.

30. 30
University roles depending on the localUniversity roles depending on the local
economic development patterneconomic development pattern
 Creation of new industries (type I)Creation of new industries (type I)
– Forefront science and engineering research.Forefront science and engineering research.
– Aggressive technology licensing policies.Aggressive technology licensing policies.
– Promote / assist entrepreneurial businesses (incubation services, etc.).Promote / assist entrepreneurial businesses (incubation services, etc.).
– Cultivate ties between academic researchers and local entrepreneurs.Cultivate ties between academic researchers and local entrepreneurs.
– Create an industry identity.Create an industry identity.
• Participate in standard settingParticipate in standard setting
• EvangelistsEvangelists
• Convene conferences, workshops, entrepreneurs’ forums, etc.Convene conferences, workshops, entrepreneurs’ forums, etc.
 Importation / transplantation of industries (Type II)Importation / transplantation of industries (Type II)
– Education / manpower development.Education / manpower development.
– Responsive curricula.Responsive curricula.
– Technical assistance for sub-contractors, suppliers.Technical assistance for sub-contractors, suppliers.
 Diversification of existing industries into technologically-related new ones (Type III)Diversification of existing industries into technologically-related new ones (Type III)
– Bridging between disconnected actors.Bridging between disconnected actors.
– Filing “structural holes”Filing “structural holes”
– Creating an industry identityCreating an industry identity
 Upgrading existing industries (Type IV)Upgrading existing industries (Type IV)
– Problem solving for industry through contract research, faculty consulting, etc.Problem solving for industry through contract research, faculty consulting, etc.
– Education /manpower development.Education /manpower development.
– Global best practice scanningGlobal best practice scanning
– Convening foresight exercisesConvening foresight exercises
– Convening user - supplier forumsConvening user - supplier forums
Lester, R. (2005). Universities, innovation, and the competitiveness of local
economies. Summary report from the local innovation project — phase I.
Industrial Performance Center Working Paper Series. Cambridge, MA, MIT
Industrial Performance Center.

31. 31
Type IType I Type IVType IV
Creating new industriesCreating new industries Upgrading existing industriesUpgrading existing industries
FinancingFinancing Angel / venture capital (private &Angel / venture capital (private &
public)public)
Internal financing, supplierInternal financing, supplier
financing, governmentfinancing, government
InnovationInnovation
cultureculture
Science-driven: entrepreneurialScience-driven: entrepreneurial Customer driven, TQM,Customer driven, TQM,
continuous improvement, “bestcontinuous improvement, “best
practice”practice”
Local anchorsLocal anchors Research UniversitiesResearch Universities
Government labsGovernment labs
Lead firms - lead customers -Lead firms - lead customers -
usersusers
EducationEducation
AndAnd
trainingtraining
Ph.D. level scientists andPh.D. level scientists and
engineers: entrepreneurialengineers: entrepreneurial
business educationbusiness education
BS/MS level engineers: faculty -BS/MS level engineers: faculty -
student knowledge of industrystudent knowledge of industry
practices and businesspractices and business
problems. Internships, rotations.problems. Internships, rotations.
LeadershipLeadership
in thein the
public spacepublic space
Creating an identityCreating an identity
(“evangelism”): standard setting(“evangelism”): standard setting
Participate in regulatoryParticipate in regulatory
processes: global scanning forprocesses: global scanning for
best practice: ‘foresight’best practice: ‘foresight’
exercises.exercises.
TechnologyTechnology
transfertransfer
Proactive technology transferProactive technology transfer
from univ. & gvt labs: start-upfrom univ. & gvt labs: start-up
orientedoriented
Long term relationshipsLong term relationships
between univ. and establishedbetween univ. and established
firmsfirms

32. 32
ConclusionsConclusions
 Academic spin-off creation and growth works better under certainAcademic spin-off creation and growth works better under certain
conditions of industry, technology and commercialization.conditions of industry, technology and commercialization.
 It requires significant resources and commitment.It requires significant resources and commitment.
 Spin-off creation and licensing university patents is only one ofSpin-off creation and licensing university patents is only one of
several mechanisms of technology transfer.several mechanisms of technology transfer.
 Economic development strategy of universities needs to beEconomic development strategy of universities needs to be
aligned with the particular industrial development in the region.aligned with the particular industrial development in the region.

33. 33
ENDEND