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| Technology Innovation Management Review, August 2015 |
This is the
fourth and final post in the series on bridging the Valley of Death – the chasm
between university-generated innovations and real-world products/services. Prior posts have focused on incentives,
skills
development, and university technology
transfer practices. In this post, we explore how connecting to a thriving business
ecosystem can enhance research commercialization success.
What is a
business ecosystem, anyway?
In biology, an ecosystem is
a community of living organisms in conjunction with the nonliving components of
their environment (things like air, water and mineral soil), interacting as a
system. Applying the term to businesses
recognizes the interconnectedness of ventures with their surroundings. Business
ecosystems can be defined in terms of geography, or industry, or activity (e.g.
entrepreneurship), or some combination of the three. For instance, the Twin
Cities are known as a strong ecosystem for medical device startups
(geography-industry-activity). Strategy as Ecology,
a seminal article in the March 2004 Harvard Business
Review defines a business ecosystem as “loose networks—of suppliers, distributors, outsourcing firms,
makers of related products or services, technology providers, and a host of
other organizations—affect, and are affected by, the creation and delivery of a
company’s own offerings.”
The big question is what defines an ecosystem that nurtures entrepreneurship,
especially for new ventures that become “gazelles” (high-growth
companies, which generate high employment and wealth). A startup ecosystem contains
the following components. The trick is
to get them to play well together.
Daniel Isenberg of the Babson
Entrepreneurship Ecosystem Project has argued that communities can start
an entrepreneurial revolution with 9 policies and practices that involve
government-private sector partnerships to break down barriers and shape the
ecosystem around local conditions (i.e., build on strengths). The Kauffman Foundation sponsors a lot of research
on entrepreneurship and entrepreneurial ecosystems, but even they are still
are at stage of proposing
regional measures. In fact,
published rankings tend to be highly
subjective and unscientific.
Still
generally, speaking, having a great world-class research university is a great
place to start. In a recent Kauffmann
Foundation posting,
Paul Graham, the cofounder of Y Combinator, was quoted saying that “there are no technology hubs without first rate universities…if
you want to make a Silicon Valley, you not only need a university, but one of
the top handful in the world.” Probably
the two most famous university centers of startup ecosystems are MIT and
Stanford. MIT’s ecosystem of multiple
entrepreneurial programs has been credited
with generating ventures that created hundreds of billions of dollars in revenue
and hundreds of thousands of jobs. Stanford is the intellectual hub of Silicon
Valley, spawning graduates who founded a wide
range of companies, including Hewlett Packard, Google, Tesla and Instagram,
to name just a few.
Where does the
Twin Cities region stand? Sometimes, we come up high
on entrepreneurship rankings and other times low,
but goes to show how subjective they can be.
So, following are a couple of facts and several hypotheses about what
generates innovation and entrepreneurship at the regional, national and
international levels.
Fact #1: The Twin Cities has a highly educated
workforce, which is one element that comes up again and again in those suspect
rankings (e.g. Minnesota as top-rated
state for business) and education is associated with high-potential
startups.
- Total Research Expenditures -- 8th (rank among public research universities)
- Federal Research Expenditures -- 9th
- Doctoral Degrees Awarded -- 10th
- Post-doctoral Appointees -- 11th
Hypotheses: Several years ago, my colleague John Stavig
and entrepreneur Scott Litman wrote an article
proposing several strategies to promote entrepreneurship in Minnesota,
including:
- Create an end-to-end ecosystem that inspires, educates and supports entrepreneurs
- Create a framework that incents formation and job creation
- Provide experiential entrepreneurship education at the University of Minnesota
- Keep entrepreneurs in Minnesota
- Celebrate our successes
Many of their
proposals have come to pass and/or grown, such as the Minnesota
Angel Tax Credit program and the MIN-Corps
Lean LaunchPad educational programs. We
also have been blessed with strong industry associations (e.g. Medical Alley), more
angel investing groups (e.g. Gopher
Angels, Sofia Fund, Twin Cities Angels), a very dynamic meet-up group
(Minne*), and multiple incubators/accelerators (e.g. Treehouse Health, The Seed Partners, University Enterprise Labs).
Other mechanisms to
connect business ecosystems with university innovators:
- The UMN Office for Technology Commercialization Venture Center Business Advisory Group of tech entrepreneurs and executives helping to vet the commercialization potential of University innovations
- MIN-Corps mentors advising students and faculty on their business concepts
- MnDRIVE – Minnesota’s Discovery, Research, and Innovation Economy initiatives for research that results in regional economic growth
- “Ecosystem events” such as Founders Day to showcase program participant ventures and technologies
- The Office of University Economic Development, which helps external partners to connect with the resources, services and expertise at the university and its system campuses
- The Minnesota Cup, the largest state-wide venture competition in the U.S.
