Anecdotes about the phenomenal growth of Silicon Valley convince developers worldwide that their community should become the next clone of the Valley even though many have tried, and failed, for the past 20 years.  Some regions, such as Bavaria and Los Angeles, have, however, succeeded over decades in building a sizable technology component in their economies. The job of technology development is far more complex than most developers imagine.  Taimerica Management Company, an economic development consultant whose president began work in the high tech area in 1983, offers this primer to developers wanting to analyze their community's strengths and weaknesses for technology development.
 
 
 

Understand the Process

New ideas like the computer hard drive do not spring directly from university labs. As Peter Hall states in his work about innovative regions, the goal of a technology program is to create a "cascade of innovations" that lead to new companies producing new products for world markets.

The cascade has at least 4 critical steps:

• The cascade begins with a fundamental scientific discovery, what is termed basic science. Most basic science is a product of university research programs.
• Basic science is further refined in a step called applied research. The end product of applied research is a patent or other document that establishes an inventor's legal claim to the idea.
• Patents must be further refined into products for the marketplace. Production processes and costs must be determined; market demand must be assessed; distribution channels and costs must be studied.
• Once these pieces are defined, an entrepreneur must develop a business plan, assemble a management team and raise the financial resources needed to commercialize the idea.


Each step in the innovation process must be completed before the community sees the creation of new jobs and payroll.  A break in this long chain of innovations ends the job generation process.

Regions with a long history of R&D activity, whether in basic research at universities or applied research at federal and commercial labs, are home to most of the world's technology companies.  As the number of basic science ideas that pass completely through the cascade of steps in the process is so small, scale is the only way to assure that a community will see results for its efforts.  Anything lacking scale is a high risk strategy that should not be contemplated.  Technology development is not a process for "smoke and mirrors" programs that hope to achieve results without spending resources.  Before launching a technology development program, analyze your community's relative position in the R&D marketplace. Do you have what it takes to compete?
 
 

It’s a Long Road between Basic Research and Startup Company with a Variety of Actors in the Process

 About 52 percent of all basic research in the US is performed at universities. But it takes 10 years or more before basic research leads to innovations with commercial potential. Even in fast paced fields like biotechnology, the time between publishing of a scientific article and citation of that article in a patent application is 6-8 years.  Universities do not spin out many startup companies that succeed in the marketplace:

• University researchers are not businessmen. They want to see commercial application of their work but they don't want to design and prototype a manufacturing process, perform production cost estimates, collect market research on a new product, and write business plans.
• A link between university researchers and the business community is a vital element in turning bright ideas into new products which generate community jobs and payrolls.

Two paths to technology development can be pursued by a region.

• The Ruhr region of Germany successfully pursued a strategy of developing technology industries that improved the productivity of local industry, then exported those technologies to the world.
• The second path consists of a technology program that identifies a nascent technology, then builds a world scale research effort around that technology. Both paths can succeed, but it is unrealistic to expect measurable results in less than 10-15 years.

Universities hold a significant number of patents in superconductivity, molecular biology, surgery, and in biomedicine.  University research does not always have commercial application, however:

• Linkages between universities and industry are growing stronger in clinical medicine and biomedical research, as revealed by the proportion of scientific articles that are co-authored by academic-industry teams.  This research area is ideal for collaboration.
• Innovations in communications, electronics, and software are rarely collaborative between industry and academia, and there is little synergy between academic and commercial interests in these fields.

People trained in science and engineering often ignore the importance of culture in technology transfer.  An important component in building science based industry is a university culture of openness about research and a mechanism for continuing collaboration between universities and private entities.  The following points are some of the key issues in building  a mechanism for university-business collaboration:

• Saxenian’s work at UC Berkeley demonstrates that universities with comparable research budgets and faculty have very different success rates at commercializing research, depending on the institution's attitude about working with small firms.
• The scientific research that garners the most academic recognition tends to be on the leading edge of science, the edge of the scientific landscape farthest from the commercial arena.
• The traditional rewards for excellence in science often work against efforts at commercialization. Communities and universities must work together to provide rewards for academicians to work on the commercial end of the science spectrum.

As a host of entities must support a technology development program, the program needs a written strategy and plan to build consensus among all of the actors.

• The proper research drivers and magnet technologies must be identified.
• A funding plan that provides financial and institutional resources for basic and applied research as well as for implementation efforts must be developed.
• As almost none of the nation's venture capital is available for seed funding, a mechanism must be developed to support commercial entities while they are refining patents and developing business plans for launch of technology companies.
• And most importantly, a region must have a viable program in place for rewarding collaboration between its academic and its business communities.

Although few people needing surgery allow their hospital to substitute a professor of anatomy for an experienced surgeon, many communities hire consultants lacking experience as economic development practitioners. Taimerica Management Company combines 20+ years experience in the practice of economic development with academic training in that field. Taimerica offers communities a balance of theory and practice that produces realistic goals and strategies.

Let a specialist like Taimerica help with your technology development plans and programs