Category Archives: Universities

Start-ups Are the Key to Our Future

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Published in the Telegraph-Journal 19th April 2013

In a province where traditional industries have been in decline, substantial reliance has been placed on new business formation to support New Brunswick‘s economic growth. But entrepreneurship has always been a risky proposition. Whether launching a tech start-up, a small business, or an initiative within a large corporation, the odds are overwhelmingly against the entrepreneur. Harvard Business School researchers have recently estimated that more than 75 per cent of all start-ups fail.

For decades, business founders had been taught that success involves writing a business plan, pitching it to investors, assembling a team, introducing a product and selling it as aggressively as possible. This is the conventional approach and prevailing wisdom of business schools, government economic development agencies, financial institutions and investors.

But recently an new methodology has called into question the logic of business planning and discarded much of what we thought we knew about the process of starting a company. Called the “lean start-up“, this new methodology favours “experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development“.

One of the forces behind this new methodology is Steve Blank, a consulting associate professor at Stanford University, National Science Foundation principal investigator at the University of California at Berkeley and Columbia University and extremely successful founder of numerous high-tech start-ups.

Blank holds that business plans are one of the fundamental reasons why failure rates among start-ups are so high. The traditional business plan typically includes a five-year forecast for income, profits and cash flow. The assumption behind writing a business plan is that it is possible to figure out most of the unknowns of a business in advance, before funding is raised and the idea is actually executed.

According to Blank, “no one besides venture capitalists and the late Soviet Union requires five-year plans to forecast complete unknowns. These plans are generally fiction, and dreaming them up is almost always a waste of time.”

Conventional business plans contribute to the likelihood that entrepreneurs who can convince investors to fund them then begin to build the product in isolation from their markets, with little if any customer input. Too often, after months or even years of development, entrepreneurs learn the hard way that customers neither need nor want most of the product’s features. And in today’s fast-moving markets, even good ideas can be made obsolete very quickly.

Blank concedes that business success is predicated on too many factors for one methodology to virtually guarantee that any single start-up will be a winner. But on the basis of hundreds of start-ups, in university programs that teach lean principles, the more important claim can be made that using lean methods across a portfolio of start-ups will result in significantly fewer failures than using traditional methods. In the last five years alone, more than three dozen universities have begun to incorporate the lean start-up methodology in their program portfolios, with immediate and documented success.

A lower start-up failure rate would have profound economic consequences in New Brunswick. The province’s economy increasingly is being buffeted by the forces of globalization and disruption. Its traditional industries are rapidly losing jobs, many of which will never return. To ensure economic viability in the long term, the province must rely on successful entrepreneurship. The growth of jobs across the province will need to come from new ventures, and all New Brunswickers have a vested interest in fostering an environment that helps them succeed, grow and hire more workers. The rapid expansion of start-ups is critical to supporting the transformation to an innovation economy. Universities, government, financial institutions and investors each have a key role to play.

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Filed under Business strategy, Education, Innovation strategy, Job creation, New Brunswick, Universities

Research: Catalyst for Economic Growth

Published in the Telegraph-Journal 2nd October 2012

New Brunswick’s universities have been involved in much of the prosperity and growth in every industry in this province. There is a long history of university-industry partnerships that have supported the successful commercialization of university research as well as the creation of many competitive spin-off firms. The development of innovative products and services in existing companies and the generation of thousands of jobs in New Brunswick has been the hallmark of successful university collaboration with industry.

But in recent years, universities and scientific research centers have not been the catalysts for entrepreneurship and regional economic development in the way that similar and more successful institutions have in other regions. Even though there have been notable successes, New Brunswick’s university-industry collaboration is falling short. University and corporate business leaders need to more aggressively support start-up ventures and mid-size firms.

This represents a huge opportunity for New Brunswick.

There is a need to create new engines of job growth. As the demand for expertise and experience outpaces supply around the world, New Brunswick must take steps to increase its pool of talent. Other countries are already investing heavily in research and development. In Asia, R&D spending is forecast to overtake U.S. levels in the next five years, due primarily to remarkable growth in R&D investment in China.

In New Brunswick, the private sector may have limited capacity to create the jobs and prosperity needed to restore economic stability. The ability of the government to act as the generator of economic growth has become limited because of the province’s fiscal obligations. Essentially, the longer we wait, the more challenging the economic situation will become.

New Brunswick should follow the lead of New York City Mayor Michael Bloomberg to meet this challenge.

In 2011, Bloomberg and the New York City Economic Development Corporation announced that the city was seeking responses from universities, research organizations and related institutions to develop and manage an applied sciences research facility. The city’s objective was to strengthen its practical sciences capabilities in order to maintain a diverse and competitive economy, particularly in fields which lend themselves to commercialization and capture the considerable growth occurring within science, technology and research. Bloomberg committed the city to making a significant capital contribution in addition to providing city-owned land.

“A new, state-of-the-art applied sciences research school would be a major asset for New York City as we develop a 21st century innovation economy,” said Mayor Bloomberg. “The City is committed to finding the right partner and providing the support needed to establish such a facility because research in the fields of engineering, science and technology is creating the next generation of global business innovations that will propel our economy forward.”

A substantial applied sciences research centre with similar objectives of creating global business innovations is needed in New Brunswick, even if the financial commitment would be substantially less than the US$3 billion of New York City’s total expenditure. Rather than re-purposing New Brunswick’s current universities’ budgets to serve corporate objectives, creating additional world-class capacity to New Brunswick’s existing science and technology communities would allow the province to stay globally competitive. As with Bloomberg’s model, a substantial percentage of the costs will be carried by a consortium of collaborating universities, international applied science and technology organizations, as well as private sector partners.

This capacity would not only substantially enrich the province’s research capabilities, but would lead to greater commercialization and expand the province’s economy. While some of the development would be for academic use and would include teaching space and laboratory facilities, much of the focus would be on providing the business acumen needed to drive commercialization in startup and early stage firms.

We know that investing in innovation is the key to creating a robust and expanding economy. This initiative would be a strong demonstration of the province’s commitment to making these critical investments.

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Filed under Business attraction, Business strategy, Education, Entrepreneurship, Innovation strategy, New Brunswick, Universities

New York’s Newest Idea Incubator: Cornell-NYC Tech

By Peter Lindfield, published in the Telegraph-Journal 21st September 2012

A longtime myth may soon be discredited. For more than 20 years, conventional wisdom had it that the success of Silicon Valley would never be duplicated. But Cornell University earlier this year won a bid to build a $2-billion graduate school on New York City’s Roosevelt Island.

The Ivy League school partnered with the Technion-Israel Institute of Technology, an Israeli-based public research university, to create the Cornell-NYC Tech campus. This helps fulfill a growing vision of generating a startup boom in Gotham.

The Cornell-NYC Tech project may provide a view into the future where large and complex technical infrastructure provides the blueprints for successful ecosystems of innovation. The development of similar mega-tech centers are underway or in the planning stages in countries such as China, India and Germany.

The joint project is part of New York City’s Mayor Michael Bloomberg’s ambitious efforts to create new businesses in New York and to develop the city’s five boroughs as the technical business capital of the world. The project could be a large as two million square feet on Roosevelt Island, across the East River from Manhattan.

It promises to give other hubs of entrepreneurial science around the world “a run for their money,” said Bloomberg. “It really is a game changer. In fact, the economic impact will be even greater than we originally thought. It will generate more than $23 billion in economic activity over the next three decades as well as $1.4 billion in tax revenues.”

Cornell-Technion’s plans include a high-tech research centre dedicated to attracting brilliant young minds, establishing fresh businesses and powering New York’s post-industrial intellectual economy, beginning in 2017.

For all that to happen, the Roosevelt Island centre will need to be an exciting, urban place and resounding of innovation. To support the right vibe, research towers and sloping lab buildings are oriented for the most efficient capture of solar energy in the proposal for a new Engineering campus. Even more investment will be necessary to connect Roosevelt with Manhattan, but as with most super-initiatives, Cornell-NYC Tech initially will be a cost centre. Profits will not roll in immediately.

“This is a story of connectivity between people and their ideas, between researchers and business people and between students and their dreams,” Cornell President David Skorton said.

New York has yet to establish a reputation in IT innovation in the way that Silicon Valley has but New York possesses some attributes that are vital to rapid growth.

“You’ve got to understand how big we are,” said Bloomberg, noting that “New York City has more undergraduate and graduate college students than Boston has people.”

Henry Etzkowitz, senior researcher at Stanford’s H-STAR Institute, coined the term “entrepreneurial university” to characterize the role universities can play to foster startups in a way that most effectively leverages local advantages. CornellNYC’s Tech graduate curriculum is intended to draw on talent and innovation in the many fields where New York City is already a dominant player, such as in global finance, media, design and fashion.

“This is the strength of New York,” he said. “It has all of these resources but many of them isolated from each other.” Cornell-NYC’s Tech will bring them together under one massive roof.

Etzkowitz calls for targeted investments as well, particularly in creating regional partnerships to create efficiencies and other institutions focused on economic development but cautions that “real success demands patience; economies grow slowly and payoffs come slowly. The powerful impulse to keep score on public spending needs to be weighed against the requirements for investments with uncertainty built into the payoffs.”

Will Cornell-NYC Tech become the model for leading entrepreneurial ecosystems? Even considering New York’s size advantage, or perhaps because of it, at a time of fiscal constraint and diminished expectations, this uncertainty looms largest.

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What Silicon Valley Can Still Teach Us About Entrepreneurship

By Peter Lindfield, published in the Telegraph-Journal 9th August 2012

The success of Silicon Valley was in no small part because of unintended consequences involving outward-facing research universities building Cold War weapons systems with the assistance of massive U.S. government R&D. In 1979, regulatory change accelerated the involvement of venture capital when changes in the U.S. Employee Retirement Income Security Act resulted in a dramatic increase in pension funds investment.

We know today that we cannot perfectly duplicate Silicon Valley’s success. But there are lessons we can learn about innovation and building startups even without Cold War funding. Many of these lessons are changing our fundamental perceptions of how innovation, startups and entrepreneurship work.

As in the early Silicon Valley days, 90 per cent of startups still fail in their first five years, representing an enormous waste of productive potential. We once believed that creating an innovative product or service, establishing a 5-year financial forecast and executing a business plan was all that was necessary for startups to succeed. Marketing and sales would follow demand. Many universities continue to teach entrepreneurship around these assumptions. There is growing evidence that this process fails because startups are not simply smaller versions of large or established companies.

Steve Blank, author of The Startup Owner’s Manual moved from being a Silicon Valley serial entrepreneur to teaching entrepreneurship at Stanford University. He is emblematic of the new thinking about how startups succeed and fail.

Today we know that many more startups fail from a lack of customers than from a deficiency of innovation, lack of investment capital or failure of product development. Startups are still being built with business tools from the 1950’s. According to Mr. Blank, established companies execute a plan because customer characteristics are known. A startup is a temporary organization designed to search for a repeatable and scalable business model. Discovering and validating customers happens before the development of a business plan and before salespeople are hired.

Companies build value for themselves while delivering products or services to its customers. This is achieved through key partners, resources, customer relationships and segments and appropriate channels. Ultimately, these elements create revenue streams and profit margins. But at the startup stage, much of this is hypothetical. Potential customers cannot easily put a value on innovative products and services and research tells us conclusively that no business plan survives first contact with customers. A key task for startups is to transform these guesses into facts. Universities such as Stanford, the University of California at Berkeley and Columbia have transformed their entrepreneurship teaching programs to reflect this new Silicon Valley model. The results have been encouraging with far fewer failures and stronger growth.

Even under this new Silicon Valley model, government is still a cornerstone of entrepreneurship development. Although the roles of universities, industry associations and venture capital firms remain critical, government is central to the development of a successful entrepreneurship ecosystem. The requirements of this ecosystem also point to what government can do. It can encourage a “fail fast and move fast” culture. It can encourage the growth of private sector-led entrepreneurial centers such as accelerators and incubators. It can review incentives for risk capital to locate in close proximity to these centers.  It can task universities with the responsibility to become more outward-facing and encourage them to develop a 21st century entrepreneurship curriculum. It can rationalize its own policies and processes to encourage small business initiatives – whether startup, early stage or established — to consistently adopt these new entrepreneurship practices. And this approach of government policies, funding and tactics will not cost taxpayers more than they are paying today.

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Two Universities and the Province’s Shale Gas Outrage

By Peter Lindfield, published in the Telegraph-Journal 1st May 2012

The Université de Moncton and the University of New Brunswick are planning to hold a two-day, science-based forum in June with the objective of discussing the future of the province’s natural resources economy and the positive and negative elements of shale gas development. The event organizers are targeting the participation and involvement of 200 stakeholders from government, opposition, industry, environmental groups, citizens and owners of agricultural property.

The forum will bring a much needed perspective to the shale gas development issue. What it will not do is address the key attribute of the shale gas development phenomenon in New Brunswick. The assumption heading into this event is that science or data will address the fundamental opposition to shale gas drilling. The opposition to shale gas is not only focused on the hazards of drilling. The opposition to drilling today is centered on the outrage expressed by many who no longer trust industry or government to operate in their best interests. And now, the universities are in jeopardy of falling into this black hole.

Shale gas drilling is a prime example of locally unwanted land use that arouses not irrational outrage but quite rational sentiments of not-in-my-back-yard (NIMBY) opposition. From a national, and regional perspective, the product of shale gas wells may indeed be a good thing. Natural gas is a relatively clean source of energy and is environmentally superior to dirty fossil fuels such as coal and oil. But gas wells are not great neighbors. Instead, they are ugly, they are noisy and they are intrusions into people’s lives. While everyone across society may be better off with more shale gas in our future energy portfolio, there is no denying that everyone would better with those gas wells in someone else’s back yard.

Shale gas drilling is not a Frank Gehry-designed factory operation nestled in a corner of the province. Instead, it is a forest of well-head structures, fleets of trucks and other drilling infrastructure dominating the landscape. This approach of downplaying the negative side effects of drilling by appealing to the importance of shale gas to New Brunswick economic development prospects has added insult to injury. Instead of mollifying protestors, it has added the outrage of dishonest disrespect to what are considered to be the substantive downsides of drilling itself.

The gas drilling companies have been aware from the outset that they never stood a chance of persuading opponents that their opposition was irrational, and that shale gas drilling would be a good thing for their neighborhoods. According to this view, protestors in the community are irrational economic development-potential destroying ideologues instead of average citizens attempting to protect their community’s lifestyle and property values.

In the face of this, industry, government and academics have been feigning surprise at the opposition to shale gas in New Brunswick. For some time, proponents have stated that they could not understand how anyone could object to making progress in this critical and desperately needed opportunity of economic development. The forum’s chair, the Université de Moncton’s Roger Ouellette has stated that shale gas is an important question for New Brunswick, which has traditionally relied on a natural resource-based economy and faces fiscal challenges going forward. Some have gone so far as to tie shale gas economic development to the ability of the province to afford entitlements such as health care, education and social assistance. This view, which completely ignores the seething outrage that figures so prominently in this issue, and baldly states that shale gas drilling is necessary to pay for the economic and social entitlements of this province’s citizens, may come back to haunt its proponents.

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Universities are the Lifeblood of Innovation

Published in the Telegraph-Journal 13th April 2012

The effectiveness of university-industry research and development (R&D) partnerships is at the core of the drive to supercharge Canada’s innovation engine. There is incontrovertible evidence that this push is built on substantial success. Countless university-industry partnerships have supported the successful commercialization of university research. They have resulted in the creation of many competitive spin-off companies, the development of innovative product and service portfolios for existing firms and the generation of thousands of jobs in industries across the entire spectrum of economic activity. It is not an overstatement to say that in Canada university research has been a cornerstone of innovation in every growth industry over the last 60 years.

That is not to say that universities are without their critics. Those industries that rely on university research complain that the processes of technology transfer, commercialization and invention management are fundamentally flawed by universities’ insufficient attention to the need for rapid progress in making innovation marketable.

Governments fund universities without setting their explicit research objectives and universities are left to determine their own research agenda, generally autonomously at the level of individual departments. There has been criticism of this approach by some in industry who would prefer that universities focus on practical research and that government provide guidance to that end. Industry lobbyists increasingly are pressuring government to support economic growth and job creation by encouraging universities to shorten their research timelines to reflect the near term by shifting their focus – and funding – from basic to practical research and commercialization.

This presents a profound challenge to universities. It is with basic research where breakthrough discoveries and technologies are most likely to occur, although if they are frequently distantly removed from being commercial products. It is precisely because the lead time to generate marketable products is often so long that many firms in the private sector effectively have abandoned basic research. From manufacturing to mining to the life sciences industry, industry has dramatically downsized its investments in basic research in favour of collaborating with universities.

The immediate beneficiaries of technology transfer and commercialization is the university itself rather than industry. This is counterintuitive and may appear unproductive to the private sector. However, it may require many years for university basic research to translate into viable inventions and even longer for inventions to reach the market. Even successful, patentable discoveries are not likely to achieve a significant return on investment in the short term. If university researchers capitulate to the demands of industry to trade long term basic research for a focus on developing practical inventions, commercialization may only involve picking the lowest hanging fruit. Long shot breakthrough innovations in industries such as biotechnology will be less attractive if decades are required for commercial products to reach the marketing stage. Under the pressure of short term results, and without the benefit of hindsight, the most promising research may never be undertaken at all.

In the race to capture the benefits of innovation, the rest of the world is not standing still. China has redoubled its effort to increase basic research funding although it is too early to determine the results of this investment, or even its trajectory. Other nations are making ambitious investments in R&D, reflecting the recognition that the critical function of basic research should not be placed at risk, even if there appears no immediate practical application of that research.

None of this is to suggest that a focus on the commercialization of innovation should not be better funded or that universities should not support industry by engineering a more efficient and productive technology management and commercialization platform. But as other nations are discovering, and as Canada’s record has already demonstrated, successful university innovation involves focusing on basic research while effectively supporting commercialization, not substituting the former for the latter.

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The Value of the University Is Not Measurable

Published in the Telegraph-Journal 10th April 2012

After more than a year of fierce public opposition to drilling for natural gas in this province, the University of New Brunswick has announced that it is joining the debate. It is touted as a good thing. University faculty members in departments such as geology and chemistry will provide valuable scientific information to give New Brunswickers a greater capacity to judge for themselves whether the costs and benefits of shale gas development are worth the risks. A conference will be hosted sometime in the near future and presumably will also feature faculty from other public universities in New Brunswick.

But should universities – as institutions – be required to take on this role or is this some new quixotry that we see emerging from their cloistered halls? The reality is more prosaic and mundane. Suggestions that public funding should be directly tied to the university’s ability and willingness to undertake efforts at public engagement are an ominous sign that universities are being dragooned into this discussion. But universities have been pushed down this road for some time.

In the culturally and socially turbulent 1960s and 1970s, both right- and left-wing movements began to undermine the meaning of education, at all levels, by burdening the university with the profligate task of engineering technical perfection in all individual and social life. The putative winners of this battle were education radicals whose cardinal assumption was that all social and economic ills would be overcome by participating in the project of endless transformation. At the university, departments of economics, public administration and business were not at the core of this project but were key beneficiaries in the drive to find its practical expression in the lexicon of competitiveness, increasingly on a global scale.

One of the consequences of this project was to isolate universities from the community. Traditionally, the tenets of commonsense judgment vindicated the everyday decisions of ordinary men and women, whose knowledge was neither expert nor superlative, but were the middle degrees of capacity. For the vast majority of the public, participating in society meant exercising judgment and moral sensibility which in turn provided the confidence that their everyday experiences in the world were intelligible.

Today, the responsibility for an increasing number of political, social, economic and corporate problems is being laid at the door of the university where commonsense judgment is seen as a quaint throwback to more primitive times. At the behest of far-ranging corporate interests, the traditional principles of the university are being repudiated and overturned under the banners of “value for money.” We are allowing the independence of the university agenda and its principles to be trumped by economics.

Critics complain that much of the university is irrelevant and unsuited to the demands of the global economy. They would prefer that the university be used in the service of those skills whose universality and flexibility permit them to be jettisoned whenever circumstances demand. Instead of providing the foundations of intellectual life, universities are at risk of becoming theme parks promoting competitiveness.

The rationale for New Brunswick to continue to invest approximately $200 million a year in universities does not lie in whether universities are effective organizers, facilitators of public engagement or even whether all of the benefits accrued by New Brunswick’s universities to the public can be made measurable. It is true that in the absence of continued public investment, the future of New Brunswick’s universities would be in peril. Without universities, much of the intellectual and social infrastructure that undergirds New Brunswick’s identity would be in grave jeopardy. Universities are seriously endangered by the constant pressure to transform to reflect corporate values that are inconsistent with their purpose and mandate and this threat is growing.

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