Success Factors in Technology Transfer

Oxford Case Study

Tim Cook Director, Isis Innovation, University of Oxford

Visiting Professor in Science Entrepreneurship, Said Business School

Tim Cook

> BA Physics, DPhil Cryogenics - Oxford University> HNC Mechanical Engineering - Oxford Polytechnic> Diploma Accounting & Finance - Institute of Certified Accountants

> Managing Director of tech based companies (1983 – 90) 7 yrs> Oxford Analytical Instruments> Microsystem Design Limited > Micrelec plc

> Private Investor (1990 – 97) 7 yrs > Founding Managing Director Oxford Semiconductor > Founding Managing Director Oxford Asymmetry

> University Technology Transfer (1997 – 2007) 10 yrs > Director Isis Innovation, Oxford University (1997-2007)

> Visiting Professor in Science Entrepreneurship, Oxford University (2006)

Contents

Universities

Academics and Industrialists

Investors and Three Dimensions

Oxford Results and Tricks

Universities in a Commercial Environment

Speakers message

> Knowledge transfer is stimulating communication between very different cultures

> The cultures will not in general spontaneously understand each other> But there has always been the occasional multi linguist!

> Therefore intermediaries are required > at least to start with

> It only works if the intermediaries have a real understanding of both cultures

> There is not a single recipe that always works> But there are some underlying principles

What are Universities for?

> Research & Teaching> The creation and transmission of knowledge

> These both have a major economic impact> Creative thinkers (in science, arts and humanities)> A workforce trained in some useful areas

> But not all useful areas!

University Innovations

> Range from inventions & new processes to new philosophies & political thought

> Most of this talk is about the former but let’s not forget the others They may well have a more profound long-term impact on our lives

Why is it difficult 1 - Academics

> Universities have developed a self consistent set of values and behaviours which have enabled some of them to survive and prosper for a long time (Darwinian)

> This ethos can be summarised as:> The pursuit, preservation, development and dissemination of

knowledge

> Many of the most successful practitioners in universities are independent individuals who really see themselves as self-employed

Why is it difficult 2 - Industrialists

> The commercial world has also developed a self consistent set of values and behaviours. These can be summarised under two headings

> Internal coherence> All members of the company must have the same version of

the master plan and work to it

> Management accountability> The company is accountable to the shareholders and the

employees to the company

> These are not the same as university values

The Challenge

Researcher> Self directed> Next step defined by

yesterday’s results> Free exchange of ideas

Commerce> Driven by external needs> Clear goals with

shareholder commitments> Commercial confidentiality

So we can expect it will be challenging to build a mutually trusting relationship

“Academics never deliver” “Industry is out to cheat us”

Orthogonal Value Sets

Academic axis€ ->Research

2D Intermediary

Research -> Products

Commercial axis

Licence or consultancy

An additional challenge

> If we are talking about spinout companies, rather than consultancy or licensing there is a third axis

> In addition to academia and industry there are investors

> Investors are not the same as industrialists

Why is it difficult 3 - Investors

> Investors have yet a third set of values and behaviours, which again are self-consistent but differ from both industry and academia

> They evaluate an opportunity, invest, if it doesn’t perform they get out and try somewhere else > and what happens to the firm is not their responsibility

> These are not the same as university or industrial values

The third axis

Academic axis€ ->Research

€ -> €€€Investor axis

2D Intermediary

3D Intermediary

Spin-out

Research -> Products

Commercial axis

Licence

To summarise

If it’s not working get out

If it’s not working fix it

If it’s not working find a workaround

• Evaluate • Invest• Monitor

• Coordinated plan• Coherent activity

• Route is undefined at the start

Lots of concurrent activities

One companyOne major interest

OutsiderInsiderInsider

InvestorIndustrial ManagerAcademic

How it goes wrong

> A company signs a licence with a university> The company asks for a commitment that

> no-one in the University will work on anything that will devalue the company’s licence and

> the university will offer the company any improvements that any of its staff make to the original invention

> A year later a new academic joins the University who is a greater expert in the field than the original inventor

> Can the University tell him that all his future work in the field is restricted for the benefit of the company?

The clash

> This simple case exemplifies the issue:

> The Academic does not see himself as a “bound employee” he feels he is essentially an “independent trader”

> On the other hand the company has paid the University and can reasonably expect that the University will not devalue the product that it has sold

The common currency

> The only real common values between these different civilisations are personal relationships

> What about money?> Certainly they all deal in cash but the returns come in

multiple currencies with undefined exchange rates> Academic return> Personal cash return> Personal feel-good return

I would like to spend a bit if time expanding on this because I believe it is the most important point I have to make

Academics

> Academics are our shareholders> Isis Innovation is a wholly owned subsidiary of Oxford

University> Which is owned by the academics

> Academics are our customers> We only get to transfer knowledge from the ones who choose

to come to us

> Academics are our suppliers> Our raw materials are their inventions

> So they have big impact on our future prospects

Initiation by researchers

> All Isis Projects start with an approach from an academic

> Of course we devote much effort to internal marketing to researchers

> We make them welcome and they participate in all decisions but

> They have to decide to start any new project

A = fn (S, C)A = Attractiveness of project

S = Strength of science

C = Commercialisability of academic

Least attractive

Most attractive

Dr Quiet

Attracting Inventions

All the inventions in the University

0% 100%

The Beeson Gregory Project

> Oxford needed a new Chemistry building costing €90m> The Department had raised €15m> If the University matched it government offered €45m> So the University needed €30m

> Beeson-Gregory offered €30m for 50% of the University’s interest in Chemistry spinouts and licences for 15 years

> Was this a good deal for Oxford?

Requirements for intermediaries

> Must understand both value systems> Ideally should have lived in both

> Must be fluent in both vocabularies > And able to translate

> Must be trusted by both sides> So the academics will risk “being cheated”> And the industrialists will risk “having their time wasted”

Sources of intermediaries

> University technology transfer offices> As long as they employ bilingual staff

> Diplomatically adept property owners> Science parks, private developers

> Public sector (government officers)> If they really do understand both values systems

> The Professionals > Accountants, lawyers, consultants, investors, etc.> As long as they can suspend their self-interest long enough for

the creative interactions to start> Divisive advisors inhibit the process> Protect their client and kill the deal

Results in Oxford 1997-2007

36

330

280

55

0

50

100

150

200

250

300

350

400

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year to March 31st

Lic

en

ces, C

on

su

ltan

cie

s

0

15

30

45

60

Sta

ff, S

pin

ou

ts

Staff in Tech TransferCompany

Cumulative licences

Cumulative consulting

Cumulative new cos

Spinout Managers - The Rowing Boat

Spinout Managers - The Rowing Boat

Cashflow profiles

b

a

c

Time ->

Cumulative Net cash in

d

The difficulty

> In the long term it is in everybody’s interest

But

> In the short term the costs are from a single party

Culture Change

> All three must proceed together but the University must lead the change because..

> The ideas are in the University> If University provides TT resource,change will happen faster> Oxford pre-Isis 1 spin-out every 4 years, post Isis 8 per year

> If the University doesn’t lead, the University may not receive its share of the benefits

University entrepreneur culture

University & its technology transfer

resource

Local professional environment

Executive(policies)

Other academics

Gene pool Commercially

active scientists

The University

Tech transfer

office

StudentsBrokers

Itinerant managers Consultants

Sub-culture in a barter economy

VC’s Lawyers

Headhunters

PR agents

Realestate

LeasingBanks

Accountants

Specialist suppliers

Otherstart-ups

Message for Government

> We have some great universities> If you fund research you get more and better research> If you fund knowledge transfer you get more and better

knowledge transfer> This gives a better commercial return on the research

spend > and the return is disproportionately high

> because you are investing in an under-utilised asset (research results)

PS badly managed research, or badly managed knowledge transfer is a waste of money

but does not devalue properly managed research or knowledge transfer

Success Factors

Do> Expect it to be difficult> Work hard to understand the different civilisations> Invest in the interface> Use only intermediaries fluent in both value sets> Focus on building trust (particularly with researchers)

Don’t> Tell them to understand each other (they won’t!)> Think you will ever get it all right> Despair

“Managing” your relationship with a university

Walk along with the elephant> In whichever direction it chooses to go> Until it gets used to you

Start to pull gently on your rubber band If you pull too hard or too suddenly

> You will break your rubber band and> Have no further influence over the elephant

The UniversityYou

Like leading an elephant with a thin rubber band

But

> Don’t think you will ever have complete control

Cartoon by Stoney, Ravette Publishing +44 1403 711443 Tony Lopez (Copyright)

Contacts

Isis Innovation LtdEwert HouseEwert PlaceSummertown Oxford OX2 7SG

T 01865 340314E tim.cook@sbs.ox.ac.uk www.isis-innovation.com