A recent article in the Creativity and Innovation Management journal (March 2008) takes on internet marketplaces for technology such as yet2.com and Innocentive, and shows that there’s still a bumpy road ahead for totally open innovation. Specifically, the success rate has been far lower than expected.

In their study of 25 large Swiss and German firms (on average, 8 457 employees and 2 135 million € in revenue), Ulrich Lichtenthaler and Holger Ernst find that markets for technology have remained imperfect, resulting to high transaction costs and limited adoption by industry incumbents. Although all the firms surveyed were aware of different service providers, and several firms had invested substantial time and resources to decide on their technology offerings, the maximum number of transactions for a single company was only one out-licensing and one in-licensing agreement.

It might be no wonder, therefore, that most industry experts interviewed by Lichtenthaler and Ernst “have relatively reserved attitudes towards these marketplaces”. Only two out of 25 firms wanted to give the internet marketplaces another chance in the short to medium term, while the rest are presumably waiting for the markets to shed their imperfections. Thus, a vicious circle is set up: firms do not want to spend their resources on imperfect markets, while markets remain imperfect as long as firms do not participate more actively.

According to the authors, the most severe deficit is that the commercialization of technology through internet marketplaces constitutes a relatively unsystematic and passive approach. Specific technology needs or customers are not addressed, and problems and solutions are communicated very broadly. This makes matching technologies with buyers difficult, and numbers tell the rest of the tale: in 2004, yet2.com, with its 90 000 registered users, concluded only 10 technology transfers. Companies also tend to publish only relatively unattractive, residual technologies that have limited value, further weakening the attractiveness of using the marketplace. Read the rest of this post >

After attending the National Council for Entrepreneurial Tech Transfer (NCET2) Conference last week in Washington DC, it is clear that universities are stuck while the world is moving quickly past them. Closed, entrenched processes are restricting universities from adopting open innovation. The question the conference was trying to answer was, “How do we utilize our campuses, tech transfer offices, and discoveries for entrepreneurship?”

Today, university tech transfer offices operate like a filter, only promoting works they deem financial viable. If it has some value in their eyes, then they get to work patenting the discovery, advising that faculty member to incorporate, or trying to license the work. This process is one giant disservice to the university as it restricts what works get into the public domain for the world’s benefit. The Bayh Dole Act of 1980 said that universities can take ownership of works that are funded by the federal government. By filtering the works that make it out of universities, tech transfer offices are only shooting themselves in the foot by limiting potential, financial returns. The more open a university is with its works, then clearly the higher the chance someone will try to utilize that work. Welcome Open Innovation!

For universities to spur entrepreneurship, they must welcome open innovation in a dramatic fashion. Pushing faculty to start businesses, I believe, is not the correct route; welcoming entrepreneurs and companies to utilize their works is. To help this, the Kauffman Foundation and Science Commons are working to create a streamlined, open tech transfer environment with:

The iBridge Network, out of the non-profit Kauffman Foundation, allows university faculty and administrators to post innovations for others to find and utilize. iBridge allows universities the public venue to promote their works. So instead of acting as a lens, tech transfer offices should instantly post works in iBridge (think of it as an online store for university innovation). Science Commons aims to write generic license agreements for universities to utilize. The whole processes today is crazy, to write a new agreement every time a technology is licensed. Science Commons, a subsidiary of Creative Commons, is streamlining the last kink in the chain.

For universities to spur entrepreneurship, adopting iBridge and standard licenses is a must. Open Innovation is knocking on their door and its time to let it in!

Emile Petrone

epetrone (at) knowble.net