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Getting Real In The Real World: The Latest In University-Business Partnerships

POSTED 08/25/2014
By Maria Wood

Partnerships between universities and corporations are nothing new: IBM has been teaming up with universities since the the early days of computer science education in the 1940’s

As the debate over the “skills gap” accelerates, however, collaborations between universities and businesses are becoming more sophisticated and intertwined, evolving to meet shifting economic, marketplace and educational needs.

Let’s look at IBM’s latest, for example. For the last six years, the company has been working with universities to train IT specialists in the rapidly emerging field of big data and analytics, says James Spohrer, director of IBM University Programs (IBM UP) and Cognitive Systems Institute.

As part of that initiative, the global giant announced in May a partnership with 28 business schools and universities to help craft or revise a big data curriculum. Faculty members at those universities will be given free access to IBM software tools and case studies for educational purposes, as well as guest lecturers from the company.

IBM has a 70-year history of partnering with universities in this way, but the corporation is finding the lag time between new initiatives is getting more compressed, partly because of the emergence of big data. “Every decade is punctuated by some major initiative and more recently, it’s been every couple of years that we’ve had a new one,” Spohrer says.

And corporations may sense a greater urgency to align with universities to have access to the skilled workforce they need in the future. A recent Northeastern University poll found that 73 percent of business leaders contend there is a substantial skills gap in the current U.S. workforce. Even more damning, 87 percent of those leaders say most college graduates lack the most important skills required to succeed into today’s workplace

As the next-generation university-industry partnerships are anointed, companies may guide the formation of curriculum so the workforce of the future can keep up with rapid technological changes (a shift that has its critics). There is also more of an emphasis on giving college students the opportunity to learn how to be entrepreneurs and easing the pathway from the lab to commercial applications.

Survey

Naturally, it is never easy to align the interests of universities and local industry, but the next generation of the partnerships reveals several interesting trends in how to navigate the fraught territory between promoting academic freedom and training a highly-skilled workforce.

More than social responsibility and feel-good moments

At one time, business-university partnerships typically entailed a corporate representative sitting on a university advisory board or the company simply writing a check to the higher ed institution. Such collaborations were done more to enhance the corporation’s brand or out of a sense of social responsibility, says Jason Tyszko, senior director of policy for the U.S. Chamber of Commerce Foundation’s Center for Education and Workforce.

U.S. Chamber of Commerce

Today, corporations want more than just a feel-good moment when they work with a university. They want a demonstrated return on investment for their outlay to the university. That means they are more engaged in the shaping of curriculum and identifying the required skills sets for a particular industry.

“Now, employers are saying, this is not just about doing good and giving back, it’s about making sure our industry can thrive and has access to a talent pipeline that will ensure our competitiveness,” Tyszko says.

“It’s not just us cutting a check; we need to know what we are getting out of this partnership and we have some specific asks. We are thoroughly integrated and involved in whatever solution we are supporting. So you have employers playing a more hands-on role inside the delivery of instruction.”

Having industry represented at the instructional level means the curriculum can adapt more quickly to changing marketplace needs. “So students don’t come out saying, I have a skill set that was competitive five years ago but has no place in today’s economy,” Tyszko says. “Faculty and deans need to know how to constructively engage employers to get that feedback in real time.”

Getting a definitive read on the actual number of university-business partnerships operating in the U.S. is problematic. These include one-off, informal partnerships between a company and a few students and faculty to sponsored research projects to mega research campuses. The National Science Foundation provides a good barometer in its compilation of higher ed R&D expenditures. In the 2012 fiscal year, that figure stood at roughly $66 billion, up from the $41 billion recorded in 2003.

A syndicate model

Not surprisingly, the major impetus for university-business partnerships is money, or more precisely, how to obtain prized grant dollars from public sources. Elaine C. Rideout co-authored a recent book, InnovationU 2.0: Reinventing University Roles in a Knowledge Economy with Louis Tornatzky, which profiles 12 universities fostering innovation and economic growth in partnership with industry. They detail how each of the 12 universities exemplifies how best to partner with industry to promote economic development, applied research and student learning, and they explore several commonalities.

Fifteen years earlier, Rideout and her co-author did a similar study and since then they’ve seen “enormous progress” in the area of higher ed-business partnerships, which she attributes partly to a shift in how funds are awarded.

To gain research grants from say, the National Science Foundation, or to get other federal monies, universities are being pressed to cobble together syndicates of partners that may include other universities, nonprofits and businesses.

“The funding environments have really helped force the issue,” Rideout explains. “It used to be universities would go solo applying for research funds. Then the feds started encouraging more participatory proposals. Now you even have business partnerships that in some instances can be part of a group that is going in for funding, particularly if it’s a drug development or something like that.”

Cuicar

One of the universities featured in InnovationU 2.0, Clemson University, is a good example of of melding together public and private funding to build research campuses and support other university programs. John Ballato, Clemson’s vice president for economic development, says the university has taken advantage of a series of economic development programs sponsored by the state of South Carolina.

These run the gamut from endowing chairs at the university to helping build multi-million-dollar research centers. In some cases, the state offers cash awards outright; for others, it’s tax credits. In some instances, the state will match what a company provides.

Using a mix of state, university, and private funds, Clemson built its $250 million International Center for Automotive Research in Greenville, S.C. One of the primary backers, along with other automotive-related companies, was BMW.

“The types of things we’re doing, where we’re building a campus, investing staggering amounts of money, you can’t do that by yourself, nor can the company,” Ballato explains. “BMW is a wonderful global brand, but it has only so much resources. Clemson is a mid-sized university. So the other piece is the governmental source.”

Building meaningful business-university partnerships

The Clemson and BMW partnership began almost two decades ago when the auto company located new operations in South Carolina. Ballato admits some stumbling at first when Clemson suggested they partner to build a wind tunnel to test cars.

BMW executives quickly tossed aside that suggestion, though. They already had a wind tunnel in Munich, and what it really needed was a specialized talent funnel — students with graduate-level training in automotive engineering with an emphasis on integrating the smart systems emerging in the industry.

So BMW kicked in $10 million to fund two endowed chairs, one in systems engineering and another in manufacturing. 23 doctoral degrees and 160 masters degrees later, Ballato says the lesson is that universities can’t assume it knows what a corporation wants: “You put your brain on hold and you sit down and listen. Then you have to make a decision as to whether or not it’s something you can and should do.”

Another example he points to is how Clemson teamed up with the large-scale engineering and construction company Fluor Corp. “Over the years, we kept asking, what do you need? Are we providing the students you need and want?” Ballato recalls. “Sometimes the answer is yes, and sometimes the answer is, well, what we really could use are some ways our employees around the state or maybe even around the world can get that next level of education.”

Ultimately, the university developed an online masters degree program in engineering with an emphasis on supply chain optimization and logistics, and Fluor Coro endowed a chair.

Fluor

Rideout, who is also a Kaufman Fellow in Entrepreneurship at North Carolina State and an adjunct professor in the Entrepreneurship Initiative at the same university, concurs. To structure a successful university-business partnership, the university must first assess its strengths before approaching potential partners. “You’re not going to get anywhere unless you are strategic about that,” she says.

Three guiding principles for business-university partnerships

The National Academies’ University Industry Demonstration Partnership (UIDP) brings together major research universities and large, well-known corporations in an effort to facilitate better partnerships between the two parties by discussion of best practices. Since its founding in 2006, it has identified three guiding principles that create successful university-business partnerships. Anthony Boccanfuso, UIDP’s executive director, outlines those principles:

  • It must be beneficial to both parties. “Companies don’t work with universities because they are nice,”  Boccanfuso stresses. “They are doing it because there is a driver behind that and it benefits them in their role. It has to be something that supports the mission of each party.”
  • Deeper and narrower. Companies today desire deeper relationships with a fewer number of universities, he says, because they feel it’s more efficient. Firms also do a thorough due diligence on potential higher ed partners. In 2011, Dow Chemical Co. identified 11 universities it wanted to partner with on a 10-year, $25-million per year program to boost chemical engineering training. “That’s a very telling thing that a company like Dow would invest that much money to enhance their pipeline,” Boccanfuso says.
  • Remove barriers that may impede the formation of the partnership. Concentrate more on the objectives of the alliance, not the minutia of contract terms. “A lot of the most successful collaborations are those where the leadership of the university and the company have set out a vision of what they want to accomplish and they’ve said, ‘We have to get this done, so let’s figure out how.’ They don’t worry so much about the tactical issues. They get people to work on those, but that’s not the focus,” Boccanfuso says.

Moving beyond STEM

While most university-industry partnerships fall within STEM areas, says Rideout, “that’s not to say you can’t have great education software companies or psychology software. In fact, I’m in a technology incubator right now. I’ve got my own small start-up company. One of the other companies here is a game company that’s building software to help kids with their emotional intelligence quotient.”

Pearce

At Clemson, within the Pearce Center for Professional Communication, students are matched with local business that need written materials like white papers and research reports. “Closing the skills gap must occur across disciplines and not just engineering or business,” Ballato says.

“We’re experimenting with ways to get everybody, from English majors to Chemistry majors, engaged with solving real problems with industry and nonprofit partners. This not only should help address the skills gap but also foster creative and interdisciplinary thinking and entrepreneurship.”

Promoting entrepreneurship

One of the hallmarks of the universities singled out in InnovationU 2.0 is an emphasis on what Rideout terms “entrepreneurship education.”

As she explains it, for today’s students the notion of working for one company for one’s entire career is increasingly foreign, so they are demanding schooling in how to be self-employed. Typically, entrepreneurship classes are taught within the business school, but all students, no matter what their major, should have access to those classes.

“Many universities aren’t there yet,” Rideout concedes. “Entrepreneurship education is like a pipeline. You want to interest students at the very beginning, and then you offer them this great experiential curriculum. Then you want to get them to come up with an idea and actually turn it into a start-up company. That’s where the universities fall down.”

In addition to exposing entrepreneurship classes to students outside of the business school, she recommends universities continue training after graduation with summer programs or competitions for the best startup business plan.

She describes an “end of the pipeline problem” that hoists students out into the work world less than fully prepared. “That is where these partnerships with economic development initiatives in university towns can make a difference,” Rideout says.

Promoting failure

Emphasizing entrepreneurship education as well as establishing on-campus incubators does more than create a fertile ground for inventions or start-up companies to sprout. These programs also produce better workers, says IBM’s Spohrer. When IBM hunts for new hires, it prefers graduates who have gone through the start-up process, even if the budding company failed.

“The experience that these people have had even in a failed start-up can be of tremendous value to their future employers,” he says. “They’ve explored something that didn’t work and they’ve learned how to be resilient. When we hire, it’s not just the skills we’re after but that attitude of how to deal with adversity, how to spring back, how to take risks.”

From outputs to outcomes

Today’s university-business partnerships emphasis measuring and evaluating outcomes, though determining concrete benchmarks is a work in progress.

To do so, universities may have to switch gears from tracking their traditional outputs (how much research funding is the school getting, how many students did the university graduate, patents approved, start-up companies launched, etc.) to benchmarks that are more employer-centric.

It goes beyond just counting degrees, explains Tyszko of the Chamber of Commerce. How did that student perform in the workplace? Did the university help the employer reduce its time to fill positions? Did the recent grads function adequately from the first day of employment, or did they require extra training?

“You need to define what does success look like,” Tyszko says. “If it’s just coming in and engaging at a high level but we don’t really know how to track if this partnership has been effective or if the outcome for the students has been good, that’s a problem.”

Granted, quantifying the eventual outcome of a university-industry partnership is difficult to calculate in a nice-and-tidy spreadsheet. UIDP’s Boccanfuso says there are no clear-cut metrics currently in use to evaluate these collaborations, further noting that any results are “typically not instantaneous.”

Further complicating the matter are the differing perspectives of the two parties involved. “Universities like data that says, hey, we got X millions of dollars a year from companies to perform research or to partner with them,” Boccanfuso says. “But companies are looking at different issues, like students hired. It’s very difficult and it’s also a longer time range, so there isn’t one set of established metrics to evaluate these collaborations.”

Measure or else

Nevertheless, federal research dollars increasingly depend on partners establishing those benchmarks, Rideout says. In the grant proposal, the two partners must set aside a specified dollar amount that will be used to measure outcomes as well as a projection of likely outcomes.

Clemson’s Ballato agrees there are some concrete measures of a partnership’s ultimate success from the university’s standpoint, such as the number of research grants the faculty wins and companies spinning off from the university.

Results are bit more difficult to track from an industry perspective, he finds. “Obviously they want to see technology transition to benefit their industry, which we can track to some extent,” Ballato says. “We hope they are hiring our graduates and hopefully they are happy with them. It’s a bit harder to go back to them and say, can you give us a spreadsheet that values your $10 million gift and all the tangible and intangible returns on it? That’s a tough thing to do.”

The best gauge of a successful partnership is return business, Ballato says. He points to Duke Energy, which partnered with Clemons on two projects: an incubator in Anderson and an electrical grid capability in Charleston. “Do our partners keep coming back to us for more students, for research, for new partnerships?” Ballato says. “If Duke didn’t see Clemson as a valued partner, they wouldn’t have entertained that second relationship.”

Try and buy: Commercializing innovations

In 1980, the Bayh-Dole law specifically compelled universities to take any technological innovation created at a university and transfer it to practical use in the real world.

In other words, as Rideout explains, if a faculty member found a new molecule or a new invention, that research shouldn’t simply be locked away in an ivory tower but put to commercial use, either in new drug, material or start-up company.

“If there were a real effort and focus on that, you would have every university basically be a job dynamo,” Rideout says. “We can do so much more in that area.”

One way to do this is by shrinking the bureaucracy that can sometimes hinder technology transfer. The University of Minnesota’s Office for Technology Commercialization (OTC) is making strides in that regard. They aid students and researchers in their start-up companies, navigation through the licensing maze, sourcing funds and finding potential partners in the business world. In 2013, Minnesota’s OTC reported 331 invention disclosures and 65 U.S.-issued patents.

University of Minnesota

Meanwhile, the university’s “Try and Buy” program permits companies to access the university’s licensed technology for a trial period to assess whether any product produced is commercially viable. There’s typically a fee, but Minnesota firms are given free rights for the trial period, according to Rick Huebsch, associate director at Minnesota’s OTC. In addition, the first $1 million of product revenue is royalty-free for the licensing company.

In addition, another program covers companies that want to sponsor research at the university. Sponsoring research that may or may not produce any tangible results can be a precarious venture for a company. Therefore, Minnesota’s OTC instituted a program whereby a company pays an additional one-time fee of 10 percent to lock up exclusive licensing rights to any technology resulting from a research project.

“Basically,” Huebsch says, “it eliminates the risk or uncertainty that companies have when they want to sponsor research at the university.”

Nationwide, the Association of University Technology Managers (AUTM) surveys academic technology transfer pros to gauge licensing and related activities (such as spin-off companies) at U.S. universities, hospitals and research institutions. Its latest report for 2012 found that 5,130 licenses were executed, a 4.7 percent hike from the number of licenses executed in 2011. Also registering an increase in the same period were start-up companies, up 5.1 percent to 705.

Should universities and industry partner at all?

Some critics throw shade on the concept of university-business partnerships, arguing that it’s not the role of business to meddle in a university’s curriculum, and raising questions about academic independence.

For example, Molly Corbett Broad, president of the American Council on Education, told the Wall Street Journal that “The most important concern . . . is the absolute requirement on the part of faculty of independence for their judgment and avoidance of any conflict of interest.”

South Dakota State

Those who study these partnerships counter that no university is compelled to partner with a corporation, nor is a company obligated to hire a university’s graduates. And if a university does collaborate with a company on an academic program, the university has the final say on curriculum or hiring of faculty. Supporters further point out that a university has many missions, one of which is to train an adept workforce in new fields.

For example, South Dakota State University will launch two minors this fall in the field of precision agriculture, a field which utilizes the latest biotechnology and engineering tools to aid farm production. Working with SDSU on the creation of the curriculum is Raven Industries, which has a precision agriculture division. Though Raven is partnering with the university on this program, Kevin Kephart, SDSU’s vice president of research, says any academic program is vetted by the state’s board of regents.

“Those are important checks and balances on the objectivity and quality of the programs being offered to students,” Kephart says. “On the other hand, we certainly seek input from stakeholders of the university and that’s where I put Raven — as a very strong and important stakeholder in our research and in our academic programs.”

Balancing act

Yet it’s a balancing act. The university must maintain its academic freedom while at the same time acting as a good steward of the money given to it by students, the state and corporations, Clemson’s Ballato maintains. It also behooves the university to train students in fields where they can find jobs, and for that, industry input is needed.

“There would be more of a valid criticism if we were taking tuition dollars and money from the state to educate students and then not educating them in topics where they could get jobs. That does nobody any good,” he says.

Ballato also refutes the belief that universities “simply fall over and get in line” with whatever a corporation tells them to do. “By virtue of the contracts and the agreements they sign, they know how their money is going to be used. The policies and practices that we employ to do what we have promised to do.”

Rideout admits that one of the conclusions in her book — that universities should foster an external private-sector orientation — is fairly controversial. Yet she feels sentiment is swaying more in favor of these partnerships due to the current economic climate.

“Educational institutions have these dueling priorities,” she explains. “You want to prepare young people to have a possibility in the job market. But you want to make sure no one is ever impinging on your freedom to come up with any conclusion and do empirical research that has not been compromised by some political agenda.”

What may be tipping the debate in favor of partnerships, applied research and practical education is the current state of the world economy, which is moving faster than ever. The U.S. could be left in the dust if it doesn’t respond and adapt.

“We’ve lost our blue-collar manufacturing,” she says. “We have innovation, and we have technology. We have inventions. And if we lose that, what do we have left?”

[Editors’ note: An excerpt of this article appears on eCampusNews.]

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