Universities and, by extension, business schools provide fertile ground for idea generation, knowledge acquisition, innovation and embedding ethics and best practice, but it is in the real world where the rubber really meets the road. Far too often, good – even great – ideas fall through the wide gaps that exist between ideation and actualisation.
The frustration arising from this disconnect is what gave rise to so-called university transfer offices (UTOs), which have provided a route for the commercialisation of academic knowledge since the University of Wisconsin in the United States first developed the idea about a century ago.
Today, UTOs are up and running worldwide, from America to New Zealand and Ireland. In South Africa, the University of Pretoria’s Contracts & Innovation Office and its TuksNovation subsidiary work to transfer the technology and innovation developed by university researchers into the private sector. In the process, faculty and students benefit financially from the commercialisation of their ideas; universities create a potential income stream from successful licensing agreements; society benefits thanks to increased employment opportunities, and product and service innovation gets a boost.
In theory, this all sounds great, but UTOs are not without their challenges; after all, those operating at the intersect of academia and management come from different and sometimes contradictory realities, but the pull to create a smoother path for ideas to develop into entrepreneurial, start-up businesses is great. Certainly, venture capitalists keen to monetise university intellectual property (IP) keep a close eye on developments coming out of UTOs, but that is not to say they are not critical of the model. In recent years the venture capitalist fraternity has argued that some UTOs in the likes of the United Kingdom hold too much equity in start-ups, and often to the detriment of the founders and their motivation. This also acts as a break from ensuring that much-needed funding gets to the start-ups that need it most.
It is this sort of criticism that has seen greater interest in the establishment of university spin-off companies, which Norwegian academics Lars Øystein Widding, Marius Tuft Mathisen and Øystein Madsen regard as particularly interesting “since they can be developed into high-tech companies with global growth potential. In turn, they can directly create wealth and employment opportunities on both regional and national levels.”
Rather than a licensing scheme, as is the case with UTOs, these spin-off companies stand to be more profitable for both the universities that house them and the economies they call home. These companies would, in effect, work to commercialise IP developed either entirely from within the university community or in collaboration with universities and the business community. University spin-offs would work with the now ubiquitous UTOs and play an important role in raising capital for entrepreneurial ventures at various stages of their development and providing the support needed to develop innovative ideas into tangible offerings.
Since innovation goes hand-in-hand with entrepreneurship, these spin-off companies must focus on the type of entrepreneurship that can help turn around statistics, such as the South African economy’s 1.5% contraction in the third quarter of 2021. Or an official unemployment rate of 34.9%. Or a 4.2% decline in the manufacturing sector. That means focusing squarely on radical innovation defined by new ideas and new sciences, not the incremental type of innovation that currently receives so much time and attention.
Yes, if 90% of entrepreneurs fail in the context of our traditional growth system, then we can expect an even higher failure rate when it comes to untried and untested radical innovation ventures. But a radical entrepreneur – the type university spin-offs should be nurturing – will invariably offer a return ten times that of a traditional entrepreneur. They are higher risk and require more funding, time and attention. However, when they hit the sweet spot, they can achieve exponential success. And, guess what? Universities and businesses will be on hand to create the very managers needed to help these radical innovation companies achieve incremental growth.
Right now, there exists a singular opportunity for higher education institutions to put their teaching around collaboration into practice in a way that will positively impact the academic community and society at large. This is an exciting development for entrepreneurially oriented students at GIBS and the broader University of Pretoria.