Things that begin with ‘P’ – And why they matter in University Technology Transfer
July 2016
Many years ago I identified four words beginning with P that accurately sum up the resources a university needs to have in its Technology Transfer Office (TTO). These resources allow the TTO to function adequately, successfully, at all! These 'Four Ps' then formed part of the conversations we had with other TTO’s who visited us at Isis Innovation, the University of Oxford’s TTO where I worked at the time.
The first four P’s were: People, Patent budget, Policies, and Proof-of-Concept funds. Proof-of-concept funds was the most recent arrival, although since 2000 in the UK it has been clear that these have changed from being a ‘nice-to-have’ to being a requirement. Indeed these days most universities have access to one or more, either within their institution or from partners in the innovation community.
A couple of years ago I added a fifth P: Promotion. It was becoming clear that success for the TTO lay in being able to promote its activities and outcomes through a range of marketing activities, within its institution and outside, to the benefit of its institution. In the UK, this was a function of the government allocating research funding resources according to the ‘impact’ of research, such impact often supported by the TTO (see 2014 REF).
A couple of days ago, at a workshop with the impressive Business Shuttle TTO at the equally impressive University Pompeu Fabra in Barcelona, we identified two more: Processes and Project management. To some extent these are a subset of ‘People’ in that the People need these things to operate; however, it is helpful to consider these two areas in detail.
This article looks at the growing list of ‘Things that begin with P’ one by one.
People
Obvious, in that not much happens on its own; although having the right number of the right people, recognised and respected by the researchers they support is easier said than done. In Oxford, Isis Innovation established and preached the model of recruiting technology transfer project managers with a PhD in science (so they understood the language of research and could hold the respect of university academics) and experience of working in industry in sales, marketing, business development roles (so they understood the language of industry and could hold the respect of business people). Not all TTO’s adopt this model, not least because such people are hard to find, recruit, reward and retain. On various visits to European TTO’s this model was envied as a distant dream; the challenge compounded by publicly owned universities and their employment conditions. The result being TTO’s staffed by administrators rather than commercial people. Technology transfer is a commercial activity, and commercial people, as long as sensitive to their university environment, will achieve better results.
The right number of people is a function of the size and nature of the university’s research base. A huge research university dominated by a department of theoretical physics, pure mathematics and inter-galactic philately (an as yet unexplored discipline coined by one of the fathers of university technology transfer in Cambridge) is unlikely to need many TT project managers, however hard they try. The limit ad absurdum is one TT manager per researcher and not even the most rampantly commercial vice-chancellor would be likely to support that. The level in Oxford was fairly steady at 40 projects for each project manager, rising to 50, 60 in some areas, and in times of plenty. There is a rule of thumb that TTO’s can expect a new project disclosure per million of research spend (insert currency of choice £, €, $). If one ‘does the math’ then €120m of research spend suggests 120 new projects a year, a steady state of 200* projects in the system at any one time, suggesting five TT project managers, plus leadership, management and support staff.
[* The steady state number is taken as 120 Disclosures pa, with patent filing or equivalent stage gate on 1/3; 1/2 of those going through PCT; ¼ of those into National Phase; a few longer. The number will rise gradually as the university research activity increases.]
Patent budget
A large number of TT projects require the filing of patent applications in order to establish a position from which the TTO can discuss the inventions with industry and investors; and then go on to execute commercial intellectual property licensing deals. Filing a patent application costs money and needs to be done before the invention is published and discussed with companies. The costs therefore need to be met by the university TTO from its own budget. The University of Oxford was very supportive of investing in patenting inventions arising from its research activity, with the annual patent budget from the University to its TTO rising from £1m pa in 2000 to £3.1m pa by 2016. The costs of patenting vary enormously by country, technology, and level of TTO experience (decision making, what it can do in-house, inventor control). A steady state portfolio of 200 projects can readily consume €400k per year ** of costs that the TTO needs to meet itself.
[** This is based on 40 first patent filings @ €3k; 20 PCT @ €6k; and 5 National Phase entries at €20k.]
Policies
Technology Transfer from universities to companies (whether existing independent companies or new spin-out companies) is a very complex and difficult activity. The complexity is borne out in the number of policy areas that the university needs to address.
Ownership
Who owns the IP generated by staff, students, visitors, collaborators. This is likely to follow the national law, but is this clear, to what extent does the university need to make choices how to proceed.
Revenue sharing
How will licensing income (fees and royalty) be distributed amongst the TTO (to cover operational costs and recover external costs), the inventors and contributors, the academic department, and the university centrally. Can inventors waive their rights and transfer money to their department. What about external collaborators.
Disputes
How will the university resolve disputes on inventorship, revenue sharing, equity splits in spin-outs, commercialization plans.
Conflicts of interests
Can researchers be consultants, directors, shareholders of spin-out companies that fund research in their labs. Is the approach to inevitable conflicts of interests one of ‘identify and manage’ or ‘thought shalt not’.
Spin-out share ownership
Can the university, can academics own shares (not a trivial question in publicly owned institutions). How much should the university get, how much should researchers get.
Share management
Who will manage the university’s portfolio of spin-out shareholdings. Do the researchers understand they need to manage their shares themselves.
Share proceeds distribution
How is income from the sale of university shares distributed within the university; to the department, the TTO, the host proof-of-concept & seed funds.
Student start-ups
Are students allowed to start companies whilst at the university. Does the university expect or want shares in student start-ups.
Licensing for equity
Is the TTO allowed to license university IP into (non-spin-out) early stage companies in return for shares, rather than licensing revenues. If yes, who decides when to sell, affecting the inventors’ income. Will inventors allow the university to sell shares on their behalf.
Licensing terms to spin-outs
How are these structured; aggressively, sensibly, realistically to a spin-out with no revenues. Is there a royalty holiday, agreement on no licensing fees for ‘n’ years.
In many of these areas, a very sensible approach is for ‘the university to be as generous as it can afford to be’; and many universities would wholeheartedly endorse this and then find it very difficult to determine what this means in practice. The good TTO will define sensible policies and work to have these taken up by the university. (Who better than the History Department to determine how to teach and research History.)
It could be argued that this list of policy areas in itself suggests there is far too much regulation, and a far more laissez-fare approach is needed. It is quite common for financial investors to argue this position. The fundamental challenges lie in two areas: what the university is willing to have its employees do; and how the university views its public/charitable status.
Yes, a university could decide to ignore all these points, and the resulting chaos would probably only become apparent after a couple of years, as word spreads and the arguments begin to surface. A risk not to be taken.
Proof-of-Concept funds
These funds allow money to be spent to convert university research outputs into realistic investment opportunities for companies. There is a gap between the funding available for university research and what companies will spend their money on.
In 1999 the UK government launched the University Challenge Seed Fund programme. By the mid 1990s it had become clear that there was still a gap, specifically in funding proof of concept to enable new products to emerge from research discoveries. In 1998, the new Labour Government was determined to make Britain’s research capability more fertile ground for reinvigorating the economy and they responded very positively to the proposal to create the University Challenge Seed Fund in a partnership with the Wellcome Trust and the Gatsby Charitable Foundation. The concept was not only to provide the proof of concept funding required but to encourage university researchers to be much more receptive to commercial exploitation of their ideas. In 1999 Sir David Cooksey chaired a distinguished committee whose task was to steer the allocation of the £40m provided by the sponsors. The new University Challenge Seed Funds, born out of the need to improve connections and understanding between universities, venture capital investors and industry were an experiment, which has been highly successful. In addition to contributions from HM Government (£20m), the Wellcome Trust, and the Gatsby Charitable Foundation (£20m), the universities themselves were required to provide at least one quarter of the funds.
This was the launch of university proof-of-concept funds in the UK. Today there is a very wide range of funds, owned and managed by universities, regional and national governments, and charitable foundations.
In putting together a fund the key features of a fund are: the objectives of the fund (accelerate projects; not make money); the source of money (university, government, philanthropy; and the arrangements to proposals, decision making and monitoring.
Processes
A little like Policies, this is not the glamorous end of the business. It is very useful to have clear, written down processes and procedures for the various tasks and events that occur in university technology transfer. These need to be flexible so that as facts change the procedures can change, to keep up to date and to ensure the TTO is doing things the best way it knows. The TTO processes need to connect into existing university processes, for example in the Finance department, and they need to reflect the prevailing conditions, resources and attitudes in the TTO at the university at the time.
Of course, the processes need to be helpful; helpful to new recruits to understand how things are done, helpful to management to avoid reinventing wheels, helpful to all staff as simple step by step guides to how to do the job; and describing practices by the TTO which are helpful to researchers. The processes will reflect experiences, sometimes painfully learned from challenging episodes; ‘we do it this way because …’.
Project Management
My first full-time job in university technology transfer was at the University of Bristol where I started in January 1993 in the Intellectual Property Management Unit, working for Adrian Hill. I had a large desk in a large office in a large Victorian house on Priory Road in Redland. We wanted to produce some promotional materials and I needed to come up with a new strapline; and so Identify-Protect-Market was born out of Intellectual-Property-Management unit. Over time, the stages have been developed into Identify-Evaluate-Protect-Market-Deal-Post-deal, and this extension provides a useful framework.
I still feel the three fundamental stages lie at the heart of university technology transfer. If one ever needs reminding what the job involves, Identify-Protect-Market is a good place to start.
University technology transfer is a project management job; as well as of course involving multi-stakeholder-relationship-building and being a contact-sport etc. A successful TTO will have a clear project management framework, clearly defined stages, and tools to monitor the volume of projects at each stage and their progression towards market. Well before my time at Oxford, Tim Cook had designed a ‘graphic’ equalizer chart showing the number of projects at each stage in the project portfolio of each project manager; a brilliant visual management tool.
Performance measures
Whilst writing, another P relating to university technology transfer comes to mind: Performance measures. The much discussed ‘Key Performance Indicators’ and ‘Metrics’ are a challenging aspect of the university technology transfer world. However, the point of these tricks is to keep it simple and be helpful, so I’ll leave that one for another day; along with patience, perseverance etc. But not without reference to the UK Patent Office marketing legend of the 1990’s who would describe his plan for writing a pocket guide to intellectual property, to be titled: ‘I P in your pocket’.
Tom Hockaday
Technology Transfer Innovation
July 2016
The first four P’s were: People, Patent budget, Policies, and Proof-of-Concept funds. Proof-of-concept funds was the most recent arrival, although since 2000 in the UK it has been clear that these have changed from being a ‘nice-to-have’ to being a requirement. Indeed these days most universities have access to one or more, either within their institution or from partners in the innovation community.
A couple of years ago I added a fifth P: Promotion. It was becoming clear that success for the TTO lay in being able to promote its activities and outcomes through a range of marketing activities, within its institution and outside, to the benefit of its institution. In the UK, this was a function of the government allocating research funding resources according to the ‘impact’ of research, such impact often supported by the TTO (see 2014 REF).
A couple of days ago, at a workshop with the impressive Business Shuttle TTO at the equally impressive University Pompeu Fabra in Barcelona, we identified two more: Processes and Project management. To some extent these are a subset of ‘People’ in that the People need these things to operate; however, it is helpful to consider these two areas in detail.
This article looks at the growing list of ‘Things that begin with P’ one by one.
People
Obvious, in that not much happens on its own; although having the right number of the right people, recognised and respected by the researchers they support is easier said than done. In Oxford, Isis Innovation established and preached the model of recruiting technology transfer project managers with a PhD in science (so they understood the language of research and could hold the respect of university academics) and experience of working in industry in sales, marketing, business development roles (so they understood the language of industry and could hold the respect of business people). Not all TTO’s adopt this model, not least because such people are hard to find, recruit, reward and retain. On various visits to European TTO’s this model was envied as a distant dream; the challenge compounded by publicly owned universities and their employment conditions. The result being TTO’s staffed by administrators rather than commercial people. Technology transfer is a commercial activity, and commercial people, as long as sensitive to their university environment, will achieve better results.
The right number of people is a function of the size and nature of the university’s research base. A huge research university dominated by a department of theoretical physics, pure mathematics and inter-galactic philately (an as yet unexplored discipline coined by one of the fathers of university technology transfer in Cambridge) is unlikely to need many TT project managers, however hard they try. The limit ad absurdum is one TT manager per researcher and not even the most rampantly commercial vice-chancellor would be likely to support that. The level in Oxford was fairly steady at 40 projects for each project manager, rising to 50, 60 in some areas, and in times of plenty. There is a rule of thumb that TTO’s can expect a new project disclosure per million of research spend (insert currency of choice £, €, $). If one ‘does the math’ then €120m of research spend suggests 120 new projects a year, a steady state of 200* projects in the system at any one time, suggesting five TT project managers, plus leadership, management and support staff.
[* The steady state number is taken as 120 Disclosures pa, with patent filing or equivalent stage gate on 1/3; 1/2 of those going through PCT; ¼ of those into National Phase; a few longer. The number will rise gradually as the university research activity increases.]
Patent budget
A large number of TT projects require the filing of patent applications in order to establish a position from which the TTO can discuss the inventions with industry and investors; and then go on to execute commercial intellectual property licensing deals. Filing a patent application costs money and needs to be done before the invention is published and discussed with companies. The costs therefore need to be met by the university TTO from its own budget. The University of Oxford was very supportive of investing in patenting inventions arising from its research activity, with the annual patent budget from the University to its TTO rising from £1m pa in 2000 to £3.1m pa by 2016. The costs of patenting vary enormously by country, technology, and level of TTO experience (decision making, what it can do in-house, inventor control). A steady state portfolio of 200 projects can readily consume €400k per year ** of costs that the TTO needs to meet itself.
[** This is based on 40 first patent filings @ €3k; 20 PCT @ €6k; and 5 National Phase entries at €20k.]
Policies
Technology Transfer from universities to companies (whether existing independent companies or new spin-out companies) is a very complex and difficult activity. The complexity is borne out in the number of policy areas that the university needs to address.
Ownership
Who owns the IP generated by staff, students, visitors, collaborators. This is likely to follow the national law, but is this clear, to what extent does the university need to make choices how to proceed.
Revenue sharing
How will licensing income (fees and royalty) be distributed amongst the TTO (to cover operational costs and recover external costs), the inventors and contributors, the academic department, and the university centrally. Can inventors waive their rights and transfer money to their department. What about external collaborators.
Disputes
How will the university resolve disputes on inventorship, revenue sharing, equity splits in spin-outs, commercialization plans.
Conflicts of interests
Can researchers be consultants, directors, shareholders of spin-out companies that fund research in their labs. Is the approach to inevitable conflicts of interests one of ‘identify and manage’ or ‘thought shalt not’.
Spin-out share ownership
Can the university, can academics own shares (not a trivial question in publicly owned institutions). How much should the university get, how much should researchers get.
Share management
Who will manage the university’s portfolio of spin-out shareholdings. Do the researchers understand they need to manage their shares themselves.
Share proceeds distribution
How is income from the sale of university shares distributed within the university; to the department, the TTO, the host proof-of-concept & seed funds.
Student start-ups
Are students allowed to start companies whilst at the university. Does the university expect or want shares in student start-ups.
Licensing for equity
Is the TTO allowed to license university IP into (non-spin-out) early stage companies in return for shares, rather than licensing revenues. If yes, who decides when to sell, affecting the inventors’ income. Will inventors allow the university to sell shares on their behalf.
Licensing terms to spin-outs
How are these structured; aggressively, sensibly, realistically to a spin-out with no revenues. Is there a royalty holiday, agreement on no licensing fees for ‘n’ years.
In many of these areas, a very sensible approach is for ‘the university to be as generous as it can afford to be’; and many universities would wholeheartedly endorse this and then find it very difficult to determine what this means in practice. The good TTO will define sensible policies and work to have these taken up by the university. (Who better than the History Department to determine how to teach and research History.)
It could be argued that this list of policy areas in itself suggests there is far too much regulation, and a far more laissez-fare approach is needed. It is quite common for financial investors to argue this position. The fundamental challenges lie in two areas: what the university is willing to have its employees do; and how the university views its public/charitable status.
Yes, a university could decide to ignore all these points, and the resulting chaos would probably only become apparent after a couple of years, as word spreads and the arguments begin to surface. A risk not to be taken.
Proof-of-Concept funds
These funds allow money to be spent to convert university research outputs into realistic investment opportunities for companies. There is a gap between the funding available for university research and what companies will spend their money on.
In 1999 the UK government launched the University Challenge Seed Fund programme. By the mid 1990s it had become clear that there was still a gap, specifically in funding proof of concept to enable new products to emerge from research discoveries. In 1998, the new Labour Government was determined to make Britain’s research capability more fertile ground for reinvigorating the economy and they responded very positively to the proposal to create the University Challenge Seed Fund in a partnership with the Wellcome Trust and the Gatsby Charitable Foundation. The concept was not only to provide the proof of concept funding required but to encourage university researchers to be much more receptive to commercial exploitation of their ideas. In 1999 Sir David Cooksey chaired a distinguished committee whose task was to steer the allocation of the £40m provided by the sponsors. The new University Challenge Seed Funds, born out of the need to improve connections and understanding between universities, venture capital investors and industry were an experiment, which has been highly successful. In addition to contributions from HM Government (£20m), the Wellcome Trust, and the Gatsby Charitable Foundation (£20m), the universities themselves were required to provide at least one quarter of the funds.
This was the launch of university proof-of-concept funds in the UK. Today there is a very wide range of funds, owned and managed by universities, regional and national governments, and charitable foundations.
In putting together a fund the key features of a fund are: the objectives of the fund (accelerate projects; not make money); the source of money (university, government, philanthropy; and the arrangements to proposals, decision making and monitoring.
Processes
A little like Policies, this is not the glamorous end of the business. It is very useful to have clear, written down processes and procedures for the various tasks and events that occur in university technology transfer. These need to be flexible so that as facts change the procedures can change, to keep up to date and to ensure the TTO is doing things the best way it knows. The TTO processes need to connect into existing university processes, for example in the Finance department, and they need to reflect the prevailing conditions, resources and attitudes in the TTO at the university at the time.
Of course, the processes need to be helpful; helpful to new recruits to understand how things are done, helpful to management to avoid reinventing wheels, helpful to all staff as simple step by step guides to how to do the job; and describing practices by the TTO which are helpful to researchers. The processes will reflect experiences, sometimes painfully learned from challenging episodes; ‘we do it this way because …’.
Project Management
My first full-time job in university technology transfer was at the University of Bristol where I started in January 1993 in the Intellectual Property Management Unit, working for Adrian Hill. I had a large desk in a large office in a large Victorian house on Priory Road in Redland. We wanted to produce some promotional materials and I needed to come up with a new strapline; and so Identify-Protect-Market was born out of Intellectual-Property-Management unit. Over time, the stages have been developed into Identify-Evaluate-Protect-Market-Deal-Post-deal, and this extension provides a useful framework.
I still feel the three fundamental stages lie at the heart of university technology transfer. If one ever needs reminding what the job involves, Identify-Protect-Market is a good place to start.
University technology transfer is a project management job; as well as of course involving multi-stakeholder-relationship-building and being a contact-sport etc. A successful TTO will have a clear project management framework, clearly defined stages, and tools to monitor the volume of projects at each stage and their progression towards market. Well before my time at Oxford, Tim Cook had designed a ‘graphic’ equalizer chart showing the number of projects at each stage in the project portfolio of each project manager; a brilliant visual management tool.
Performance measures
Whilst writing, another P relating to university technology transfer comes to mind: Performance measures. The much discussed ‘Key Performance Indicators’ and ‘Metrics’ are a challenging aspect of the university technology transfer world. However, the point of these tricks is to keep it simple and be helpful, so I’ll leave that one for another day; along with patience, perseverance etc. But not without reference to the UK Patent Office marketing legend of the 1990’s who would describe his plan for writing a pocket guide to intellectual property, to be titled: ‘I P in your pocket’.
Tom Hockaday
Technology Transfer Innovation
July 2016