A figure of the innovation scene in Russia, where he has lived for more than 20 years, US investor Kendrick White shares his vision of the innovation potential of Russian universities and the challenges related to its translation into market-oriented products.
Although Russia has a great scientific tradition, it has a long history of failing to commercialize its scientific initiatives. Reforming universities is an important step for Russia to emerge as an innovation-driven economy.
The problem is that Russia cannot simply pick up some instruments that exist elsewhere and plant them down domestically. It should adapt the West’s best practices and apply them carefully into a working university ecosystem.
More than 50 years ago the West came to the conclusion that separating university research and university education was not the best approach to encourage creativity, entrepreneurship and new product development. The best way to encourage creativity and innovation is by mixing together researchers and students. Bringing new blood into the system would force scientific researchers to continuously look for new answers to questions from young, enthusiastic and questioning students, thus, forcing them to develop new theories and adjust old thinking.
Such an approach would spur the commercialization of new scientific discoveries into real products and solutions solving real-world problems, which the students could then take forward into industry and form new companies attracting both industrial partners and private capital investment. This could further support science advancement as well as commercialization and job creation.
While the rest of the world has moved on to combine its teaching and research universities and focus on solving real-world problems and developing commercially viable solutions, Russia has continued its practice of separating research from teaching, and this is one of the reasons why it was not able to develop into an innovation-driven economy.
The problem also lies in the fact that some among the academic community are outright resistant to the idea of such modernization and see the goals of the University 3.0 model as incompatible with the traditions of classic education in Russia.
Left to work on their own without any external influence, scientists may be inclined to work forever without ever actually reaching an end, especially if federal grants are allowed to be rolled over year after year without proper guidance to ensure that objectives are not being met. This is a serious problem in today’s world of shrinking government budgets.
Many people are just afraid of change. But what is required is not to abandon long-held practices, but rather, to add into the system new methodologies and approaches that can help to speed up the evolution of the system.
The fact remains that economies that have adapted a more entrepreneurial approach to university management and scientific development have been able to dramatically increase overall wealth creation and economic development.
Changing the rules of the game
Russia’s University 3.0 modernization program involves upgrading universities step by step to improve the ability to identify technology commercialization opportunities.
Establishing and propping up technology transfer and IP protection departments in universities in Russia will be an essential next step. But they won’t work well without setting up fully funded Proof of Concept (POC) centers, which are extremely important in identifying the required commercial applications of new technologies. The POCs are necessary to support the development of proper business models which can then be used to establish the commercialization road maps necessary to determine in which direction to take the next stage of translational research work.
Without this work, university researchers will never be able to connect directly with investors as they will never be able to answer basic budgeting questions angels and venture capital investors would typical want to have answered prior to getting involved.
Investors have little interest in providing open-ended grants for never ending work – they want results, solutions and ultimately products that can be sold into specific markets.
For industrial partners, they need to see and understand the development path of any given technology discovery in order to determine if this discovery will be able to eventually solve any key problems which they face in advancing their own product lines.
The key role of Proof of Concept centers is to bring together experts who can understand both the scientific world and the business world, and bridge the differences, who can work to identify if and how a new technology discovery can actually form the basis for the new product, which can be useful in any given industry. And this is what a university should be responsible for in supporting its scientific researchers, as they themselves are hardly capable of answering such questions. Therefore in order to modernize, university leaders need to support the development of additional mechanisms such as Proof of Concept centers, business incubators, seed funds and accelerator startup programs.
To sum up, universities not only need to look for grant funding and funding for students and tuition, but they should build their own portfolio of intellectual property to maximize the value of that intellectual property in the commercial markets. It is like managing a balance sheet in the business world, where one has assets and liabilities.
For the university, one of the most valuable assets that it owns is its intellectual property (IP). One way to think of the POC is that its job is to help the university management to maximize the value of this asset on its balance sheet.
Case study: Lobachevsky State University of Nizhniy Novgorod (UNN)
The UNN is one of the pioneers in technology transfer in Russia, with a history of developing new university spinout enterprises.
In 2013-2015, the UNN formed a partnership with the University of Maryland (UMD) under the framework of the EURECA program financed by the U.S.-Russia Foundation for Economic Advancement and the Rule of Law (USRF). The terms of the program allowed the UNN’s TCC to bring two cohorts per year to visit the University of Maryland for up to two weeks. The purpose of the visit was to investigate the competitive market in order to determine final business models for projects discussed.
The staff of the University of Maryland M-Tech Venture Accelerator program, along with the UMD International Business Incubator helped the Russian teams to better understand how to adjust their projects’ business models and to determine the best market entry strategies for the U.S. and other international markets.
One of the problems that the UNN faced was the lack of funding for the purchase of professionally prepared market research covering new technology and patent disclosures. This is essential information required to assess competitive trends. As part of the EURECA program, the teams were given access to market research supplied by both UMD and the American Councils, another partner in the program.
This information proved itself invaluable to Russian researchers, as Lobachevsky State University did not have access to this information in Russia.
Implications of University 3.0
Russia’s authorities need to understand that it is not all about setting up technological parks around the country, but about setting up the support mechanisms required to encourage students and professors to develop solutions and new products to solve market-driven problems. When universities take that as their goal, this would be a fundamental shift.
The University 3.0 program could prove to be an excellent way for the top Russian national research universities to attract new funding, new professors, new researchers, new students and new possibilities to realize its science potential into real business solutions.
This, in turn, could reverse the problem of brain drain and create new jobs – one of the key problems for today’s Russia. However, to achieve this goal Russian universities, with the support of the authorities, should bolster an open environment, where there are no barriers within the university itself, and between its management and the local business community and the rest of the world.
Herein lies the key to unlocking the potential of Russia’s remarkable intellectual property.
- Kendrick White is the founder and CEO of Marchmont Capital Partners, an investment advisory firm active in Russia during the past ten years. He is the former Vice Rector for Innovation, at Lobachevsky University (2013-2015) where he created a comprehensive tech transfer and commercialization infrastructure, including Russia’s first Proof of Concept (POC) Center. During 2015-2017 Kendrick worked as an Advisor to the UNN Rector assisting the Russian Ministry of Science & Education in developing the new NTI “University 3.0” program focused on modernizing Russia’s tech transfer and IP protection policies. During the past 25 years, he has built unique know-how in commercializing early stage investment projects in Russia. This included the positions of Director of the EBRD’s $50 million Central Russia Regional Venture Fund, advisor to the Nizhniy Novgorod administration, and other. Mr. White completed his MBA in international finance from the Kellogg Graduate School of Management (1990) and has a BA in international economics from Stetson University.
