Thursday, June 20, 2013
National Research Council Symposium
“Defining Maryland as the STEM Capital”
Remarks of USM Chancellor William “Brit” Kirwan
Good afternoon. It is a pleasure to be with you today. The topic we will address—
Defining Maryland as the STEM Capital—is incredibly timely. As the national
economy begins to gather momentum and recover from the protracted period of
recession, it is simply a truism that innovation, discover, and technology—the
elements that define the STEM disciplines—will be the drivers.
The possibility exists to position Maryland at the forefront of this next wave of
growth, with our research universities leading the way. There is no question we
have a number of strengths to support this, but we must recognize our challenges
and act aggressively to overcome them.
First—on the plus side—we all recognize that Maryland is in a very favorable
position.
Just last month, the New York Times published an article noting that—according to
the U.S. Census Bureau—Maryland is the third best educated state in the nation,
behind only Massachusetts and Colorado in terms the highest share of bachelor’s
degree holders. And in terms of advanced degrees, Maryland ranks second to
Massachusetts.
Several major private companies have a significant Maryland presence: Lockheed
Martin, Northrop Grumman, Verizon, and others.
We have one of the largest clusters of biotechnology companies in the U.S.
And we are home to more than 50 federal agencies and research facilities: the
National Institutes of Health (NIH), Food and Drug Administration (FDA), National
Security Agency (NSA), the National Institute of Standards and Technology (NIST),
and many others.
All of these elements have combined to give Maryland an enormous research
enterprise.
In fact, Maryland ranks second in total federal obligations for R&D—and first on a
per-capita basis. The state is third in R&D intensity and fourth in R&D performed at
universities and colleges. Between the USM’s three research universities—College
Park, Baltimore, and Baltimore County—and Johns Hopkins University, we can
claim $3.5 billion in annual academic R&D.
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That’s the good news. Here’s the bad news: Maryland ranks 28th in economic gain
from R&D. As a state we are simply not doing enough to promote opportunities for
licensing and commercialization of intellectual property, coming up short in
providing proof-of-concept funding and seed funding, and not aggressively linking
university research labs with technology-based companies.
These same shortcomings are highlighted in the Milken Institute’s State Technology
and Science Index 2012, which tracks and evaluates every state's tech and science
capabilities and their success at converting those assets into companies and highpaying jobs. Overall, Maryland ranks second in the nation, doing well in almost
every category: second in Research and Development Inputs, second in Human
Capital Investment, second in Technology and Science Workforce, and fourth in
Technology concentration and dynamism.
The only area where Maryland does not rank in the top five is the category of Risk
Capital and Entrepreneurial Infrastructure, which specifically measures the success
rate of converting research into commercially viable products and services. This is
an area the report noted that Maryland has “consistently underperformed.”
Or consider the Kauffman Foundation study noting that about half of the nation’s
tech startups were established in the same state where the founders received their
education. But for Maryland, that numbers down around 15 percent. This goes
hand-in-hand with a Boston Federal Reserve study showing Maryland slipping out
of the top ten and all the way down to 27th in terms of its ability to keep its
graduates in state. We simply must keep more of our graduate—and their startups—here.
So those are the challenges we are facing. And I do want to note that working
together, leaders in Annapolis, the business community, and our public and private
universities, have been attaching this challenge aggressively.
Two years ago, with strong support from both the University of Maryland and Johns
Hopkins, Governor Martin O’Malley and the General Assembly launched the $84
million Maryland Venture Fund to support startups and help fill the existing venture
capital gap. Last year the same team supported the creation of the Maryland
Innovation Initiative to help move discoveries from academia into the marketplace
more quickly. These two state programs will work in tandem—providing the
“push” from the lab and the “pull” of the marketplace—allowing Maryland to take
better advantage of its technical and scientific talent.
The USM’s new strategic plan made advancing Maryland's competitiveness in the
innovation economy a key goal. To advance that goal the Board of Regents
established the Committee on Economic Development and Technology
Commercialization—the first new standing committee created in over a decade—to
provide oversight and support for campus based technology transfer and
commercialization activities. In order to encourage and reward a more
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entrepreneurial culture within our faculty, the Board also expanded the criteria for
promotion and tenure to include activities involving the creation of intellectual
property and technology transfer.
And we initiated a new, extensive partnership between our two largest research
institutions, the University of Maryland, College Park (UMCP) and the University of
Maryland, Baltimore (UMB). This collaborative relationship—University of
Maryland: MPowering the State—is designed to leverage the resources of these two
significant and complimentary research universities to advance the quality for the
two institutions, expand their research portfolios and boost technology transfer, and
commercialization of intellectual property. While less than a year old, this new
collaborative relationship is already producing significant results. Finally, under
MPowering the State, we have launched University of Maryland Ventures (UMV),
which brings under one administrative structure a single director for the technology
transfer and commercialization activities on the two campuses. Each campus had
components of a successful tech transfer operation but neither had the full suite of
services. Now we have that.
Essentially what we are doing with all these efforts is improving the state’s science
and tech ecosystem in a manner that will allow Maryland’s innovation economy to
thrive. I am sure many of you have read The Rainforest: The Secret to Building the
Next Silicon Valley by Victor Hwang and Greg Horowitt. In this book, the authors
look to explain the nature of innovation ecosystems: human networks that generate
extraordinary creativity and output. They argue that these ecosystems—or
“Rainforests”—can only thrive when certain cultural behaviors unlock human
potential. Theses ecosystem are not so much “created”—you cannot replicate
Silicon Valley—as they are grown, nurtured, and sustained. As Victor Hwang puts it,
“talent, ideas, and capital are the nutrients moving through this biological system,
and the system becomes more productive the faster these nutrients are allowed to
flow.”
In a moment I will be asking our panelists for some of the ideas they may have to
enhance Maryland’s science and technology ecosystem, but I’d like to get the
conversation started by noting a few ideas of my own.
But first, let me make two quick points:
First, even through Maryland lags in commercializing research, it is still a huge part
of the state’s economy. Even if we had no tech transfer at all, our success still funds
professors, students, and our universities, grows the economy, and makes Maryland
more competitive overall.
Second, the biggest tech transfer event happens every year and has nothing to do
with patents; we call it “graduation”. The USM alone awarded a record number of
degrees this year—34,500—including two-thirds of all degrees awarded in the
STEM fields.
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Now . . . let me quickly share a few thoughts on ways to nurture our science and tech
ecosystem
Given that commercialization efforts for many new technologies often die on the
vine for lack of funding to conduct a market study or pay for patent costs, it might
make sense to change the SBIR program to empower researcher to deploy up to 5
percent of a federal research contract or grant for such commercialization purposes.
This would not be a requirement, just an option. It would not increase the costs of
the grants. Researchers would be held accountable for use of the 5 percent as part
of the normal reporting process, so no new bureaucracy would need to be
developed. And, unlike the very small federal technology commercialization
initiatives—i6 challenge was only $5 million nationwide—this would be applied to
literally billions of federal research grants and contracts. The National Commission
of Innovation and Entrepreneurship has hinted at such a transformative and
scalable program, but I am not aware of any formal suggestion to OMB.
Universities currently allow faculty to consult with industry, but often times
industry does not know which faculty have the expertise they are looking for, and
often faculty don’t know how to go about finding corporations interested in their
knowledge. In addition, the faculty members usually can’t bring back any work to
the university or support grad student with the consulting work. In the UK and
Australia, universities have flipped this model around and have formal consulting
practices where the university organizes a faculty consulting practice, making
knowledge transfer more efficient and providing support for grad students in the
process. Some American universities, such as Purdue, are experimenting with this
model and Maryland universities should also examine allowing universities to
create formal consulting practices for industry: A Knowledge Transfer Program.
Right now, a myriad of laws and missions prevent federal labs from being
entrepreneurial. For example, federal labs in Maryland do somewhere around $12
billion annually in internal research and NIH is the world’s largest bio-medical
institution. But you don’t see start ups in Bethesda. We need Congress to create a
federal lab technology intermediary—similar to TEDCO on the state level—that
would be a quasi-governmental technology intermediary or entrepreneur in
residence that could take on the business of tech transfer.
Finally, I would suggest that Maryland is ripe for a much more significant global
research presence. We could bring more international firms to the
Baltimore/Washington region given our robust R&D, the proximity of foreign
embassies, and our international airports.
As we move into our panel discussion, we will learn more about where Maryland
stands and what new and innovative approaches can strengthen our position.
Thank you.
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