Professor Dr. habil. Achim Walter speaks to TRANSFER magazine and explains what six blind men and an elephant have to do with the term entrepreneur. He also explores the factors that are essential for the success of an academic spin-off.
Hello, Professor Walter. If you ask ten experts what they mean by the term entrepreneur, you get at least eleven different answers. Why is that?
[Grinning ...] Sounds like the analogy with the six blind men and the elephant: The six men are asked to identify what kind of animal the elephant is by touching different parts of its body. Sometimes it’s exactly the same way in science. Depending on their specialty and the kinds of methods they gravitate toward, each of the experts comes up with a different answer and it’s only when they sit down and compare their insights that they figure out the “big picture” together. At the moment, the search is primarily on for business scientists, but also psychologists and sociologists with a sufficient grounding in empirical methods that make it possible to say what makes a good entrepreneur. Sometimes the focus lies in researching personal attributes to work out the phenomenon of entrepreneurship – like striving for power, or the motivation to achieve something. Sometimes it’s more about people’s personal networks or the specific ways they act, like when they face a decision. Then there are factors like the way society’s view of entrepreneurs has changed over time. In the old days, they were like wandering minstrels, inventive tradesmen, or bosses with their sights set on a goal – people matched to the idea of adding value through a business undertaking. These days, the image people have of entrepreneurs is shaped by clever networkers, people like Mark Zuckerberg.
One of your main areas of research is academic entrepreneurship. How important are academic technology spin-offs for exploiting expert knowledge in the world of business?
Yes – academic entrepreneurship, it’s an amazingly fascinating area. On a general level, it involves all kinds of activities, people, initiatives, and organizations that are of benefit to the commercial exploitation of scientific insight. On a functional level, academic entrepreneurship is about striving to translate new technologies that come up through universities or other research bodies into products and processes that add value. This usually won’t work without the involvement of the creators and developers of the innovative technologies, so we need the person who has the know-how, with the right entrepreneurial ability to form a link in the chain between science and business. Academic spin-offs are business undertakings founded by scientists working at public research institutions. They’re often using the technology at an early stage of development, so it’s at a point where an established company won’t be all that interested in it yet. I know scientists who always have a prototype somewhere up their sleeve to make sure they don’t miss an opportunity to show somebody in industry how useful their idea is. It’s a really important part of the transfer process. The challenge is to run real experiments or a kind of hidden object game to see who exactly might find a new technology useful. One and the same kind of technology can sometimes be used to come up with several successful innovations, even though they’re completely different.
I strongly believe that academic spin-offs can provide a strong impetus in developing regions of innovation. There are a number of studies that indicate that such spin-offs are usually set up in the immediate area around the mother organization and that this creates jobs for highly qualified workers. International studies show that companies formed as spin-offs of research institutions are highly likely to survive in the long term. Once they’ve made it through the early stages, they rarely have to throw in the towel. Academic spin-offs do a relatively large share of business through exports and their presence attracts other hi-tech companies – and this stimulates business clusters. Established companies can take over academic spin-offs and bolster their longterm competitiveness. At the same time, they can broaden the focus of their own R&D to other fields of application. Spin-offs offer potential growth, so for venture capital companies, they can be an attractive investment – even if this is often associated with high levels of risk. When publicly funded research promotes industry at a regional level, this also has a positive impact on the image of the organization acting as the incubator – so this also justifies giving it funding. I see robust funding and research bodies moving around within a region as a reliable starting point for economic development.
What do you believe is the most important factor for such spinoffs to succeed. How important is the idea, or the entrepreneur, or the newly set up organization?
Before I answer that, I have to say that the academic spin-offs we encounter consist of very few female entrepreneurs. Our own studies found that less than 10 percent of teams include a woman. There are reasons for this and they have to be talked about so that we can change things. As for the key success factors for academic spin-offs, there are several. Apart from needing a marketable technology and a solid financial basis, which are prerequisites, they need enough leeway to work as an entrepreneur – either within the mother organization or separately – and perhaps the most important factor is the human factor. Entrepreneurial opportunities are discovered or developed by people. Without their special aptitudes, their above-average self-confidence, their personal drive to get out there and meet people in the market, and to create something new, nothing would move forward. Every idea needs someone to bring it to life. Technologies don’t end up in value-adding applications by themselves. Academic entrepreneurs become the discoverers and creators of entrepreneurial opportunity through the things they do and decide. To do this, they need to believe in their own ability, they need business acumen, a certain amount of luck, and, more than anything else, competent partners at the research institutions. Academic business founders benefit hugely from carefully targeted support, especially when they’re taking their first steps. They need help getting organized, drafting contracts, speaking to clients in industry, and looking for appropriate funding.
For such spin-offs to succeed, their knowledge and technology has to work in actual application and this has to be recognized, especially by industry. The transfer process plays an important role in this respect. Who would you say is responsible for ensuring this works properly, and how?
The easiest way to figure out the answer to that question is to think about how insecure companies feel at first about the idea of collaborating with an academic spin-off, which is there to provide the knowhow. Established companies find themselves standing opposite an innovation partner which is still new and mainly has the scientific background but often has no market reputation to speak of and can’t even point to any proper reference customers. So at the beginning, it all depends on how much support is given to the transfer project by establishing a sense of trust.
In terms of the actual transfer process, that means that the academic entrepreneurs should not be simply given funding because they have the right know-how, they should be expected to be so-called relationship promoters. As such, academic startups should build a bridge between their own business undertaking and the customers of their innovation. In their role as relationship promoters, they should be professional networkers, who forge and foster personal contacts in business and underscore their commitment to gain the trust of their transfer partner. This helps mobilize the required resources to develop the academic spinoff and commercialize its core know-how. IT also reduces the risk of misunderstandings between the technology provider and the beneficiary, who achieve a balance between their different interests more quickly. As relationship promoters, academic entrepreneurs help unveil specific and hitherto unrecognized needs of the transfer partner and if conflicts do arise, they find constructive solutions. Time and again we find that successful transfer processes depend on all parties learning lots and this is made much more difficult if they’re held back by “can’t-do” or “don’twant- to-do” attitudes.
Professor Dr. habil. Achim Walter is director of COMMIT, the Steinbeis Consulting Center. His Steinbeis Enterprise looks at strategic planning and evaluation, offering its clients services relating to the analysis of customers, suppliers, technologies, and innovations. It also helps with implementation.
Professor Dr. habil. Achim Walter
Steinbeis Consulting Center COMMIT (Kiel)