Why does a tech company succeed?

Engineers and scientists have a lot of ideas, and some of those ideas have potential commercial value. They can contribute to a new or existing company by creating a new product, enhancing the capabilities of existing products that will extend the market, or helping to lower costs. But relatively few of these ideas eventually develop into new businesses or components of existing businesses. Can we say anything substantive about the factors that influence success or failure in the context of university research?

A couple of factors are fairly obvious. First, the investigator. Many engineers and lab researchers are brilliant at the arriving at the insights and doing the problem-solving that are involved in scientific and technical breakthroughs, but have little interest in business and commerce. Many give little thought to the ways in which their areas of research might have applications in consumer or industrial contexts. And sometimes the investigator turns out to lack the skills and personality needed to develop a commercial product and an emerging company. This is a feature of training, in part; the investigator is trained in the arts of the laboratory but not the marketplace. But it also may be a feature of selection – it may be that the personality traits associated with successful entrepreneurial creativity are not favored in the intense competition that exists in the recruitment and education of skilled scientists.

Second, the university. Some universities have cumbersome or discouraging policies about intellectual property, patents, and licensing, so the researcher finds it unappealing to work through the bureaucratic processes that are needed in order to establish intellectual property and begin to create a company that can develop the idea commercially. Universities are now making strong efforts to bring down those barriers and to encourage and support faculty when they seek to bring their ideas to the marketplace; but there is still a long way to go on this front.

Third, the idea. It is often very unclear how a specific discovery or innovation in the laboratory might contribute to an important advance in a commercially important product. The steps from the innovation to the product may be obscure; it is only after the fact that we are tempted to say, “what a great idea, and what obvious potential it had for a business product!” The most spectacular example of this difficulty is the failure of Xerox PARC to exploit the many innovations in user interface that were made there, including the computer mouse, as a foundation for personal computing. (Here is some background by Malcolm Gladwell in the New Yorker.)

Every region with a strong university wants to be Silicon Valley or Route 128. But in fact, few succeed. The chemistry that supports creativity, risk-taking, and institutional support for moving research from the lab to product is difficult to reproduce.