I thought that for my next blog I’d continue elaborating on different types of local economic development.  In my last blog, I talked about small business and entrepreneurial-led economic development.   Today, I’d like to talk about tech-transfer and technology-led economic development.  The International Economic Development Council (IEDC) defines “tech transfer economic development” as the “movement of a technology from one location to another”.  Technology can be “transferred” one of four ways:  1) data and information, 2) know-how or expertise, 3) right to make, use and/or sell, and 4) embedded technology that is contained in a piece of machinery or software.

A tech transfer and technology-led economic development strategy serves two basic purposes:  1) “Technology Commercialization”, to place new products, services or methods of production in the marketplace through existing companies and firms or through new companies and firms started around the development of a particular new technology, and 2) “Technology Development”, to place new or existing “off-the-shelf” technologies into existing businesses in order to enhance the competitiveness of a business or enable the non-technology-oriented business to develop new or enhance existing product lines, services, or manufacturing processes.

Typically, a local “tech-transfer economic development authority” provides a wide variety of services to encourage either “technology commercialization” or “technology development”.  When dealing with “technology-push forces”, new research that usually gets done by research institutes or local universities are marketed by the local tech-transfer economic development authority to private entrepreneurs and businesses that don’t even know they have a need for the new technology!  When dealing with “technology-pull forces”, it is the private entrepreneur and/or business that has a need for a new technology – usually a new product, improvement to an existing product or even the development/modification for new or existing manufacturing processes.  Usually, the local tech-transfer economic development authority will provide financing for new research at a research institute or local university that will focus on developing the new technology for the private entrepreneur or business.  In either case, the patent for the new technology is held by the local tech-transfer economic development authority and revenues generated from the patent’s use by private entrepreneurs or businesses is reinvested into new research in areas such as biotechnology, life science technologies, opto-electronics, computers and telecommunications, electronics, computer-integrated manufacturing, material design, aerospace, weapons, and even nuclear technology.

The difficultly in local technology-led economic development efforts lies in the trouble in classifying different high-tech and tech-oriented firms and businesses.  However, most “technology businesses” are either skill intensive companies or high-tech assembly companies.  A skill intensive technology-oriented company is “knowledge based” in that the company seeks to focus on the creation and/or effective implantation of new technologies.  Skill intensive technology-oriented companies have a high demand for a highly skilled workforce, high-speed data networks and access to transportation networks.  High-tech assembly companies are similar to “traditional manufacturers” and typically focus on the manufacturing of “tangible” and “real” products.  These high-tech assembly companies “put technology to work” in either the products they make or the manufacturing process.  High-tech assembly companies typically choose to locate near their target markets or supply sources, or near sophisticated transportation networks that allow them to access markets easily.

Various factors contribute to attracting high-technology and technology-oriented companies to a particular community.  These high-tech and tech-oriented firms like the presence of different and varied research institutions.  Access to capital is important especially for start-up high-tech and tech-oriented firms.  These firms also value high levels of support for entrepreneurial development in the community in which they choose to locate in and strive to achieve both state and local commitment.  High-tech and tech-oriented firms also need and want an educated and talented workforce.  For high-tech and tech-oriented firms choosing to move into a particular location, they do not want to spend a lot of resources on training an unskilled workforce nor do they want to spend a lot of money on moving the needed workforce from one community to another.  Start-ups, in particular, need an established workforce that is already educated and talented in various technology fields.

These firms also want an established technology infrastructure, which includes both the physical infrastructure and knowledge-based infrastructure.  Physical infrastructure can include such factors as fiber optic networks, technology incubators, connectivity abilities and even capacity for growth.  Finally, high-tech and tech-oriented firms typically want a high “quality of place” in order to attract an educated and talented workforce.  A high degree of diversity in all aspects of life including education, culture and other entertainment and recreation that supports different types of people at different stages in their life is also important to the high-tech and tech-oriented firm.  Housing and transportation are also important.

Right now you are probably thinking that there isn’t much a local tech-transfer economic development authority can do to help spur new technology-led economic development.  After-all, what can a local tech-transfer really accomplish when it comes to “quality of life”?  When it comes to the diversity of education, culture and other entertainment and recreation opportunities, most communities either “have it” or they don’t!  It’s not like the local tech-oriented economic development authority can really impact choices in entertainment all that much.  In general however, it is the responsibility of the local tech-transfer or tech-oriented economic development authority to coordinate and facilitate three concurrent activities, including:  1) technology development, 2) business development and marketing, and 3) financing.

In regards to technology development, the local tech-transfer or technology-oriented economic development authority might have the most direct influence.  In either the “technology-push force” or “technology-pull force” scenario, the local tech transfer or tech-oriented economic development authority serves as a “clearing house” for both the research institute/local university and the private entrepreneur/business.  In the “technology-push scenario”, new technologies are developed by the research institute/university and “transferred” via the local tech-transfer authority to the private entrepreneur/business.  In the “technology-pull scenario”, market demand by the private entrepreneur/business is communicated through the tech-transfer authority to the “best fit” research institute/university and then the newly developed technologies are transferred back to the private entrepreneur/business.  To accomplish this, the local tech-transfer authority usually provides financing for new research either directly or by funneling monies and donations from the private sector to the research institute and/or university.  If the local tech-transfer authority provides the research financing directly, the tech-transfer agency will usually hold the rights to any developed patent on the new technology and “sell the rights” to private interests.

During the business development and marketing activity, the local tech-transfer or tech-oriented economic development authority is responsible for coordinating and initiating the various activities involved with starting or expanding a business venture centered on the development of a new technological innovation.  Specific business development and marketing activities can include, but are not limited to, obtaining financial and personnel resources, analyzing existing market conditions, making informed market forecasts, developing advertising and marketing plans and strategies, developing pricing strategies and identifying potential distribution channels.

Financing remains one of the largest barriers to the implementation of a successful tech-transfer local economic development strategy.  Although the tech-transfer program itself is generally low cost, researchers and private entrepreneurs are always seeking new financing and funding sources to support new and existing research efforts and the actual development of new products, services and methods of production.  The local tech-transfer or technology-oriented authority must constantly search for appropriate financing sources for researchers and private entrepreneurs alike.

An excellent example of a successful local tech-transfer, tech-oriented economic development authority is Stanford University’s own “Office of Technology Licensing” (OTL).  If you get the chance, check out the OTL online at:  www.otl.stanford.edu.  Stanford’s OTL employs many of the tech-oriented economic development strategies already mentioned here including the support for new technology development, business development and marketing, and even provides financing to researchers and entrepreneurs alike.  In FY 2006 alone, the OTL reported a total of 518 “new disclosures” for new inventions discovered by Stanford University faculty, staff and students.  Nearly 91% of the 518 “new disclosures” resulted in income-generating patents held by the OTL.  In just FY 2006, licenses authorized by the OTL generated generally $61.3 million in revenue for the OTL which was subsequently reinvested by the OTL into new research efforts by Stanford University faculty, staff and students as well as directly into new small business high-tech start-up efforts.  The “Stanford Start-Up’s” program is part of the OTL and, in May 2002, the “Stanford Start-Up’s” program was responsibility for the successful development of nearly 100 high-tech, tech-oriented companies.

Tech-transfer and technology-led local economic development efforts are more “art” than “science”.  This may be some what paradoxical as “science” has everything to do with tech-oriented development!  You never know what the next “big thing” in technology will be but successful local support of the next “big thing” can lead to huge dividends for the local community that invests in it.  But in order to be able to invest in tech-transfer and technology-led local economic development, the right combination of organizational structure, local community resources and adequate financing must be made available in the short-term in-order to ensure long-term, stable local economic growth through technology-oriented development.

This entry was posted on Friday, November 28th, 2008 at 10:00 pm and is filed under Economic Development, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.