Move no. 1: creation of university/academic spin-offs
This form of collaboration produces university/academic spin-offs, i.e. companies that are able to transform by-products of the basic research into tradable items. In Russia, it is arranged around the so-called university innovation infrastructure that was developed in almost every university after the introduction of Federal Law No. 217 in 2009. This infrastructure includes offices of technology transfer, offices of commercialization and business incubators. As was expected, these departments would actively engage in the creation and development of academic spin-off companies and assist researchers in their desire to develop products useful for Russian industry.
As some industry representatives claim, however, these offices are doing everything apart from search for possible sellable ideas/products inside the university or organization of technology transfer. They focus mainly on marketing strategies of universities’ enormous R&D capacities and ‘organize constant presentations and exhibitions’ notwithstanding the fact that sometimes there is a lack of potentially suitable ideas for market promotion inside their organization. ‘These offices are black holes that grow bigger and bigger every day. They absorb everything around them, and have no particular meaning or task’g.
Most respondents were highly sceptical about this form of interaction and questioned the ability of Russian universities to produce marketable ideas let alone create real spin-offs. In their opinion, universities lack relevant personnel to ensure the meaningful and effective performance of such offices. As one Russian expert who immigrated to Finland concludes, ‘every university hastily made business-incubators. Of course, there are a certain number of spin-offs that any university claims to have created every year. However, their activities are being developed only on paper- a paper which is signed by the university in question…In real life, technology transfer is managed through social networks between company and professor, not with the help of these business-incubators’h. Certainly, there are some successful stories of start-ups originating from Russian universities, especially during the first innovation wave when the forming of independent companies was in vogue. However, most such companies were created either outside of the official innovation infrastructure as construed by the state or in areas that required less human and financial resources, like IT or e-commerce companies.
Another problem associated with Federal Law No. 217 is the uncertainty concerning intellectual property rights after a small innovative enterprise has been created. As in stands, the universities use the following procedure to protect intellectual property: the organization tries to get patents for as many results of the research as possible by patenting the inventions, utility, models or designs. Under these, the institution is the rights holder and the employee is the author. This means the educational or research institution is responsible for payment of patent taxes as well as of royalties to the inventor, if the patent brings commercial profit. Further use of the patent is regulated by license agreements. That is, if the author wants to develop the innovation himself, the patent is transferable to a small innovative enterprise affiliated to the university under the conditions of a share capital subscription. Otherwise, the organization seeks to find a customer interested in using the patent in the production process.
On the whole, the transfer of rights by license agreement to a third party, not being the author of the patent, remains inadequately regulated and most often, the commercialisation of the fruits of intellectual labour is limited to the format of the small innovative enterprise (SIE). Moreover, the majority of these SIEs are pseudo-R&D structures created for the purposes of compliance and report and attraction of the grant funding, rather than functional startups. What was the reason for this? According to Federal Law No. 217, the college owned 33% of shares with no dilution of ownership possiblei. This proportion was too big and made it difficult to attract investors. Besides, the university’s share is a constant if invisible presence in the regulatory control organs and thus confers obligations of compliance to certain rules and regulations, for example - Rosstat (Federal State Statistics Service) registration: ‘You have to register with the Rosstat which makes the keeping of accounts much more complicated due to the fact that Rosstat adopts a huge amount of absolutely unintelligible reports. Whereas a normal company does not have to register; and nothing untoward occurs; SIE’s are nevertheless obliged to do so’j.
The owner, namely, the State, is too abstract, so the interests of bureaucrats of different levels are likely to supersede the aims/interests of national policy. It is not unusual for officials to comply to the letter rather than to the spirit of the law making it and this makes it really difficult to come to an agreement with them. This opinion is widely endorsed, not only by the researchers but also by the experts training the technological entrepreneurs: ‘The academicians who taught us told us that investors are not typically interested in companies with a university as a shareholder because nobody knows who this university is, or who it is represented by. It is very possible that the university can later start to get whimsical with the company. This makes the SIEs a less attractive investment prospect, and, generally, they are told: “Please do apply; as long the application fulfils all the criteria, numbers etc., everything is fine”, but at the same time they hint: “You have no chance of getting an investor”’k. In this connection, although there are lots of SIE’s in the universities (according to the reports the government gets), they are hardly ever an efficient commercialization tool.
Move no. 2: joint R&D projects between companies and universities
This model of interaction is enforced by Government decree No. 218, which stipulates the creation of research maps for every state corporation and requires them to provide funding for universities in accordance with these roadmaps. In a case whereas sellable product is the outcome of such collaborations, the state promised to reimburse expenses incurred by the corporations concerned. The State can co-finance the joint R&D projects of the universities and companies in a ratio of 1:1, so that means that the government can provide a subsidy equal to the sum the company spends on this project. At this juncture, the business often invests into the projects their assets rather than ready money: ‘The government themselves understand that nobody is going to put out forty million rubles just like that, everybody shows everything they can find - depreciation of equipment, intellectual property and whatever … And the main idea is that the State provides the university with money and they go through with the development [together with the company - authors] and later with the commercialization’l.
This law has channeled a great deal of money to the universities for R&D work. ‘Where we see funding sufficiency on the scale such has developed over the last five years, it allows us to work with a number of such organizations and so we have raised the R&D budgets accordingly. If five years ago, say, it was about 250 millions, now we are well over the billion’m
. As for the industrial companies, many of them who used to have contractual links with some developer teams in the universities are now saying that they are interested in the project from the point of view of being able to participate in larger projects the future, which could not have been approved by the corporate management before. Still, there are many problems with the state projects and money, as the rules and the priorities of the game can change very fast both for major corporations and, largely, for the state corporations. The seemingly generous disposition of the government has turned out to be less beneficial than was originally thought. For example, ‘If before the money started coming from the moment the contract between the federation and the company was signed, now the money does not come - the company has to invest their own money and later the federation can return something if they think it necessary. Perhaps, if the terms of the competition had been announced at the beginning of 2014 the situation would not have been so bad, but it was announced in the second half of October when all the financial plans of the company had already been drafted. Naturally, nobody knew that the rules would change but they had been advised about the competition and the company had committed; providing funding with its own money for the project in the same way as before. The rules of the game changed and the finance plans had been already approved by everybody up to, say, the headquarters of the corporate structure, so nothing could be changed. In this scenario the winners are, let’s say, private companies. That is the companies not belonging to a corporation’n.
At the same time, industry representatives complain of the needlessly strict reporting stipulations that are a negative influence affecting motivation in favour of prolonging collaboration with the universities: ‘The volume of reporting we finally had to provide is one of the biggest drawbacks of this program, because not a single company manager who was involved with the project wants to repeat the experience - namely having to spend three hours every day writing the reports. Not only was there a field audit; it being state money which means a particular way of keeping the tax records, − it also means government attorney inspections, having to deal with the ministry of science, communicate with the universities and, besides all this, there’s a monitor, who also checks all the papers’o.
In many cases, however, Russian companies decide to enter this game and spend money on the joint projects. The most popular form of cooperation was the creation of centralized R&D centres or engineering labs in a particular university. Some experts believe that such centralization solves the problem of defragmentation of research efforts and prevent dissipation of resources: ‘They give us 100 million rubles. I can spread it out over all departments, but no one will notice it, no one will notice! Alternatively, I use those 100 millions to create two resource centers, two really big research labs’p. In practice, however, the ideal of research centralization often fails. In one case, two centralized labs were indeed created, but for some reason remained empty. As a scholar from this university explains: ‘We have two new labs with high quality equipment designed for many people. But surprisingly nobody wants to use them. Why? I think because researchers are afraid of cooperating with top management of the university. It is less unpredictable to interact directly with company rather than create something new and potentially lose product ownership’q.
Overall, many academic and industrial representatives believe that ‘like any other coercion, “enforced R&D projects” result in the growth of cheating strategies. Industry drafts the joint R&D plan with $15 mln budgets and pretends to be doing something. We take the money for this something and again pretend to produce something’r. The outcome of this pseudo interaction is the ‘fake innovation’ product, something that was developed by university back in 1970s and now is presented as a new invention. To play with this ‘put on’, on the one hand, an encouraging temptation for industry, ‘Corporations… are forced to spend money on inventions. They… approach university and ask professors to knock up some projects. Then the company can cut the ribbons launching a new project and develop a report for the government’s
. These numerous R&D projects are presented to the Russian government and used as indicators for the successful collaborations between the academia and private sector. On the other hand, however, it produces a lack of trust between partners: ‘We contracted out for some projects. In a month, they sent a progress report and claimed to be doing this and that. We have no way of finding out whether they are actually doing it… They could just as well shake the dust off a report prepared thirty years ago for the Soviet Ministry of Defense, − just change the dates and names and hand it to us’t.
Experts have noted that in the light of this high degree of uncertainty, companies would probably rather look for R&D projects within their personal networks than initiate new partnerships. New contacts mean high risks, additional time and unpredictable outcomes. ‘Large companies are not interested in playing these games … If they have an R&D problem, they solve it through their own connections. For example, GAZPROM has long-term relations with GAZPROM VNIIGAZu. They have many joint R&D projects and do not need to look for anything else’v
. There have still been some exceptions to the rule where companies actively established new relations. Usually this happened in cases where companies went to an eminent professor or research group not having previously worked with them, in order to solve a new, atypical research problem.
Move no. 3: the shared-use equipment arrangements
Yet, one mode of interaction which is slowly growing is that of the creative partnerships. These are the more unpredictable off-shoots of the innovation enforcement policy rather than the positive outcomes. In this group, the types of academic-industrial interactions can be quite different. We allude for an example to the stories of shared equipment arrangements between company and university. Shared-use equipment is a vital element in the research infrastructure in many universities around the world. It provides a cost-effective way for groups of researchers from different departments or different universities to use commercially-available equipment that costs more than certain amount (for instance, for National Institute of Health, USA, it is more than $100,000,000; for post-Soviet countries, it can be lower costs). Examples of shared-use equipment include protein and DNA sequencers, nuclear magnetic resonance systems, mass spectrometers, biosensors, X-ray diffractometers and cell sorters.
Shared-use equipment arrangements can be highly beneficial for big corporations as well as for small businesses. In the case of big companies and their subsidiaries, advantages lie in the added rationale it provides in persuading shareholders to support an expensive new R&D initiative. In the case of small and medium-size companies, which have limited budgets for acquisition of expensive equipment, it is a way of getting access to it.
In Russia, equipment share is highly popular with universities. Two basic models for this interaction have emerged. Firstly, from the 1990s, cooperation between companies and universities in exchanging and using equipment together was underpinned by the universities’ need to provide free educational resources for students and, especially in the context of the under-funding of Russian universities at the time, on using the companies’ equipment to teach them and to conduct experiments. Secondly, when in the 2000s, the Russian government provided massive financial resources which then being used, at least by a select number of leading Russian universities, allowed them to acquire both basic and advanced equipment. To expound, there are shown to be two possible ways for the development of interrelationships between universities and companies underpinned by the sharing of research equipment: firstly, interaction at the lower level whereby the university is invited by the company to use its equipment and, secondly, via government-subsidized requisitioning, whereby universities, having acquired some very expensive equipment, are invited by the company to share it on site, or even, in some cases, to transport it to the company premises for use in situ.
The first model - where the equipment belongs to the company - is most often used for educational purposes. There are several options: the companies provide the equipment to universities to accustom the future users to their product or to invite the professors and students to work for the company a certain period. In the first case, the company allows the university free access to their resources, e.g. the computer equipment or medical equipment etc. In the second scenario, the university representatives work for the company for a period of time.
This model, first of all, works to create a specialized human resource competency that will allow students to work with the technology either produced by the company or required for its production demands, on a commercial or market project commissioned by the enterprise. As one of the respondents noted, the product of this interaction model is ‘not something specific that has been produced [in case of the respondent it was a program code]… but the competence that can exist around this ….[code].. and accompany it’w. This is a kind of interaction where the company does not expect a real product (‘If there is a result - that’s fine, if there isn’t - (it’s understood that its perfectly possible ) well, nobody seems to mind’x); however, while aiming at educating the customer, the company can sometimes end up with a product or an assigned project team for their projects. The experts say that this kind of collaboration often helps to build efficient developer teams made up of talented students and instructors who use the company products and show good results: ‘This is about shaping not even the people but teams, when what you get is not only some results for the project and some research data but also a team.. You can take it and start working at once’y.
This strategy is used, for example, by RTI Systems. As a company representative explained, they create different teams for various purposes. This approach is now ‘already an adopted blueprint for some laboratories», and «when the task is beyond the skills base of the university we integrate the R&D through company specialists or just get the solution and start earning money with it’z. This mode is used by nearly all western companies in Russia (including Intel and Microsoft): ‘these were, in fact, student laboratories where as a part of their extra-curricular education, small tasks, small projects were done by the students …’aa.
For the companies, beside the abovementioned benefits, another possible option is to delegate the higher-risk research projects to research teams outside the company to be tried out - ‘try this, try that’ - as a pilot programme. The companies hand out some of the risky projects to the students for whom this project is a testing ground to foster creativity and expertise. The companies can, by using this method get a negative or a positive answer to their question for a small outlay: ‘Here, please look into this method». And themselves they… Well, maybe this method is a dead-end, they do not use it, they have their own that is now working, and this one is just a contingency for the future, for some kind of research project or other…’ab. In these cases, the universities are ‘[a kind of] facility that can be used to develop some brand new projects that sometimes can’t be developed on your own territory because the risks are too high (that is - something completely new). A university is more suited to this purpose because the human resources there are younger, with unconditioned brains they can openly express some absolutely new ideas and even carry them through somehow, which is not always possible [in the corporation]’ac.
For the university, besides getting some free equipment and extra valuable competence training for the students, it is also important that a system of trust is established between the university and the industry - small projects (for small money and sometimes even free) done by the students under the direction of a professor allow the company to assess the department’s competence and see if it’s worth working with them again: ‘nobody wants to commission R&D as a pig in a poke. Everybody is afraid of swindlers, of a failure. And this way we already have a prototype, we already have… a result we can show and say: “You want some real R&D? Do you? Then we can do it for money”. and they commission some work’ad.
The classic case of using the alumni human and intellectual resources in situ with the equipment broadens the scope of the possible ways to interact with them - it’s not only developments from the alumni that work in the industry and employment of the new alumni with them but also the access to the equipment the university does not have - the number of the research topics going through the university structure always causes a shortfall in resources vis a vis the equipment purchased by the university through state and private grants and research support programs. ‘Take, for example, the Ecoilcompany. Its director let’s just say is a very well-known person in YNAO, KhMAD in Tomsk region, everywhere in oil-producing regions. So he works in our laboratory, see?, and he has installed some equipment, some big industrial fermenters, at his plant, and our alumni will work as, let’s say, specialists when they graduate, and our students are working there in the summer, for example…so, if we need an experiment - we come to him, let’s do an experiment, he never refuses’ae.
Let us consider now the second model of sharing the equipment - placing it on the premises of the university. Two options are available for cooperation here: the equipment either stays within the university or, very occasionally, is transferred to the industrial enterprise. The first option: the equipment is in the university and, in theory, it can be used not only by the employees of the university for research purposes but also by the industry representatives interested in cooperative and applied research. The main limitation to the success of this kind of cooperation is that in many cases, the new equipment has been obtained mainly for internal usage, i.e. only researchers from the grantee institution would be allowed to use it. Some universities were not eager to share new instruments even within the academic circle let alone to give private companies the permission to use it.
Certainly, however, there have been exceptional, positive developments in this mode of collaboration. As the representative of a state corporation reports, they were able to set up the sharing arrangements with at least two Russian universities. As he claims, this cooperation allowed for a solution to some internal R&D funding problems within a corporation: ‘Russian universities can obtain now very expensive equipment. Industry is eager to use it…. When a company starts new R&D project, the first question is always about the funding for this research. We can find money for salaries or for additional staff, but the average expenses required for research equipment are incredibly high. Given the fact that we have stockholders, we are almost never able to get their permission for expensive R&D ideas. A university provides a quick way out of this impasse. More than this, the university itself can be eager to learn from us too, because academic people are not always sure about the right type of equipment or about the volume of the potential users. Here, we find our sole mate’af
. The shared equipment also affords a relaxation in competitive tension between state and private companies looking for new ideas and potential products. As experts argue, in some sense, shared equipment promotes cooperative relations between different companies. ‘It is a kind of public space that can be used commonly by everybody. Nobody can claim its ownership inside the university. So, we are using equipment and occasionally meeting our competitors. This is the best way to enhance our economy’ag.
Within this model, keeping the equipment in the university is the easiest method of cooperation, where the university researchers use it both for the grant and research projects and for the projects done together with the industrial enterprises. An example of this model is illustrated at one of the Russian universities in South-West Siberia and its SKIF Cyberia supercomputer based on intelxeon 5150 2.66 GHz, intelxeon 5670 2.93 GHz and InfiniBand network. Seventy-seven per cent of its capacities are used for research and 13% for external commercial projects. The computer was purchased by the university in 2007 within the framework of one of the first big Russian infrastructure projects, namely, ‘Innovative Universities Nationwide’ which proved to be aimed not so much at organizing the university-industry connection as at providing state-of-art equipment to be purchased by the Russian universities who came out as winners in the competition. It seems that at that point in time there was no clear state programme as regards innovations development, it came later, from 2010, with the next project ‘National research universities (NIU)’, and every university defined their priorities in the development of the infrastructure themselves. Tomsk State University had been far-sighted enough with this equipment, and it also got plenty of press in industrial spheres as the owners of the most powerful computer in the Asian part of the country. It served not only to perform the complicated calculations for the research projects of several faculties, laboratories and research institutes - the main consumers of this equipment - but also to attract attention of potential industrial partners for the university.
For example, throughout 2014, the computer was used by six companies one of them, registered in Skolkovo, was working with it for six months on a development project for the SukhoiSuperJet airplane wing. A further two companies at the university having already been once, have returned. The university team works together with the representatives of the commercial structures in providing the necessary computer 3D- modelling applications services for physical and chemical processes in ‘….the architecture of the projects: and the calculations are different for every customer…, in every case we have to adapt the customer’s software to suit our own architecture’ah. This indicates that the work on the projects is being performed by teams belonging to other research institutions and businesses together with the university employees. However, it must be noted that for long-term projects, rather than for just calculations, the university is typically approached via the established personal connections of the researchers and those of the company representatives which existed long before the appearance of the equipment (for instance, two out of the six companies with representatives working on the equipment at the university this year came by virtue of its being the alma mater of one of that company’s chief executives).
However, the equipment itself often becomes an important factor when choosing the associate university. One of the respondents tells of how at least one of the projects approved under Federal Law No. 218 would never have been possible without the particular equipment involved. These kinds of commissions create a long history of collaboration with the university. It means that when a similar task comes up, the company comes to a university it already knows. One of the examples of this kind of collaboration is a company that works in 3D graphics and has a long-term contract with the university for the calculations: it pays a small sum every month for a small amount of these calculations and if a larger commission comes up, ‘They also phone us. They are our priority customers… When the work is done we calculate the costs, make up the final contract and the invoice’ai. This is a classic example of a ‘vacillating’ contract relationship where it is impossible to calculate all the details of the contract beforehand and the final contract is made post factum, the relations being based on the mutual trust between partners.
Besides trying to work out some risky ideas for the companies, establishing trust, decreasing costs and increasing the possibilities for the business structures one of the respondents lends credence to the idea that university equipment, wherever industry has expressed an interest in it, becomes an ‘anchor’ for the researchers’ thinking within a certain area of study, and this moreover attracts those companies interested in such developments - underlining the need for an anchor: ‘human thought processes are intrinsically transient; Today a person does this and tomorrow, by common sense, it would be better for him to do something else. The project normally runs for three years. For three years the team does something, no matter whether it works out or not, the project is over, the equipment has been bought, they’ve been doing something, so now what? Now they are out of money. There is no chapter in research manuals to help them generate, money of their own from this development which is a whole epoch in research and development. There’s no mechanism for that. Who’ll put money into this? Only the investor, and only if they know about the development are they happy to come and ask for it…for instance saying, well this is where we are at the moment with wetlands and water cleaning’aj.
Another, radical, albeit uncommon for applied use expensive university equipment bought within the terms of a NIU program consists of its being relocated to an associate company’s premises. Here is one example: In a university, specializing in IT and optics, one of the departments had obtained unique equipment and wanted to explore ways in which it could be used more efficiently and productively. Typical problems are the maintenance, service and technical support and the appropriate staff to provide the required services. ‘When I was a student in this university, I often witnessed the dreadful stories of the death of expensive equipment. Any machine will be a pile of metal scrap just in a year without appropriate support and maintenance. Years later, when the university had decided to obtain new equipment, I immediately reacted: OK, who will provide support services? Who will oversee the operating procedures Of course, we can buy it, put it in a lab and lock the door. Certainly, nobody will break anything in that case’ak.
In this story, the department has come up with what is an uncharacteristic, for Russia, solution by deciding to transfer the expensive equipment to an industrial partner: ‘The department is using this company as a training site. We can teach students right away about how to put theory into practice…. The company is motivated by this cooperation too. They can see that the university is not just talking, it is doing something. In a response the company is more interested in our projects and students. By the way, our research center is the direct product of our cooperation’al. However, such a transfer of equipment is not clearly institutionalized in current legislative rules on state property.
To recap, the possibility of sharing the equipment purchased through state grants with industrial enterprises is an extra resource for the efficient working of scientific tools which can otherwise be just ‘ballast’ for the laboratory or other organization unit. ‘The state does of course provide, …they have a lot of money and a lot of equipment. That’s good. But what is to happen to this equipment when the project is over is not quite clear. Assuming another project is adjoined ready to start, a project that will be a winner or something. If it has continuation - that’s really good. However, if it doesn’t? Some of this equipment, the really `high tech stuff will go to some team, and the rest will be just ballast ..God willing, some connections with industry are established - then there is value to be gained from it’am. From a PR perspective, a constant connection between a company and a university, no matter what the sharing model; inside the university or on the enterprise premises, is a real feather in the cap for the company: ‘when you come to a new customers, it is one thing to say just COMPANY, the other thing is saying “We are working in association with THE UNIVERSITY”, or when foreign colleagues are visiting asking for direction directions: “We are just next to the university”, the conversation takes a completely different turn’an.