Experts tell us that one-third of all patents in the United States come from just 10 cities, and the research that produces a large portion of the wealth in this country is concentrated in just a few dozen zip codes. Northeast Ohio doesn't have one of those cities or zip codes. The Federal Reserve Bank in Cleveland held a conference recently to examine ways that this region might join that select group. As part of Making Change, our ongoing focus on the economy of Northeast Ohio, ideastream's Mark Urycki reports.
Federal Reserve Bank Researcher Mark Schweitzer says two measures of an area's economic health are the number of its people with college degrees and the number of patents produced there. The discussion at the bank's conference was whether research at Northeast Ohio universities could be turned into patents and then into economic growth for the region.
More and more, companies are looking to universities for help in research. For instance, the biggest patent producer in Ohio is Proctor and Gamble, based outside Cincinnati. But P&G's Director of New Business Development Jeff Davis says this year the company laid off 300 people in its R&D department. Now, P&G is planning to buy innovation from others.
Jeff Davis: We're a researched-based pharmaceutical company - we're just not going to be doing research in Mason, Ohio. It's going to be done in networks across the globe. And that's how we're going to do our basic research.
The trouble is universities have traditionally been be a fairly closed system, producing research for the good of science, not for business. The President of the University of Kentucky, Lee Todd, a patent holder himself, noted that's a common problem with academic research.
Lee Todd: We leave a lot of intellectual property lying on the floor at universities, because faculty members don't understand the value of it. They're out after the next publication or the next conference presentation. So we're out to nurture them to get them understand that process.
Kentucky has hired two people just to sniff out and harvest viable intellectual property at the school and Todd says they've opened their doors to corporate executives with an eye toward expanding partnerships.
Lee Todd: I had the entire management team of Toyota just going through to look at all the different things we can do. We have contracts now with nine different divisions of Toyota to tackle everything from the painting area to fires that take place in their plants because of sparks from their welders and so forth where we can computer simulate all this stuff.
Conference participants also indicated that another key to becoming an "innovation zip code" is to group together experts in one field to form clusters. Chris Coburn oversees patents at the Cleveland Clinic helping to form spin-off companies. He says even with electronic communications, there's still an advantage in geographical groupings.
Chris Coburn: Having an innovation environment surrounding our entity where there's a constant catalytic exchange between these early stage enterprises and our people makes the Cleveland Clinic a better place. It helps our clinicians it helps our discovery research. So the spinoffs that are in Cleveland or located close by. We do believe proximity matters in the health care model.
Like the Clinic, almost every university now has a technology transfer department to aid in moving basic research to commercial viability. And just about every state is now interested in investing money in the spinoff companies. But some fear this is happening at the expense of basic research. That, says Don Smith, would be a mistake. Smith acts as a go between for businesses looking to connect with Carnegie Mellon and Pittsburgh universities. He says the home run inventions spring from basic research.
Don Smith: I think there's a growing pressure to invest more money in companies and company formation activities and to move some of the funding away from the fundamental research that generates the ideas that creates those companies.
Isn't that more efficient?
Don Smith: I would argue it's not. I think the government is ill-suited to choosing who the successful companies are going to be. Investing is basic research is a fundamental public good and its something the government is quite good at.
Then there's the question of who benefits from state funded research.
Kent State University invented liquid crystal technology but the licensing and all the jobs wound up in Japan and Korea. Harvard economist Richard Freeman notes how fast American companies now ship their best technology overseas to China and India. He questions whether public funding for the latest inventions will even pay off in this country.
Richard Freeman: A taxpayer has a right to look at me and say 'Oh, I paid money, so you could make this invention that ultimately cost me my job?' It's legitimate to say 'in the long run the advances of knowledge will make your children and grandchildren better' but that's not going to make the person overly happy in the short run.
Freeman suggests pursuing what he calls "sticky" technology - something that stays here awhile, keeping the American economy ahead of foreign competitors at least long enough until the next big thing comes along.
At the moment, leaders in Ohio are more concerned with competing with other states. The Third Frontier Program is meant to spend more to foster research and innovation that in turn spurs economic growth. North Carolina might have been the first try that when it created the so-called research triangle over 50 years ago. The heavy state funding, though, has not accomplished all its goals. North Carolina's Science and Technology Advisor Robert McMahan.
Robert McMahan: Although we're strong in basic university research, we're also 42nd in the country in terms of the number of high school graduates.
McMahan says his state may have short-changed lower level education by spending so much on post-doc level research. North Carolina is beginning to address that whole also trying to spread out research triangle funding to other parts of the state. But at the same Federal Reserve Bank conference, Lee Todd of Kentucky argued that research funding should be concentrated rather than dispersed. That's a debate Ohio's government and university officials are engaged in right now. Mark Urycki, 90.3.