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Peter Schuerman, Ph.D.
Director, Licensing and Intellectual Property
October 11, 2011
Best Practices for TTOs in Forging Best Practices for TTOs in Forging Strong Internal Stakeholder Strong Internal Stakeholder
Relationships Relationships
Overview
• What is “The Problem” with TTOs?
• The Foundations of Strong Relationships
• Clarify and Communicate What You Do
• Communicate Promises and Fulfill Them
• Create Transparency
• Grow the Partnership
• Conceptual Tools Review
2
What is “The Problem” with TTOs?
Overview
• The Cost of Bad Relationships
• Examining the Relationship– How University, Industry and TTO fit together
• TTOs as Outsiders
3
The Cost of Bad Relationships
• TTOs are plagued with bad reputations and difficult internal relationships
• This relationship problem absorbs significant time and effort
• Putting out fires and making amends distracts from commercialization activities
• These demands impact performance
• Poor performance leads to more fires…
4
Examining the Relationship
• Questions for every TTO to ask itself– Do we operate as if we are part of the
university?– Do our internal stakeholders see us as part of
the university? – Do we appear to outsiders as separate from
the university?– Do we think of ourselves as part of the
university, or separate?
5
How Do These Fit Together?
University
Industry
TTO
Three-Party Arrangement
University IndustryTTO
TTO as the Valve
University IndustryTTO
Dealing with a Stuck Valve
University IndustryTTO
Dealing with a Stuck Valve
University IndustryTTO
More staffingMore funding Complaints
Threats
IncentivesCommissions
Bypass Option
University IndustryTTO
Bypass Option
University IndustryTTO
Dec. 17, 2009 – Creating an open, competitiveLicensing system for university innovators is oneof Harvard Business Review's "Ten Breakthrough Ideas for 2010“ and the brainchild of researchersat the Ewing Marion Kauffman Foundation.
The free agency solution is one of the 10 ideasthat HBR says "will make the world better.“*
* http://www.kauffman.org/newsroom
TTO: Part of the University
University
TTO Industry
TTO as Relationship Broker
University
IdeasResearch
Industry
ProductsApplications
TTO
TTO as Translator
University
IdeasResearch
Industry
ProductsApplications
TTOClear Communication
Business Understanding
Innovation Coupled to Revenue
University
Win
IdeasResearch
Industry
Win
ProductsApplications
TTOInnovations
Revenue
TTOs Cannot Afford to be Outsiders
• We must be recognized as– being part of our institution– supporting the missions and efforts of our
internal stakeholders
• When we do not succeed, our internal problems impact our overall effectiveness
• The core “problem with TTOs” is the quality of their relationships with internal stakeholders
17
What is “the Problem” with TTOs?
Summary
• Bad internal relationships impact your effectiveness
• Recognize the extent to which your TTO is perceived as an outside organization
• Recognize the need to adjust perceptions of your office and of internal stakeholders
18
The Foundations of Strong Relationships
Overview
• Identifying your Internal Stakeholders
• Identifying the Fundamental Problem with your Internal Stakeholder Relationships
• Implementing Solutions to the Fundamental Problem
19
Identifying your Internal Stakeholders
• There are people who you may be overlooking– Department Heads, Center Directors, Deans,
VP Research / VC Research
• There may be people who you are trying to include but shouldn’t– Some research does not benefit from
commercialization– Commercialization is not for everyone
20
The Value of Keeping Everyone Informed
• If we do not also keep non-inventor stakeholders informed, the inventor will become the only source of their information about the TTO
• This means that they will only hear negative things and only from one side
• Determine who is in the reporting chain– These are the people who care what you do
21
The Fundamental Issue Underlying Poor Relationships with
Stakeholders
• Lack of Trust
• Here is how they think of your TTO:– You have a different mission, possibly inimical– You are a black box– Your competency and diligence are in
question
22
The Three Ways to Address the Fundamental Issue of Trust
• Share a Vision
• Make and Keep Promises
• Show Your Work
23
The Bases of Trust
• Shared mission – I am on your side– I can help you be more successful
• Accountability – I make promises and I keep them– You know what to expect from me
• Transparency – This is what I am doing and what is happening– And I’m interested in your feedback
24
Laying the Foundation for Trust
• The goal of the TTO in forming strong client relationships is to implement practices which:– Clarify and communicate your mission– Communicate promises and fulfill them– Create transparency
25
The Foundations of Strong Relationships
Overview
• Identify who is being left out of the loop
• Recognize that trust is a limiting factor in your success
• Implement practices that build trust
26
Clarify and Communicate What You Do
Overview – Building Trust, Part 1
• Core Activities and Why You Do Them
• Make Your Motives Easy to Understand
• Create Clear Boundaries with Sponsored Research Offices (SROs)
27
Core Activities and Why You Do Them
• Internal Stakeholders need to understand what you do:– Solicit and Assess Invention Disclosures– Protect Intellectual Property– Negotiate Licenses– Administer Licenses– Support Entrepreneurism / Start Companies
• And they need to know why you do all of this
28
Why Do You Work at a TTO?
• Commercialization should be at the service of the university mission
• Otherwise, your TTO will seem to be exploitative and money-driven
• Share your story of why you joined the university
29
Make Your Motives Easy to Understand
• Make sure that whatever your mission statement is, people hear what you do in a concise and simple way
• Commercialization is complex but don’t make it complicated to understand what you do
30
Bad Example
• The mission of the TTO is to obtain disclosures, review obligations to sponsors, determine whether inventions are novel, useful, non-obvious as per patent law, do a patent landscape analysis, review inventions with the Patent Committee, determine whether to file provisional patent applications or utility applications, market technologies to industry…
31
Good Examples
• We work with researchers to maximize the impact of their research results through commercialization so that they have the broadest possible application
or
• If your vision for your research includes getting companies involved, we can help you achieve that vision
32
Create Clear Boundaries with SROs
• For many researchers, research administration is one big blur
• If you work with your Sponsored Research Office (SRO), your TTO and SRO can become indistinguishable to researchers
• Disciplined engagement with your SRO is critical to avoid damage to your reputation and confusion about what you do
33
Sponsored Research Offices (SROs)
• Typically have reputations worse than TTOs
• We want to / have to help them
• Lifeguard problem – saving a drowning swimmer without being drowned
• Engagement must be highly disciplined or you will be dunked regularly or worse
34
The Problem
• Most researchers don’t like dealing with SROs
• If you take on SRO duties, they will put you in the same category
• IP negotiations are intimidating and SRO negotiators often want you to do that part of their job for them
• They generally bring you in when everyone is already frustrated
35
The Solution
• Don’t allow them to delegate to you• Insist on early engagement before everyone
is frustrated• Turn every single interaction with an SRO
into a training opportunity• Sit in on their negotiations rather than taking
them on yourself• Insist that they be the point of contact to the
researcher and to the sponsor• Remember that if they don’t know how to
negotiate IP, they need to learn
36
Sponsored Research Agreements
• Do– Do provide guidance as they negotiate them– Do participate in discussions with companies– In selected cases, do manage them entirely from
the start• Don’t
– Don’t take them over at the 11th hour when everyone is fighting
– Don’t be the office that approves, rationalizes or fixes whatever IP language someone else negotiated
37
Material Transfer Agreements
• Incoming – treat as sponsored research agreements
• Outgoing – develop a process for separating commercialization MTAs from good-member-of-the-scientific-community or collaboration-based MTAs– Handle the former– Recognize the latter as research agreements– We are sponsoring the research of others with
in-kind support in the form of materials
38
Confidentiality Agreements
There are two kinds– Commercialization-related (TTO-handled)– Research-related (SRO-handled)
• Get out of the business of handling research-related confidentiality agreements– The satisfaction rate is very low since people
are impatient about discussing things that are exciting to them
39
When the TTO is Confused with the SRO
• You will be tarred with the same brush as those offices and suffer reputational damage
• You will be perceived as the Office of Prevention of Sponsored Research
• Your job will include rationalizing bad sponsored research deals
• You will be judged on activities and outcomes that you have relatively little control over
40
Clarify and Communicate Your Mission
Summary – Building Trust, Part 1
• We are part of the university
• We do commercialization
• We do this to help internal stakeholders achieve their goals with greater impact
• We support research administration through training and assistance to SROs
41
Communicate Promises and Fulfill Them
Overview – Building Trust, Part 2
• Mission Impossible: Bad Definitions of Customer Service
• Mission Possible: Commercialization Project Management
42
Mission Impossible: Bad Definitions of Customer Service
• Customer service is not about giving the client whatever they want
• Customer service is giving your client – what they need– in a way that allows you to maintain and grow
the TTO enterprise
• In other words, it must be a sustainable model
43
Unsustainable = Untrustworthy
• If your model of customer service is not sustainable, you will not be able to keep your promises
• If you cannot keep your promises, you may not want to make any promises
• If you cannot both make promises and keep them, you will not be able to build trust
44
The SRO Model – Do Not Use
• SRO model: “Here is my proposal, get it submitted, get me an award, and get me my money”
• TTO adaptation: “Here is my disclosure, get it patented, get me a license, and get me my money”
45
The Ideal TTO Model
• A disclosure is a proposal that a new invention may be the basis of a commercial opportunity
• Licensing managers assess the opportunity presented
• The disclosure is closed (proposal not funded) or a commercialization plan is created
• The plan is diligently executed to its conclusion
• Any successful completion of a plan, regardless of the result, is a success
46
Why This Model Fits Universities
• Inventors are comfortable with submitting proposals, and can live with getting them rejected– They just need to know that it is an objective
process
• Appeals to a community that is comfortable with experimentation– Can we license it? Instead of – Keep trying until it is licensed
• The TTO is more like a sponsor than an SRO
47
Mission Possible: Commercialization Project
Management
• Tech managers need to be freed from being IP Merchants
• This will only happen when you change your performance metrics
• Tech managers need to be measured as Project Managers
48
Reality Check
• Your huge inventory of unlicensed IP is destroying your effectiveness
• Every disclosure that is being ignored is a fire waiting to break out
• Curating a large collection of IP creates drag and a drain on your office’s resources
• Actual human beings cannot be working on 150+ projects
49
IP Merchants: The Problem with Warehousing IP
• Strategy: Build up inventory and be ready for any buyer
• Problem: IP is not a durable good that can be warehoused– It is expensive– It goes bad
• Exacerbated by patenting inventions of squeaky-wheel inventors
50
Managing for Optimal Portfolio Size
• Licensing managers don’t like to close technologies
• TTOs need to have measures that reward managers for both closing unlicensable disclosures and licensing good ones
• This has to be implemented at the supervisory level
51
The Two Questions that Will Clean Up Your IP Warehouse
• First attempt: What are all of your non-valuable technologies?– Did not work
• Second: Rank each technology as follows:– High or low – estimate the potential revenue if
licensed– High or low – estimate the risk of not being
able to license this today
52
Four-Quadrant Opportunity Assessment System
• Inspired by the Boston Consulting Group Matrix
• Simultaneously categorizes disclosures by – the type of opportunity– the appropriate activities for that disclosure
• Classic risk vs. rewards analysis
• “Reward” is however you define it
• “Risk” is “Risk of not licensing this today”
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Opportunity Evaluation Matrix
Activity Matrix
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A. MonitorB. R&D AllianceC. Start-Up
Risk Mitigation
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$
$
A. MonitorB. R&D AllianceC. Start-Up
Benefits of the Four-Quadrant Opportunity Assessment System
• Antidote to the squeaky wheel approach• Discourages managers from warehousing IP• Once a technology is in a Quadrant, it inherently
has clearly-defined expectations that cannot be met by warehousing– Quadrant 1: Market, license; treat as a high priority,
incur reasonable expenses– Quadrant 2: Market, license; treat as a lower priority,
minimize expenses– Quadrant 3: Develop, execute a risk-mitigation plan– Quadrant 4: CLOSE
57
Measuring Project Management
• Performance of Technology Managers is measured by– The quality of their decisions to close or take on
projects– Their ability to execute plans (meet deadlines,
create deliverables) that are consistent with their assessment
– The quality of their deliverables (licenses, marketing reports, etc.)
– Their ability to get reasonable revenue for the assets they license
• Performance is never measured by number of technologies, agreements, patents, etc.
58
Communicate Promises and Fulfill Them
Summary – Building Trust, Part 2• Make sure that your mission is sustainable• Use the Opportunity Assessment Matrix to
clean up your portfolio so you can manage it instead of the other way around
• Measure the performance of licensing managers as project managers– Making commitments, meeting deadlines– Getting results (closures and licenses)
59
Create Transparency
Overview – Building Trust, Part 3
• The Solitaire Assumption
• Escaping from the Black Box
• Commercialization as a Linear Process
• Disclosure Management Systems
60
Transparency Problems – The Solitaire Assumption
• If no activity is seen, the worst is assumed– Laziness– Lack of respect for inventor– Playing solitaire / web surfing all day
• TTOs are described as “black boxes” or “black holes”
• Shed some light on the problem: Show your work!
61
Escaping from the Black Box
• Transparency is key to building trust
• Develop and promote a process that – Manages communications about a disclosure
during its pendency in your office
– Communicates promises and deadlines, and delivers on them
• Include all stakeholders– At the very least, everyone in the reporting chain
(inventor, dept. head, dept. head’s boss)
62
Commercialization is Linear
63
Start of Project Commercialization
Research Program TTOCompany
InventionDisclosure
Research AdminNDAsMTAs (in/out)SponsorsFunding AgreementsInventingDisclosures
TTONDAsEvaluation AgreementsLicensees License AgreementsPatents, CopyrightsDisclosure Assessment
Commercialization is Linear
64
Start of Project Commercialization
Research Program TTOCompany
InventionDisclosure
Research AdminNDAsMTAs (in/out)SponsorsFunding AgreementsInventingDisclosures
TTONDAsEvaluation AgreementsLicensees License AgreementsPatents, CopyrightsDisclosure Assessment
The Disclosure Management System
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The Disclosure Management System
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Create Transparency
Summary – Building Trust, Part 3
• Develop a process for managing communications about disclosures
• Show internal stakeholders that you have this process
• Use this process to show your work
67
Next: Growing the Partnership
• Acknowledge the client’s role in managing “pre-disclosure” IP
• Work with IP or Patent Committees• Show an interest: Review proposals• Understand Broadcasting vs. Narrowcasting• Foster word-of-mouth advertising• Start companies together• Pursue research opportunities together• Face the challenges of commercialization as
partners
68
Acknowledge the client’s role in managing “pre-disclosure” IP
• Help Stakeholders understand their role in IP management
• Recognize that each side must help the other to be successful at their part
69
Start of Project Commercialization
Research Program TTO
Company
InventionDisclosure
Working with IP or Patent Committees
• Give stakeholders a role in deciding what patent applications will be funded
• (Also include whoever controls the funds)
• If you have an IP committee, change their role– From: deciding what to patent– To: being the target of a tech manager’s pitch
for filing a patent and carrying out his or her commercialization plan
70
Showing an Interest: Reviewing Proposals
• Reading proposals is a good way to find inventions, and more importantly, inventors
• Many proposals contain descriptions of work that has already been done
• Do this with proposals that have already been submitted so your review doesn’t become an SRO process
• Researchers are pleased that we are interested in their research
71
Broadcasting vs. Narrowcasting
• Commercialization is not for everyone
• Group presentations on tech transfer will inevitably include one or more skeptics
• Q&A becomes a cross-examination
• Spend more outreach time meeting with individual researchers doing interesting work that you think could benefit from being commercialized
72
Foster Word-of-Mouth Advertising
• When you have success in working with an inventor, ask them who else they would recommend you work with
• Build a network of interested researchers through referrals
• One positive review by a researcher is worth more than a hundred departmental seminars
73
Starting Companies Together
• Involve all stakeholders in company formation
• Discuss start-ups as a mechanism to obtain STTR, SBIR and private investment dollars for research
• If possible, invite them to co-invest with you so that they have a stake in the company
74
Pursuing Research Opportunities Together
• Increasingly, a commercialization plan is a requirement of proposals
• Early-stage technologies can be the basis of R&D alliances with industry
75
Facing the Challenges of Commercialization as Partners
• Universities are filled with smart people
• Being able to partner with them means being able to leverage that intelligence
• Having a unified, intelligent front when negotiating with industry is very powerful
76
Conceptual Tools Review
• Model of TTO as Inside the University
• Simple Informal Mission Statement
• Engagement / Training Protocols for SROs
• Opportunity Assessment Matrix
• Disclosure Management System
• Licensing Manager Performance Metrics
77
Thank You
Peter Schuerman, Ph.D.
Director, Licensing and Intellectual Property
Office of Technology Commercialization
The Texas A&M University System
78
