If innovation isn't measured, can it be managed? How universities

If innovation isn’t measured, can it be managed?How universities manage innovation through disciplined and novel measures

March 2011

Table of contents

March 2011

The heart of the matter 2

The need for holistic measures of innovation

An in-depth discussion 4

The Innovation Scorecard for universities and industry

What this means for your business 12

Applying and measuring innovation leading practices

Appendix

Master list of leading practices 17

PwC poster at 2010 AUTM Conference 20

Glossary 21

Works cited 22

The heart of the matter

The need for holistic measures of innovation

3 The heart of the matter

Innovation starts with a novel idea that is tested and tried through the scientific method of trial and error until it emerges to create value in the marketplace by solving a problem that people are willing to pay for. For this reason, we define innovation as value-creating novelty.

One of the most important places where innovations are discovered and incubated is within the univer-sity environment. While several well-known internet websites and IT advancements have come out of major academic institutions, these are not the typical university inventions. Most of the research and discovery taking place in academic centers is the result of years of grant-funded basic research to create new molecules, drugs, therapies, medical devices, genetically modified crops, lasers, and nanotechnologies, just to name a few.

Universities represent an essential component of the innovation value chain, leveraging their resources and know how to generate technolo-gies that can improve people’s lives, create commercial value and pres-tige to the institution, and further advance research & development (R&D). However, not all organizations are equally effective at generating

innovation. Significant differences arise from the varied application of best innovation practices and the disci-pline associated with measuring their innovative efforts.

Faculty and researchers create novel inventions, but until innovations are shown to have economic value, the benefits of these innovations are gener-ally not fully realized. For this reason, a common practice among universities is to provide a broad array of commercial-ization services through their tech-nology transfer offices (TTOs).

While we believe the old saying that “if it isn’t measured it isn’t managed,” measuring the wrong thing can lead to poor outcomes and results. To improve the ability of institutions to benefit from technology transfer, PwC was engaged in 2009 by Memorial Sloan-Kettering Cancer Center (MSKCC) to conduct a leading practices assessment of technology transfer at academic medical centers. PwC then worked with MSKCC and 14 other leading cancer centers, academic medical centers, and research universities in the US to create and apply an Innovation Scorecard. Through this approach, PwC identified dozens of innovation leading practices that can be applied and measured to better manage the innovation process.

From our analysis, three major themes emerged:

• Practices varied considerably across institutions based on their respective approaches to patenting, networking, marketing, funding structures and licensing, resulting in measurable differences in workflow processes and outcomes.

• No singular technology transfer office excelled in all Dimensions of innovation indicating that all insti-tutions could benefit from applying the Innovation Scorecard and implementing some of the leading industry practices, based on their unique characteristics.

• None of the institutions that we interviewed had a robust measure-ment system that provided a holistic approach to assessing and managing innovation or leading practices.

Now more than ever, technology creation and transfer processes are crucial to the health of a university’s innovation engine and bottom line. While these institutions are increas-ingly squeezed by budget cuts at federal and state levels, and as policy reforms introduce growing uncertainty, keeping TTOs profitable is not only a challenge but a strategic necessity.

An in-depth discussion

The Innovation Scorecard for universities and industry

5 An in-depth discussion

According to complexity theory,the pursuit of innovation is driven by tensions resulting from the deep dissatisfaction with the status quo and the sense of moral impera-tive to achieve improvements over the “current state.” These tensions represent the primary motivators of the entire growth process and enable innovators to create technolo-gies that lead to advancement and improved quality of life - the “desired state.” Tensions in complex systems and environments often refer to a phenomenon where there is a mean-ingful structural gap resulting from limitations, challenges and pain points, inspiring a tangible need for advancement. These gaps are closed through innovations, which are novel solutions created through innovation practices that create value by dissi-pating tensions. As the gap is closed, the desired state becomes the new current state, which means that the system or the organization grew in

1 Luecke, R. and Katz, R. (2003). Managing Creativity and Innovation. Boston, MA: Harvard Business School Press.

Why we innovate“Innovation . . . is generally understood as the successful introduction of a new thing or method . . . [that] is the embodiment, combination, or synthesis of knowledge.”

—Luecke and Katz, 20031

some dimension by solving a problem that created value while at the same time perpetuating the innovation process. For most of the organiza-tions in our study the pain points were found in cancer, the number two killer in the world, and the innova-tions originated from the inven-tions of new drugs, medical devices, processes, and treatments to, as MD Anderson’s tagline says “Making Cancer History.”

Measuring innovation in universitiesPwC believes innovation occurs within a cycle that progresses as follows: failure ➞ pain ➞ tension ➞ innovation ➞ growth. (See Figure 1) In this cycle, tension represents the energy source that drives the innova-tion process. Without tension in a system, it cannot have innovation. It is only through structured efforts to manage and measure innovation workflows and efficiencies that organizations can transform failures into identified pain points/tensions and tensions into innovations. If the innovation process is not being

measured, it is not being properly managed and tensions can become maladaptive. The most successful innovators are those individuals and organizations that most productively transform tensions to harness their energy and drive growth. Scientists and researchers apply this model in their discovery and inventive processes, and the commercial side of the university and organization can do the same in managing the innovative process.

Growth Failure

Innovation

Tension

Pain

Figure 1. Innovation cycle

6 If innovation isn’t measured, can it be managed?

For most universities, the pharma-ceutical, medical device, and life science industries represent 50% or more of their licensing efforts, and therefore their most important outlet for commercial value. US technology transfer offices (TTOs) have generated nearly $4 billion to date from commercialization activi-ties, according to a 2009 report from the Research Management Review. Additionally, a study recently conducted by Boston University and the National Institute of Health indicates that 143 (9.3%) of the 1,541 FDA new drug applications approved between 1990 and 2007 resulted from academic medical centers (AMCs) and other public-sector research institutions (PSRIs). Furthermore, the study points out that of the 348 priority reviews, 66 (19.0%) resulted from PSRIs, indicating that 46.2% of approved new-drug applications from PSRIs received priority reviews, compared with 20.0% of applications that were based purely on private-sector research.2

Most technology transfer offices perform some form of analysis to measure their success. In developing our Innovation Scorecard, PwC reviewed more than 20 academic studies that used various metrics to determine the success of tech-nology transfer. (See page 20 in the

2 Stevens, A.J., Jensen, J.J., Wyller, K., Kilgore, P.C., Chatterjee, S. and Rohrbaugh, M.L. (February, 2011). “The Role of Public-Sector Research in the Discovery of Drugs and Vaccines.” New England Journal of Medicine. 364:535–41

appendix) PwC found that nearly 70% of those studies used five metrics or fewer and over 40% considered three or less to measure success. Even the most extensive academic papers that have attempted to quantify TTO productivity have included fewer than 10 criteria, providing only a limited and narrow view. Hearsay and anec-dotes have driven much of the discus-sion regarding the remaining aspects of the tech transfer functions. Lack of concrete evidence stifles the ability to develop a definitive understanding of industry drivers, what impacts it, and what impact it can potentially have.

PwC’s team believed that traditional measures of success weren’t enough. The traditional model of innova-tion both in and outside the univer-sity setting has been in a Closed Paradigm. That is, innovation has been considered to be developed within the confined parameters of

Figure 2. Paradigms of Innovation

Source: Concept derived from Henry Chesbrough, “Open Innovation: A New Paradigm for Understanding Industrial Innovation,” in Open Innovation: Researching a New Paradigm, edited by Chesbrough, Vanhaverbeke and West, p.3. Oxford University Press, 2008.

the subunits directly involved in R&D within an organization. However, it provides only a limited understanding of the factors that impact successful technology transfer. According to Rothaermel, Agung and Jiang’s study3 on measuring success in TTOs, “several factors have facilitated what Chesbrough (2003)4 terms the shift from a Closed innovation system to an Open innovation system. These factors include, among others, the rise in venture capital, the passage of the Bayh-Dole Act, the rise in the pool and mobility of scientists and engi-neers, and important technological

3 Agung, Jiang and Rothaermel (2007). University Entrepreneurship: A Taxonomy of the Literature. Industrial and Corporate Change, Page 1.

4 Chesbrough, H. W. (2003), Open Innovation. The New Imperative for Creating and Profiting from Technology. Harvard Business School Press: Boston, MA.

Current market New markets

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Figure 3. PwC’s Innovation Scorecard structure

breakthroughs in computing (micro-processor), biotechnology (genetic engineering), and, more recently, nanotechnology.” This has resulted in a rise in start-ups, research incubators and science parks. These elements have led to the need for an expanded view of innovation in a university setting.

PwC’s approach to measuring innovation in technology transferPwC developed an Innovation Scorecard for the technology transfer industry to provide a holistic frame-work and methodology that recog-nizes open innovation. The scorecard uses 66 weighted metrics derived from the MSKCC sponsored project referenced above that included a survey completed by TTOs, third-party data, and interviews with members from leading tech transfer offices and research faculty.

The Innovation Scorecard, shown in Figure 3, consists of eight Dimensions of innovation organized into four Pillars: Input, Activities, Output and Impact.

Input Activities Output Impact

Innovation Scorecard

Four Pillars

Eight Dimensions

Resources Workforce Services In/Outreach Productivity Yield Institutional Market

R&D spendingIdeas People

OfferingsGrowth phasesRelationships

Patents, licensesEfficiencyROII

RevenuesFDA approvalsPain removed

• Input: This pillar looks at the structural elements of funding and human capital that support the inventors and the commercializa-tion process, including the struc-ture and experience of the TTO.

• Activities: This pillar looks at the scope of services offered by the technology transfer office and how active the TTO is in marketing its products and services and devel-oping relationships, both within the institution (inreach) and with external stakeholders (outreach).

• Output: This pillar looks at the efficiency and effectiveness of the technology transfer efforts in commercializing intellectual prop-erty. This Pillar also addresses the Return on Innovation Investment (ROII).

• Impact: This pillar looks at the overall contribution of innovation to society, including the institu-tion (internal) and the market (external). While the best measure for this Pillar for universities and AMCs would be the number of patients helped, cured, or saved by the innovation, this information is difficult to obtain. Therefore, PwC used other information that can act as a surrogate.


Each of the eight Dimensions answers a set of key questions as seen in Figure 4.

Figure 4. Key questions underlying the drivers of innovation

Dimension Key questions

Input

Resources Does the institution have adequate funding to drive innovation?

Does the institution invest in innovation by providing adequate gap development funding?

Does the institution invest in innovation by supporting a high performing TTO?

Workforce Is the TTO large, experienced and focused enough to sufficiently support the faculty?

Do licensing managers receive the support they need from specialists and interns/fellows?

How large is the pool of faculty members with active research funding?

Activities

Services What services does the TTO provide to the faculty and the institution?

In/Outreach How active/strategic is the TTO in reaching out to the internal and external communities?

How transparent are the processes, procedures, activities, and outcomes of the TTO?

Output

Productivity How efficient and resourceful is the TTO in transforming inputs into outputs?

Yield How effective are the office’s technology transfer efforts in producing results?

Impact

Institutional How does success in technology transfer benefit the institution?

How stable are the revenue flows from licensing and royalty payments?

How engaged is the faculty/inventor community?

Market How does success in technology transfer benefit the external community (i.e. patients, economy, external research community, etc…)?

The Innovation Scorecard was calculated in a five-step process as illustrated in Figure 5.

Figure 5. PwC’s Methodology

Apply Innovation

Scorecard to tech transfer industry with weighted

metrics

Identify institutions to

participate in the Innovation Scorecard

Collect data using

Workbook and apply to

Scorecard

Normalize data on a scale

of 1–9 and calculate scores for 8 dimensions

Calculatescores for 4

pillars and the overall score and

rankings

1 2 3 4 5


PwC evaluated 135 academic medical centers and large research universi-ties on innovation yield and efficiency using the Association of University Technology Managers (AUTM) annual survey data. PwC then selected 35 that shared common areas of research and focus on medicine, cancer, and life sciences, as shown in Figure 6, and from this created a sample of 15 to include in the study of leading practices.

These 15 organizations (two are not displayed) fell into all four perfor-mance quadrants as shown in the figure. PwC performed site visits and phone interviews with each institution to understand the various approaches, values and drivers of each TTO and to tailor the Innovation Scorecard. Of these 15 institu-tions, nine participated fully in the Scorecard, participating in a two-hour onsite interview and completing a 50-page survey to provide exten-sive quantitative and qualitative information, as well as long-answer responses. The remaining six only

Figure 6. Efficiency vs. financial success for 35 leading innovators, per AUTM data

participated in a two-hour phone call and provided limited additional data.

The data collected was cleaned, organized and analyzed and used to populate the Scorecard’s 66 under-lying metrics. In some cases, PwC used gross and aggregate data, such as total research funding and total research staff. In other situa-tions, normalized data was used to understand relative performance, creating metrics such as patents per researcher and licenses per licensing professional.

PwC then created normalized scores by creating a scale from 1 to 9 (since we were comparing nine institutions) by assigning the highest metric a score of 9 and the lowest a score of 1. The remaining TTOs were then plotted proportionally within that distribution for each metric. For example, if for a particular metric the largest was $XXX income per faculty member and the lowest was $YYY, and another generated $ZZZ, this third institution would earn a score of

* Analysis based on AUTM data; only top 35 are graphed** Efficiency = Avg. research exp. per ID ranking + Avg. research exp. per startup ranking + Avg. research exp. per patent application ranking *** Financial Success = Average income per active license ranking

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180 200 220 240 260 280 300 320 340 360 380 400 420Less efficient More efficient

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Included institutions Not included institutions


AA since it falls proportionally BB% between the two extremes.

Each metric was then assigned a relative weight based on its impor-tance and value as an indicator of successful innovation commercializa-tion. The weights were based on a research review, our understanding of the industry and interviews with leading innovators. Such weight-ings are clearly subjective in nature and are used to convey the relative importance in the heuristic created. For example, the commercialization experience and tenure of the TTO staff was weighted higher as an indi-cator of innovation than the number of resident patent agents, though all three criteria (experience, tenure and patent agents) were measured. The Dimension scores were then calculated by summing the weighted average of the individual metrics.

The individual eight Dimensions and four Pillars were each given an equal weighting. As such, the Pillar scores and the overall score were each calcu-lated using a straight average. Figure 7 is an example.

Figure 7. Example of Innovation Scorecard results

6.1

7.2 3.6 4.3 5.7 5.2 7.7 8.56.3

4.0

Activities

6.8

Input

Resources MarketInstitutionYieldProductivityIn/OutreachServicesWorkforce

5.5

Output

Overall score

8.0

Impact

Example of individual normalized metric scores: 4.5, 3.6, 8.2, 9.0

The key findings from our research, organized by innovation pillar, are as follows:Input: This Pillar looks at the elements of funding and human resources that support the inventors and the commercialization process. A key leading practice in this area is the introduction and/or expansion of gap development funds to further the development stage of promising innovations, including funding a proof of principle, proof of concept, prototype and even Phase I or Phase II clinical trials. While few institutions have funded a clinical trial through gap funding, this was recognized as an important need as most licensees are unwilling to license early stage inventions. Another important insight regarding gap funding is the need to have different types and pools of funding that can advance an inven-tion through various growth phases and to have multiple access points for inventors. For example, one institution had three separate funding strategies for each of the three phases of growth: Discovery fund, Incubation fund, and Acceleration fund.

While technology transfer offices vary in size and approach, several leading practices emerged regarding staffing. The primary issue is the effective use of licensing managers

by focusing their activities on deals (licensing transactions) supported by sufficient staff and structures. Several institutions have implemented intern-ship/fellowship programs to elimi-nate many of the tasks previously performed by licensing managers. Additionally, it is important to mini-mize licensing manager turnover, which damages established relation-ships with inventors and decreases workflow efficiency and effectiveness. While a mix of background experi-ence is valuable, commercialization experience is key to credibility with inventors and quick integration into the tech transfer office.

Activities: This Pillar looks at the scope of services offered by the technology transfer office and how the office markets its products and services. The general view was that the technology transfer office should deliver services around those core agreements that most closely relate to the technology commercialization and licensing process, and should not be distracted by those activities that do not drive commercialization or that required significant legal training and/or experience. Additionally, internal audits should be performed systematically to ensure compliance and proper compensation to the medical center.


One issue that continued to materi-alize during our interviews was the issue of the lack in transparency. TTOs are regularly referred to as “information black holes,” which undermines their credibility and effectiveness. To address this issue, offices have created various strate-gies and initiatives, including annual reports or brochures, web-based over-views of the TTO workflow, policies and procedures, annual or quarterly personal invention statements for each inventor, and more frequent in-person meetings with inventors.

Several institutions stressed the value of inventors in marketing technology and establishing a license. It is important to share the responsibility of finding licensees with the inven-tors. Many institutions promoted the concept that the inventors should help provide leads for potential licensees based upon their understanding of the scientific field, their knowledge of other competing science in the field and the interest that commercial R&D had shown in papers published and at conferences they attended. One inter-esting approach was to attend sector conferences along with inventors to develop networking relationships together. Organizing or attending disease and science oriented confer-ences or events was noted as a key method of obtaining mindshare with potential licensees.

Output: This Pillar looks at the efficiency and effectiveness of the technology transfer efforts. An overriding observation is the value

of productivity goals and success measures. While it is not always true, there is a general view that completing a licensing agreement takes about the same time and effort regardless of its size. Therefore, the number of deals should be considered a primary productivity measure, with deal value being a close second. Additionally, as is the case with nearly all institutions, technology transfer offices should expect to yield in excess of $1 revenue for each dollar of TTO expense (including salaries/benefits, gross patent/legal expenses and other office expenses) ), with many leading institutions generating significantly greater returns on their investment.

Efficiency is a key driver of produc-tivity and yield. Consequently, some organizations that are more successful at achieving efficiency seek to have support staff manage existing patent and license portfolios to improve the productivity of the licensing manager. Additionally, a number of institu-tions have implemented structures to streamline and standardize the licensing process, including invention checklists and stage-gate models, as well as automated internet (“click-down”) licenses.

Impact: This Pillar looks at the overall innovation contribution to society. The Pillar is largely character-ized by the efforts and approaches to patenting and licensing technology, as detailed in the previous three Pillars. Technology transfer offices that more aggressively networked with their inventors and had shorter times to “go

or no-go” decisions on inventions and patents had higher levels of inventor engagement, which resulted in the improved success and impact of the office.

Long-term sustainability of the office requires technology transfer and licensing practices that create a larger and diverse portfolio of licenses and inventions. As such, institutions more heavily tied to royalty streams from a limited number of licenses will need to focus on expanding their portfolios to limit their concentration and thereby diversify their sources of income to maintain their ability to finance innovation and cutting edge research.

What this means for your business

Applying and measuring innovation leading practices

13 What this means for your business

The overall scores and rankings in each Dimension, as well as in aggre-gate, should be regarded as heuristics to help support the measurement and management of the office’s practices and processes and should not be viewed as statistically significant in terms of understanding which TTO is “better” than another. Generally, the individual Dimension scores are more informative to TTOs in deter-mining which areas need the greatest improvement.

A surprising finding from our research was that all but one institution ranked 1st or 2nd in at least one Dimension, while the highest ranked institution, based upon the scorecard ranking, ranked 8th in one Dimensions and 6th in two. This indicates that even the “best” have some leading practices to learn and apply to further improve their performance.

We also found some validity in the approach as we reviewed the perfor-mance of the institution that ranked last. This office had embarked upon a massive turnaround a few years before, and in the Dimensions that you would expect to see the earliest evidence of a successful recovery in performance, productivity, they ranked 2nd overall; this indicated that it had begun to turn things around.

Another validating example arose from a review of an organization that generates a large amount of money from licensing activities. However, the TTO staff generally has less commercialization experience than other TTOs in the study and appeared over-extended by providing too many services for faculty members (e.g. CTAs, SRAs, MTAs, consulting agree-ments, etc…) which resulted in poor internal and external relationships. This was seen in high scores in the Output and Impact Pillars, but lower scores in the Workforce, Services and In/Outreach Dimensions. This shows why using revenues as the primary measure could cause an institution to miss areas of poor performance that will impact its future success.

To understand how these perfor-mance measures can be viewed and understood, Figure 8 shows three different approaches. The first figure helps see the relative level of perfor-mance across all organizations and the ranking by Dimensions for each institution. The second, we call a scatter chart, shows how each orga-nization ranked by Dimension. The third, which is a radar graph, is very useful in comparing one organization against another and seeing how well rounded the practice areas are and the obvious gaps in performance.


Figure 8. Example approaches for presenting overall results

A) Bar graph withoverall scores

Useful in comparing overall scores and rankings for each Dimension in order to identify pain points (most useful).

B) Scatter chart

Useful in visualizing comparative results in all Dimensions, as compared with other institutions.

C) Radar graphs

Useful in comparing two sets of data (more than two is confusing), for example one institution with leading practices and the TTO average.

Institution A Institution B Institution C Institution D Institution E Institution F Institution G Institution H Institution I

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*See below: Ranking 9 = High 1 = LowScore 9 = High 1 = Low

Institutional Yield Productivity In/Outreach Services Workforce Resources

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EXAMPLE

EXAMPLE

MarketInstitutionalYieldProductivityIn/OutreachServicesWorkforceResources1.0

2.0

3.0

4.0

5.0

6.0

7.0

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Institution B

Institution C

Institution D

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15 What this means for your business

Through this study, PwC collected 38 leading practices observed across all eight Dimensions among the 15 institutions (See Appendix). By measuring performance of leading practices across the eight Dimensions, organizations can identify gaps between current and desired levels of performance. Figure 9 illustrates how innovation measurement led to better innovation management.

Figure 9. Creating an action plan for change with the Innovation Scorecard

Insufficient support for TTO staffTTO staff has limited “deal” experience

Insufficient internal networking initiativesPoor transparency with faculty/inventors

Workforce

In/Outreach

Lower-scoring dimension Underlying issue Creating an action plan for change

Recruit interns to perform free/cheap work following standard approaches

Provide training and/or opportunities to receive certification to TTO staff

Develop stronger ties with faculty via networking events and partnerships

Create online reports and regular meetings to increase transparency and strengthen relationships

By using the scorecard to measure these universities, PwC made the following conclusions:

1. All of the institutions, even the best performing based upon our scoring, found that they could learn something from others, even the worst performing, and improve their overall performance.

2. The AUTM data, while very useful as a starting point, didn’t provide

the necessary granularity to iden-tify and quantify leading prac-tices to provide a holistic view of performance.

3. Additional qualitative and quanti-tative data is required and must be shared to apply leading practices and benchmark performance using the Innovation Scorecard.

4. The Innovation Scorecard is integral to the innovation cycle and process


of the TTO to identify failure and pain (gaps in leading practice performance) that create tensions to drive the creation of innovations in both leading practices and orga-nizational structures to improve innovation performance.

Innovation requires discipline. The best innovators realize this and are more successful because of it. The discipline for innovation is not the same as that provided to the rest of the organizations; it is unique to innovation. However, like other organizational disciplines, it needs to be measured. Measurement enables better management because it iden-tifies gaps in performance where leading practices can be applied to drive improvement.

Most organizations have few or no measures for innovation. Too often, they are looking for a singular

measure, a silver bullet measure, for innovation, which doesn’t exist and shouldn’t exist. Innovation is too complex to be distilled down into one simple measure.

The university environment is ahead of most corporations in supporting and measuring innovation because of the decades of open innovation and commercialization of their intellec-tual property. The corporate world is now just embarking on the road to open innovation and looking for better ways to support and accelerate innovation and, therefore, can learn a lot from leading practices applied in the university setting and the measures that support these practices.

Both universities and corporations, therefore, can increase their innovative output and performance by applying an Innovation Scorecard approach to their innovation endeavors.

17 Appendix

Leading Practice Description

Input

Develop a clear mission statement Establish clearly stated mission regarding technology transfer that reflects the goals and values of the institution and the TTO.

Provide gap development and commercialization funding

Provide additional pools of funding for technologies along the development continuum to increase commercial value of leading inventions.

Expedited process for internal start-ups

Establish well-defined process for creating internal start-ups based on: scientific/clinical merit, patentability, market opportunity, commercial viability, time to market, business plan, absence of conflicts of interest and evidence of sufficient available finances/backing and management.

Obtain sufficient industrial funding for research

Ensure that a substantial portion of research funding is from industrial sources in order to diver-sify funding sources.

Management should support licensing staff

Hire sufficient support/specialist staff to optimize productivity of licensing professionals.

Improve data-basing processes Utilize leading technology systems to automate processes and remove unnecessary tasks.

Implement internship/fellowship program(s)

Provide low-cost assistance to licensing staff by hiring interns or fellows to follow standard approaches to specific technology transfer tasks.

Reduce licensing manager turnover Hire long-term employees who will gain expertise in technology transfer, develop relationships with the inventors and industry and provide consistency.

Mix of experience is valuable, but deal experience most important

Recognize commercialization experience as a key factor when recruiting licensing staff. This experience, alongside science backgrounds, helps new staff to be more successful in gener-ating licenses and gaining credibility with stakeholders.

Additional support from Directors for licensing staff

Encourage TTO Director to actively show their support less experienced staff, since experience is key to success and credibility in technology transfer.

Activities

Remove non-core activities Separate non-core activities, such as CTAs, into distinct group within the TTO or remove them from the TTO entirely.

Streamline invention disclosure process

1) Faculty should disclose ideas before being fully developed invention disclosures (IDs). 2) Implement early & extensive reviews of patentability, market size, etc.

Create a technology transfer advisory committee

Establish a diverse advisory committee for the TTO that meets regularly to provide guidance, ensure optimal productivity and help identify opportunities.

Internal/external audits Implement regular systematic audits of completed licenses to ensure compliance.

Discuss gaps in care with faculty 1) Engage faculty, particularly clinicians, to discuss gaps in care within their fields. 2) If an ID is rejected, consider opportunities in related areas.

Allow inventors to pursue licensees Support entrepreneurial-minded inventors in pursuing licensees and provide the necessary support and guidance.

Partner with inventors on networking prospects

Utilize inventors to network with licensees—bring them to conferences and provide them with “attack plan” to approach potential licensees in their field.

Appendix

Master list of leading practices



Attend sector-specific conferences Attend sector-specific conferences, which are valuable opportunities to develop relationships with stakeholders and licensees and gain sector-specific insight.

Semiannual invention showcase Organize showcase of leading inventions to select group of VCs and licensees.

Annual/biannual symposium Organize or participate in periodic symposiums of the foremost scientific research in relevant fields to develop relationships and gain knowledge.

Improve transparency with faculty and stakeholders

(1) Provide workflow and approximate timeline of key TTO milestones. (2) Issue annual reports. (3) Consider personalized activity statements for faculty.

Royalty sharing arrangements must be transparent

Ensure transparency regarding royalty sharing practices to avoid unnecessary confusions.

Provide training on regulatory and licensing processes

Offer trainings to TTO staff and inventors regarding processes and requirements involved in obtaining IND and FDA approval, licensing and start-ups.

More frequent one-on-one meetings with inventors

Organize regular face-to-face meetings with faculty to establish and strengthen relationships with the internal stakeholders.

Outsourcing certain functions Outsource certain activities (e.g. legal counsel, contract review, IT, etc.), but only to the extent that is necessary to maintain productivity.

Output

Licenses should be seen as the primary productivity metric

Recognize number of deals as leading indicator of TTO success, though other metrics (IDs, CDAs, etc.) are important indicators as well.

Optimize yield on TTO expenditures Focus on yield by maximizing the return on each dollar invested in the TTO and create goals based on leading industry practices.

Maintain marketing pressure for valuable inventions (also relates to Impact)

Recognize that a large portion of inventions take over three years to license, indicating signifi-cant value potential beyond 16 months. Maintain pressure where appropriate - discretion is required.

Implement invention checklist or stage-gate model

Develop an invention checklist or establish minimum requirements to proceed to next stage, in order to standardize decision making process.

Implement “click down” option for cell line licenses

Offer automated option for licensing cell lines, research tools and other high-volume repeat licenses via the internet. Terms are standardized per the TTO.

Paralegals/staff should assist in managing patent portfolios and completed licenses

Leverage paralegals and support staff in managing existing patent and license portfolios, including maintenance, post-license follow-up/invoicing, etc.

Define process for determining which form of license to pursue

Establish defined processes for determining whether a technology is best suited for large pharma, mid-side pharma, small pharma, or an internal start-up.

Structure patent and licensing practices in line with mission

Pursue practices licensing terms that best service the interests of the institution, the TTO, the inventor and the public good.

19 Appendix


Impact

Monitor success using an Innovation Scorecard

Use an Innovation Scorecard to periodically review operational efficiency, productivity, and trends in their success in commercializing technologies.

Position your institution as a leader in innovation

Organize/participate in periodic innovation workshops/discussions with a small, defined group of institutions to “compare notes” and leading practices.

Office name should reflect function Provide tech transfer office with a name that reflects its function in commercializing technology and interfacing with industry.

Diversification is essential Maximize sustainability by diversifying the TTO’s revenue streams. TTOs should avoid relying on “blockbusters” and should pursue varied sources of income.

Monitor and improve office’s financial efficiency

Track and manage income and expenses in real-time in order to help keep costs down, improve efficiency and instill the office with a sense of fiscal responsibility.


PwC poster at 2010 AUTM Conference

21 Appendix

Glossary

Acronym/Term Definition

AMC Academic Medical Center

AUTM Association of University Technology Managers

CDA Confidential Disclosure Agreement

CTA Clinical Trial Agreement

Faculty/inventors with active research funding

Inventors with active research funding = Researchers, clinicians, faculty, scientists and educators/profes-sors (tenure and non-tenure tracks) with “faculty” titles (or equivalent) in basic science and clinical depart-ments at your institution with one or more research funds that are currently active (i.e., the end date of the fund is in the future) where the source of funding is external to the institution, i.e., government, non-profit (e.g., associations, societies, foundations), industry (e.g., for basic research and clinical trials) and directed philanthropy (from individuals, families, etc). This includes professors, members and attendings (depending on the nature of your institution) as well as the respective associates and assistants in those categories. This does not include post-docs, students, technicians, full-time research employees with PhDs who can apply for grants, etc...

GDP Gross Domestic Product

ID Invention Disclosure

IP Intellectual Property

MSKCC Memorial Sloan-Kettering Cancer Center

MTA Material Transfer Agreement

PI Principal Investigator

PSRI Public-sector research institution

PwC PricewaterhouseCoopers LLP

R&D Research and Development

ROII Return on Innovation Investment

SRA Sponsored Research Agreement

Start-up Company at least partially founded based on an institutions funding or inventions with limited or no income

TTO or Tech Transfer Office Technology Transfer Office


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About PwC’s Health Industries GroupPricewaterhouseCoopers’ Health Industries serves as catalyst for change and the leading advisor to organizations across the health continuum, including payers, providers, health sciences, biotech/medical device companies, phar-maceutical and employer practices in the public, private and academic sectors. With a distinctive approach that is collaborative, multi-disciplinary and multi-industry, PricewaterhouseCoopers draws from its broad perspective and capa-bilities across and beyond the health industries to help solve the array of emerging complex problems health organizations face, lead cultural and clinical transformation, and create a new, sustainable model for care delivery that is quality driven, patient centered and technology enabled.

About PwC’s Innovation GroupAt PwC, we combine unique perspec-tives and fresh thinking to create innovative solutions for complex issues. In partnership with our lines of service and business functions, the Innovation Office works to accel-erate innovation by inspiring new ideas and reducing barriers to their implementation.

The Innovation Office promotes and facilitates dynamic ideation with our people and clients and organizes collaboration opportunities with external organizations through Open Innovation.

About PwC’s Pharmaceuticals and Life Sciences Industry GroupPricewaterhouseCoopers’ Pharmaceuticals and Life Sciences Industry Group (www.pwc.com/pharma and www.pwc.com/medtech) is dedicated to delivering effective solutions to the complex strategic, operational and financial challenges facing pharmaceutical, biotechnology and medical device companies. We provide industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. More than 163,000 people in 151 coun-tries across our network share their thinking, experience and solutions to develop fresh perspectives and prac-tical advice.

© 2011 PwC. All rights reserved.“PwC” and “PwC US” refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. NY-11-0715

To have a deeper conversation about how this subject may affect your business, please contact:

David Levy Principal, Global Healthcare Leader PricewaterhouseCoopers 646 471 1070 [email protected]

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