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Outlook Luncheon

 

March 8, 2004

Good afternoon! Thank you very much for that gracious introduction.

Just last week, I was testifying about the University to a State Senate committee. We spent a lot of time in the question period talking about job creation, and about keeping our graduates in the state. It is clear that our elected officials are very focused on the need to have strong economic development.

I am delighted to be talking to you today for several reasons. Professor Fulton’s report is very enlightening, and is going to spur conversation on our campus as well as in the regional and state business community. Of course, I will let him present his own points.

I am also very glad to have this opportunity to tell you about some ideas regarding the ways our University can become involved in a more significant role in the economic development in this region. We talk a great deal about the number of jobs we create through our research funding, but we also contribute to the economy by creating significant employment in construction jobs.

I know you see the cranes on our campus—the new buildings under those cranes, and many projects that are less evident, have provided an average of 900 FTE construction jobs to the local economy each year.

Moreover, the projects that result from many of those construction jobs will provide additional fuel to our economy—our new Life Sciences Building that just opened this year, the rising new Biomedical Research Building, and our new buildings in the College of Engineering all will generate research, future technology transfer, and discoveries that will change our lives.

I have heard from the merchants in downtown Ann Arbor that evening business has increased significantly since we have completed the renovation of Hill Auditorium and drawn crowds of thousands back into town at night.

Last June, I addressed the IT Zone, and made it clear that technology transfer was going to be a key element in our relationship with the business community.
In the period since I gave that speech, we have had great success with our research and discoveries, including a recent ranking as one of the top ten universities in patents received.

Our work is this area is critically important to our university. It is also impressive to me as an indication that the willingness of our faculty to engage in this kind of work is increasing dramatically.

But when we consider our future role in statewide economic activity, I’d like us to look well beyond the metrics and mechanisms of technology transfer alone.

I cannot think of a better example to illustrate my commitment to an actively engaged university than by having the University of Michigan become an even more central lynchpin in the economic vitality of the state.

In his new report, Professor Fulton tells us that the pillars of our economic environment either have to be strong, or, the economy will need to have new pillars. I want my University to be strong and vital, so we can continue
to strengthen this state.

I want to see the University of Michigan take a truly collaborative role in designing a new kind of partnership around statewide economic development.

Our vision will certainly include the important enterprise development now underway as measured by patents, licenses and invention disclosures. But at its heart, it must be about more than that.

We have to create the conditions that will foster what John Seely Brown, the former chief scientist of Xerox Corporation, calls an “ecology of knowledge”—an ecology that fully supports economic growth.

I believe public universities have something very special to contribute to this ecology—we create an environment where the independence of research can flourish, leading to innovation and invention. Marketplace demands do not, and must not, dictate freedom of inquiry. Our academic freedom means the world’s best minds are free to invent, and to innovate without the constraints of short-term market pressures.

We are also free to learn from our mistakes, and then to innovate some more. I think of our campus, in fact, as an engine of innovation.

The global economy includes a vast amount of innovation born in our nation’s best research universities. We count on business and industry taking our innovations across the finish line into the commercialized marketplace.

So our universities can provide the space for innovation, and business brings its expertise in translating basic ideas and research discoveries into marketplace applications.

In a perfect world—there would be very few barriers between our research enterprise and the business community. But sometimes it can seem as if there are concrete walls between us. We know the constraints we all too often face: Universities can allow too many things to stay locked behind those walls; and businesses are pressured to focus narrowly on the short-term market realities, which pushes them toward more narrowly conceived innovation of products.

In today’s world, we see that Bell Labs is gone, a former giant like Kodak is foundering, and basic R&D is in decline almost everywhere.

Breaking down our barriers serves a twofold purpose: getting all the discoveries out, and creating mechanisms that allow the business community in.

We have research resources, faculty expertise, and students eager to learn how to operate in the “real world.” We need to provide the means for you to tap into our reference tools, our databases, and our libraries.

As we work to facilitate greater coordination and support for economic activity, we all must recognize we are linked together. Our state’s universities, the business sector, and the state itself, all play a pivotal role in this new ecological balance.

The state of Michigan has partnered with the universities across the state through the Michigan Economic Development Council and the Technology Tri-Corridor (formerly the Life Sciences Corridor).

But now we need to find systematic and consistent ways to fund incentives and to help design programs in areas of our greatest priority, with the help of industry and the private sector.

And our universities have to recognize where those barriers to collaboration have become concrete walls, so we can begin to take them down. Maybe we need to replace the concrete with a permeable membrane instead.

We have some wonderful examples of the possibilities that emerge when our worlds merge productively.

In our College of Engineering, we have a research center known as the Wireless Integrated MicroSystems, or WIMS. This center focuses on the development of low-cost, integrated microsystems that will have far-ranging applications for industry, health care, and the environment.

The center has received significant funding from the National Science Foundation, along with the support of the State of Michigan. Our partner institutions in this venture are Michigan State University and the Michigan Technological University.

Significantly, part of the mission of this center is to provide links to industry. We do this by sponsoring ongoing seminars exploring technological advances in microsystems and their implications for society. These seminars are not limited to campus, but also are being presented at industrial sites.

The center also established an Industrial Partnership Program, involving 25 leading companies and non-profit organizations. Nearly all participants maintain leading-edge research programs in microelectronics and wireless communications.

In addition to serving on advisory and executive committees, our industry partners have sponsored student scholarships and fellowships, provided internships, and participated in corporate personnel/faculty exchanges.

This is a model for multiple partnerships—including a federal organization, other state institutions, and leaders in industry. We have other examples of programs such as this, but I want to find ways to extend successful models such as this one across our campus. I will also encourage my colleagues at other state institutions to take up this cause. Most of the public universities in this state have knowledge and expert advice that, if we can build the right support system, can enhance our state’s business development efforts. I would like to see us build a consortium of these resources with the digital infrastructure and funding to support the effort adequately.

This state made a great commitment to research in the life sciences industry in 1999, when the formation of the Life Sciences Corridor placed Michigan at the leading edge of this critical industry.

The original commitment was for one billion dollars over 20 years, but as a result of budget cuts, the funding has been reduced by half. That threatens our ability to attract and retain life sciences industries. Many of us have been urging the state to return to the original commitment, most recently in a compelling report from the Core Technology Alliance of the Michigan Life Sciences Corridor. This new report tells us that payroll and job creation in this industry have been steadily advancing, from 28,000 jobs in the life sciences in 1998 to 38,000 in 2004—an increase of over 30%.

By cutting the funding so dramatically, not only these jobs, but our competitive edge is at risk. Many other states have made biosciences research a central piece of their economic development.

As a rapidly growing field, it has an impact on many other sectors of the economy, and is viewed as a key element in rebuilding state economies. We cannot afford to fall behind in the competition for the researchers and discoveries these new centers will attract in other states.

And while we are talking about the institutions of higher education in our state, let me make a case for the critical need for the state to invest in our universities and colleges.

I take considerable pride in knowing that the University of Michigan is, has always been, one of the nation's leading universities—public or private. It must remain one of our leading universities.

I have a deep concern that continued and severe budgetary pressures will threaten the very core of our excellence.

In Fiscal Year 2003, the University of Michigan won $528 million dollars in federal funding for research expenditures on projects designed by our faculty.

Earlier I mentioned our annual research funding for the most recent year. Let me express our research engine in another way: we have eight faculty members who EACH have been awarded between $50 million and $87 million dollars in federal funding over the past fifteen years.

These are faculty members who, year after year, attract the top graduate students and compete for the federal dollars that create jobs in our offices and laboratories.

These researchers would not be successful if our university were not strong overall. By maintaining the distinction of our programs, we are helping to keep those faculty members—and their research dollars—in the state.

You are business people. I know you completely understand the nature of business competition. Our best faculty members are regularly recruited by other leading universities, and we need to do everything possible to ensure that we keep our own university in the top rank.

In the past two years, our University has sustained some of the largest percentage cuts in the history of the institution. These cuts are deep and when another round of cuts arrives, the impact will be felt in the academic programs we have worked so hard to protect in the most recent cuts.

Affordability to families is one of our central issues—we remain concerned about keeping access to our University available to students from all economic backgrounds. But even as we work to keep our University affordable, we must also keep our quality as our main focus.

We need the help of all supporters of the University to communicate the advisability of sustaining our great state institutions. Please help me get this message to the public and to our elected officials.

Our University of Michigan is the envy of states around the country, and I intend to keep us at the center of that envy!

Part of our greatness is being able to share our wealth of intellectual capital with the public, which includes the interests of all of you. Are there barriers to some of the ideas I have put forward today? You bet there are.

But I am here to express my commitment to lowering and even eliminating those barriers.

I will look to all of you for your ideas and your leadership as we expand and create new models of the interchange that must occur between our campus and the business community.

The future economic strength of our region will be found in the partnerships we can forge. We have a good start already with coalitions such as the IT Zone, the Washtenaw Development Council, the other organizations I have mentioned, and the many visionary leaders I have come to know in the past two years. Our university is making great progress facilitating technology transfer work, including patents, licenses, invention disclosures, and start-ups.  To me, it indicates a growing interest on the part of our faculty and we will keep up this important work.

But here is my key message today: I see University-sponsored technology transfer as just the first step in what I believe can be a new partnership model for our universities, the business sector and the state—and I want the University of Michigan to play a key role in developing a dynamic hub for business activity.  We need a consortium approach that organizes our resources and is prepared to share them easily and quickly.

The universities in our state have the research, resources and faculty expertise that business requires.  The business sector has the pipeline and experience that can bring our innovations to market.  Our state government can provide funding and incentives necessary to bring it all together.  We can and we must work together to develop greater access to the innovative resources we each have separately, but which often cannot get through those figurative concrete walls.

Let’s work together to create the “ecology of knowledge” that John Seely Brown talks about—generating all the right conditions for robust economic growth.

You will hear me say many times over the next several months and years that I believe the great public university in the 21st century must be accessible, must foster collaborative scholarship, and must be actively engaged with the issues of our time. 

This directly relates to our conversation today, and the knowledge ecology we can nurture, working together.

Thank you.