19 The importance of concerted entrepreneurial educational and industrial development programs

Transcription

1 19 The importance of concerted entrepreneurial educational and industrial development programs Hans Peter Jensen Paper presented at the Conference Internationalizing Entrepreneurship Education and Training, Vienna (Austria), July 5-7, Abstract The presentation refers to ongoing activities and experiences gained at the Technical University of Denmark and by Danish industrial development programs. The objectives of the presentation is to demonstrate the importance of adjusting entrepreneurial education and industrial development to each other in order to enhance recruitment of new knowledge based companies. Further, the sound market regulation of well coordinated education and industrial development programs is pointed out. As most knowledge-based companies have to establish themselves on markets in rapid technological change, capital and competence become equally important factors of success. Capital speeds up establishment. Competence prevents errors and focuses efforts. Brought together, these two resources provide the basis for a quick and targeted launching, which again is decisive when the window to the market is open for such limited time. Advanced entrepreneurial courses provide the knowledge needed to form a new company, but not the experience, and certainly not the capital. Industrial development systems, adjusted to the needs of new knowledge-based companies, provide access to seed capital and management experience. Capital however should be available on a competitive basis 229

2 only and granted only together with whatever supplementary expertise needed to complete the entrepreneurial team. As a consequence of comprehensive entrepreneurial education, new companies are borne with a state-of-the-art knowledge on how to attract capital, how to establish themselves quickly on international markets and how to build up effective management teams. Existing companies have to adjust themselves to same level of competence or to perish. Basically this is a sound regulation, as it helps to develop regional or national competitive power as a whole. It only works however, if the industrial development programs are adjusted to stimulate the formation of new companies, for even the best education cannot replace a general lack of management experience and seed capital. So, if education and industrial development programs are linked, coordinated, and concerted, entrepreneurial education will become an important condition for successfully forming new companies. On the same time it will impress competence as a market regulator. Technology transfer from the Technical University of Denmark Consider the university as a knowledge-producing unit: human, intellectual and financial resources provide the basis for the creation of new technological knowledge, which is transferred to society through a number of outlets. Figure 1 indicates this model. Figure 1 Knowledge from TUD 230

3 DTH : a Producer of Technology Technology Transfer Activities New technological knowledge Dr. techn.s 2-5/yr Ph.D.s App. 100/yr Spin off companies 0-5/yr Money App. 160 mio US $/yr THE TECHNICAL UNIVERSITY OF DENMARK ENGINEERING EDUCATION Advanced Scientific and Technological Research and Development M. Sc.s App. 700/yr People App each day B. Sc.s App. 475/yr Knowledge gained through collaborative efforts, from scientific publications, conferences, International cooperation, etc. What goes in and what comes out? One small outlet represents the formation of new companies. As indicated on figure1, not many companies spin out directly from the university, and we do not envisage any significant expansion of this activity as the main objectives of the university is to educate tomorrows engineers and develop tomorrows technologies. Two considerations however prompt us to engage ourselves in the stimulation of entrepreneurial activities: we do believe that the university should have this outlet in order to help viable product concepts created in the scientific environments to a quick commercialisation, and we do believe that if we develop a tangible token of our sympathy with entrepreneurship, our students will adapt this attitude and engage themselves more readily in creating new companies instead of preparing themselves for a career as employees. Thus, apart from the direct influence on the spin-off activity, we expect our activities and courses to have an impact on the knowledge-based entrepreneurial activities five to ten years from now. The tangible part of our efforts is a business incubator, which we opened in From the start and up to now, some 20 companies have started in this facility. The direct job creation is about 50 jobs. From a modest tart, we hope to develop this business incubator into a real company-producing concept by expanding our market segment from university spin-outs to regional high-tech entrepreneurs and by expanding the number of perspective tenants to a level that will attract investors and business partners, who can help us 231

4 to create a fruitful environment for knowledge based entrepreneurs. Our partner in this project is Hoersholm Research Park. Together, we hope to develop a very interesting three-stage incubation concept as indicated on figure 2, page 2. In order to fully understand our engagement in the stimulation of our students' entrepreneurial spirit, two concerns must be kept in mind: first, entrepreneurial activities are considered much to low in Denmark and second, most high-tech entrepreneurs in our country are graduates from our university. This puts us in a very special position, which we try to exploit by offering our students a high-level entrepreneurial education as well as facilities, guidance and counseling to those ready to start on their own. These activities have brought us into contact with local and international industrial development programs and networks working for the creation of new companies. Information and experience from these sources together with our own reflections and observations form one of the basic points of this presentation: entrepreneurial education and regional industrial development programs must act concerted in order to obtain any significant results. Figure 2 The incubator concept 232

5 THE INNOVATION CENTRE at THE TECHNICAL UNIVERSITY OF DENMARK A three-stage approach to forming succesfull knowledge-based new companies: Spin offs from DTH DTH-dependent new firms ICT: 350 m² Up to 5 small spin offs To other facilities HOUSE OF INNOVATORS at Hoersholm Research Park 1450 m², fully equipped for knowledgebased companies HOERSHOLM RESEARCH PARK 100 Ha, 20 km north of User specified facilities for science-based companies and institutions. A working place for more than 1500 Concerted entrepreneurial education and industrial development programs. Significant results can be termed as more and better companies over a given period. More companies are a tangible result of increased entrepreneurial activities, which again are stimulated by a combination of improved economical conditions, adjusted industrial development programs and good entrepreneurial education at any level. Better companies express a higher rate of success and a higher rate of growth. Again, credit for this development must be given to changes in the general economical conditions, as well as appropriate development programs and good entrepreneurial education. This indicates that in a given economical environment, changes of quantitative and qualitative nature in the formation of new companies rely on the quality and activity of industrial development programs and entrepreneurial education. At this point, let us have a short look at industrial development programs: Jim Greenwood, Executive Director of Los Alamos Economic Development Corp, phrased it very well at the Seventh national Conference On Business Incubation, which was held in Milwaukee in April, this year. In Los Alamos they CARE for businesses. Care is an acronym, which stands for creation, attraction, retention and expansion of businesses. We agree with Mr. Greenwood in his way of phrasing what the society should do to develop it's industry. It also points out that entrepreneurial activities are only a part of the game. 233

6 Another great American, Dr. Kutzmetsky, Austin, Texas has given us a simple yet instructive model of what it takes to create a fertile environment for developing new knowledge-based companies. Dr. Kutzmetsky's principle is indicated on figure 3 together with a somewhat polemic model of the Danish entrepreneurial situation. Figure. 3 Dr. Kutzmetsky's model Knowledge-based Companies are created in a crossfield between Capital Enterprise Erhvervsliv INTELLECT Entrepreneurial invironment in Denmark Enterprise Capital Intellect According to Dr. Kutzmetsky, knowledge-based companies are created in a crossfield between capital, enterprise and intellect. This model ex-plains very well remarkable American phenomena such as Silicon Valley and Route 128. Correspondingly, more unknown regional achievements such as the development of Austin, Texas into one of the most enterprising business communities owe their success to the availability of capital and management-skills to highly creative and well educated people. We regret to admit, that in Denmark only few venture to start knowledge-based companies, and the rate-of-success is not remarkable. If we describe our environments according to Dr. Kutzmetsky's model, we find, that capital is not available until references on market potential and management skills can be produced. At the same time, it is hard to find experienced business people, ready to invest some of their time on the boards of new 234

7 companies. Add to this a general lack of interest in starting companies, particularly among well educated people, and you will recognize the picture in figure 3. We are now getting close to the point: From our side, we can strive for increasing entrepreneurial interest and competence among intellectually gifted and well educated young people. This will bring Intellect closer to Capital and Enterprise in Dr. Kutzmetsky's model. But a really efficient campaign for more entrepreneurship also requires efforts in order to move Capital and Enterprise closer to Intellect. This calls for private and public efforts within the frames of an industrial development program. Over the years, we have had a debate in Denmark on whether the low entrepreneurial activities were caused by a lack of seed capital or a defect in our education system. Each school had its' devotees with the lack-of-capital people as the largest group in numbers and influence. Four years ago, funds were made available to a large venture company together with the responsibility for changing the course. Recently, the company gave up early-stage financing owing to poor results, more or less coinciding with the appearance of entrepreneurial courses in higher education. This example of bad timing owes to the fact, that we have not yet developed a consensus of what it takes to increase the entrepreneurial activity. It takes concerted action: universities must provide high-level courses and support systems that create competence and engagement among those that have the personal gift and talent for starting a company. The industrial development programs must provide seed capital and management skills. If however, initiatives in both sectors are not balanced and coordinated, the result is either frustrated entrepreneurs or disappointed investors, but certainly not more and better companies. Assume now a well balanced and concerted program including seed capital, management skills and entrepreneurial education is implemented in an otherwise stable but unchanging industrial community. Soon, new growth-oriented companies start to develop under the guidance and supervision of experienced tutors and driven by young enthusiastic teams. They bring the latest technologies to the international marketplace, and their growth-rate is basically controlled by the inflow of net capital. Most of you will identify examples from your own regions. The drive and energy together with ample funding and skilled management makes such companies deadly competitors. Existing companies will either vanish or adapt to a new level of business competence, unless they are big enough to buy the newcomers. This example leads us to the first conclusion of this presentation: successful business creation depends on the availability of entrepreneurial education, seed capital and management skills: skills acquired from the education of entrepreneurs and skills provided by senior executives on the boards of the new companies. Altogether, the educational system can produce only part of what it takes to create new viable companies. The rest must be provided by private and public institutions and investors, as well as larger companies. All must work together within the framework of an industrial development program. The second conclusion is, that such coordinated programs will increase the creation of new growth oriented companies, operating at a high level of competence. This again will impress competence as a market regulator, which is basically sound. An important feature of such programs is, that competitiveness and profitability by intelligent use of resources is the driving force as opposed to programs that work by giving new companies special benefits. 235