5

Approaches to Enhance ONR Technology Transfer in Ocean Science and Technology

To achieve satisfactory levels of technology transfer, four approaches should be considered: (1) contact, two-way communication, and interactive participation between the developer and the potential user of the technology; (2) a new organizational mechanism for technology transfer; (3) incentives for implementing technology transfer, in both the developer community and the user community; and (4) metrics for evaluating the success of the effort. Discussion of these options, while not meant to be exhaustive, is included to provide suggestions for enhancing technology transfer efforts at the Office of Naval Research (ONR).

CONTACT, COMMUNICATION, AND PARTICIPATION WITH THE USER COMMUNITY

ONR has historically relied on informal procedures to transfer technology to academic and commercial markets. This has normally been accomplished by participation of ONR-supported scientists in professional meetings and forums. Given the diffuse nature of the ocean science and engineering community, this process, although effective at a small scale, is not necessarily efficient. ONR could considerably strengthen this vehicle for technology transfer by sponsoring special sessions on alternative uses of technology at future professional meetings. ONR might also sponsor special forums where technology transfer opportunities are identified and described in detail. These forums could be held in conjunction with ocean technology meetings (e.g., Offshore Technology Conference, meetings sponsored by the Marine Technology Society and/or Institute of Electrical



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Expanding the Uses of Naval Ocean Science and Technology 5 Approaches to Enhance ONR Technology Transfer in Ocean Science and Technology To achieve satisfactory levels of technology transfer, four approaches should be considered: (1) contact, two-way communication, and interactive participation between the developer and the potential user of the technology; (2) a new organizational mechanism for technology transfer; (3) incentives for implementing technology transfer, in both the developer community and the user community; and (4) metrics for evaluating the success of the effort. Discussion of these options, while not meant to be exhaustive, is included to provide suggestions for enhancing technology transfer efforts at the Office of Naval Research (ONR). CONTACT, COMMUNICATION, AND PARTICIPATION WITH THE USER COMMUNITY ONR has historically relied on informal procedures to transfer technology to academic and commercial markets. This has normally been accomplished by participation of ONR-supported scientists in professional meetings and forums. Given the diffuse nature of the ocean science and engineering community, this process, although effective at a small scale, is not necessarily efficient. ONR could considerably strengthen this vehicle for technology transfer by sponsoring special sessions on alternative uses of technology at future professional meetings. ONR might also sponsor special forums where technology transfer opportunities are identified and described in detail. These forums could be held in conjunction with ocean technology meetings (e.g., Offshore Technology Conference, meetings sponsored by the Marine Technology Society and/or Institute of Electrical

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Expanding the Uses of Naval Ocean Science and Technology and Electronic Engineers) and ONR-supported scientists should be encouraged to participate. ONR could foster technology transfer by active participation in the evolving number of centers and collaborative organizations in the United States. The National Science Foundation, for example, has a well-developed program that brings individuals from academia, government laboratories, and private industry together to establish closer working relationships and transfer technology. These R&D Centers have been formed around disciplinary topics (e.g., instrumentation, data analysis, manufacturing, advanced materials) and also with broad topic coverage (e.g., Ocean Technology Center at the University of Rhode Island). In marine research and business development, as in other areas of modern society, electronic communications networks have become a common tool to enhance access to people, products, services, data, and information. An important goal of providing this access is efficient transfer of knowledge. To ensure adequate transfer, organizations measure performance of the electronic access system against customer (user) satisfaction and take steps to improve that performance. ONR has made great strides in making much of the information about ONR programs and contact relationships readily available on the Internet. An example is the “ONR Home Page” on FEDIX (Federal Information Exchange). ONR has three major databases — one for each of the three areas of federally funded R&D: 6.1 (basic and applied research), 6.2 (exploratory development), and 6.3 (advanced development). The data, however, are presented in a compartmentalized, topical directory (i.e., the databases are not interactive with each other). Electronic access to each database currently requires unique knowledge and skills, creating a barrier to effective use. Such obscurity serves the interests of ONR security but impedes effective transfer of technology and knowledge. Creating a coherent, user-friendly system of data transmission (with appropriate security measures) should be the prime objective of any ONR technology outreach program. Such a system should have not only listings but also a browse capability and a help function. Customers who are unsophisticated with computer systems should still be able to interact productively with ONR’s technology program. The discussion here applies not only to contacting the Office of Research and Technology Application (ORTA) and developing Cooperative Research and Development Agreements (CRDAs), for example, but also to accessing geophysical data products such as sea surface temperature and ocean circulation models. A process should be put in place that not only measures the number of successful inquiries to the database but also provides a measure of customer satisfaction. Where matters of legitimate data security exist, the declassification systems for academic access should be extended to the private sector (subject to the same qualifications such protection imposes on academia).

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Expanding the Uses of Naval Ocean Science and Technology A POTENTIAL NEW ORGANIZATIONAL MECHANISM A private corporation, financed either (1) under an Advanced Research Projects Agency (ARPA) cooperative agreement in the form of a grant or loan, or (2) directly from ONR, could provide a timely and cost-effective interchange of technology and knowledge between ONR and private-sector companies and venture capitalists. In this report, such a company will be referred to as a Technology Transfer Corporation (TTC). The TTC is presented only as an example of the type of potential innovative solution ONR may wish to consider in an effort to increase technology transfer. Principles of Operation Cost sharing between ARPA and TTC could be arranged such that ARPA provides half the working capital in the form of a grant and half in a loan subject to repayment. The loan portion might be a non-interest-bearing, three-year loan, unsecured, with the possibility of early repayment without penalty. Repayment would be from TTC operational profit after taxes or by allocation of values inherent in equity deals (see below) or royalty income streams, or both. TTC gross income would arise from nominal service fees and participation in joint ventures distribution and royalty income. Some type of sliding-scale service fee, perhaps proportionate to the capital of the inquiring party and based on cost plus 10 percent, would encourage serious inquiry. The engine of any such enterprise is a system of incentives that encourage the creation of something new from the existing “raw material ” represented by ONR technology and private-sector need. Incentive Structure ONR. Successful implementation of a new organizational mechanism such as TTC would require active participation by ONR. There are several incentives for ONR participation: Increased license and royalty fees (per Public Law 99-502, Appendix C) Equity and dividend participation in third-party joint ventures Fees for increased use of ONR facilities Restoration to ONR of $1.8 million in budgeted funds resulting from selective transfer of responsibilities now performed in ONR 31, ONR 32, ONR 33, and ONR 36 (David Rossi, ONR, personal communication, 1995) Active exchange of knowledge and technology with partners in the private sector. Principal investigators (PIs) and ONR project manag-

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Expanding the Uses of Naval Ocean Science and Technology ers should be an integral part of technology transfer accomplished through a TTC or any other mechanism. ARPA. Incentives for ARPA to participate include effective performance of its mandated mission, broadened reach into currently inaccessible areas of the private sector, and the possibility that the 50 percent grant will be recovered in the form of cash or value repayment. Private sector. Incentives for private sector companies and venture capitalists would include the profit potential. Venture capitalists could be included among prospective ONR partners in the formation of start-up enterprises to capitalize on yet ill-defined applications of ONR technology in the private sector. TTC. Standard entrepreneurial profit would exist as an incentive for any potential TTC. Start-up capital would be only half debt; equity would be shared with ONR on joint ventures; profit potential would be tied directly to performance in the transfer of knowledge and technology. Academia. Both private and public CRDAs and TRPs would be largely outside the exclusivity of the TTC; therefore, the approximately $400 million of current ONR awards to 3,000-4,000 PIs for 6.1 (basic and applied research) projects would be largely unaffected. The same would apply for SBIRs and CRDAs. The foregoing TTC profile is intended only as an example of the type of innovative program ONR may wish to consider; consequently, details are absent from its description. The creation or implementation of any new organizational mechanism should include the establishment of clear program goals and relevant metrics to ensure that any intermediary entity truly facilitates rather than impedes technology transfer. The suggestion reflects the conviction, however, that the current status of ONR technology transfer cannot be remedied by minor reforms alone. What is needed is a basic, organizational course change. The private sector is the best source of information on what it needs, at what cost, and on what timetable. Creating a TTC is one way for that need to be addressed. ONR should explore various options to promote technology transfer, including changes in organizational structure. In addition, small business should be an important target of ONR technology transfer efforts, as smaller companies have the organizational flexibility for rapid assimilation and use of emerging technology (Berkowitz, 1994). INCENTIVES The incentives cited for a TTC are equally applicable to existing ONR technology transfer programs. Other programs should be set up to provide incentives to specific groups to promote technology transfer. Some suggested incentive plans for each major participant in marine research and development are provided below.

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Expanding the Uses of Naval Ocean Science and Technology ONR Scientists and Engineers—ONR should set aside an inviolate portion of its research funding to focus on the transfer of technology to the nonmilitary sector. Several key technology transfer opportunities could be identified and grants awarded to ONR researchers working in cooperation with a commercial firm to produce a commercial product, process, or service. Cost sharing from the commercial firm might be required as a measure of its commitment and financial capability to transfer the product or service to the marketplace. Such an award system could readily be incorporated into the TTC concept discussed above. Other incentives in the form of awards or recognition could be used to show the value of technology transfer. These could take the form of financial awards or simple recognition by higher management of successful technology transfer efforts within a research program. Although there exists a policy designed to reward DOD employees for domestic technology transfer (DOD, 1988) and a program to carry out that policy (see Chapter 3), this program appears to be vastly under used. Evidence of successful technology transfer could be made part of the performance evaluation of ONR employees at all levels. This would encourage employees to consider technology transfer as a vital part of their professional responsibilities. Academic Scientists and Engineers Supported by ONR—ONR sponsors approximately 4,000 basic and applied research projects at an average of about $100,000 per project. The “typical” project includes a PI and a graduate student (or a postdoctoral researcher). While the following suggestions would not appeal to all PIs, some would use it to enhance technology transfer. If the PI is able to arrange industrial cosponsorship for an ONR-sponsored project, ONR could underwrite the indirect cost for up to $30,000 of the industrially funded direct cost (up to, perhaps, $15,000 for each year of the ONR-sponsored project). This added cost to ONR would enable the cosponsoring industry to “buy into” a highly leveraged project and help ensure that the focus of the research involves the company ’s commercial needs and product interests. ONR could also seek an option exercisable at a later stage of the research when the project is more mature or has become more attractive to the potential commercial sponsor, although a lack of early involvement by ONR may hinder later success. The PIs obviously benefit by increasing their research output potential (e.g., an additional graduate student can be supported). The advantage to ONR is essentially the same: increased technology transfer (at the local researcher level) and greater quantity and quality of research (from a commercial standpoint). The students involved benefit by gaining an understanding of both the Navy’s scientific interests and the company’s (market-driven) interests. METRICS Although ONR supports many efforts in technology transfer, it is currently

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Expanding the Uses of Naval Ocean Science and Technology difficult or impossible to determine the effectiveness of the various approaches and programs. A clear set of standards must exist for evaluation of all technology transfer programs, and these metrics should be incorporated into the performance evaluations of key personnel. An effort should be made by the Chief of Naval Research to identify and state what standards will be used. An interagency working group (including members from the Army, Navy, and Air Force, as well as the National Institutes of Health and the Department of Agriculture) exists, in part, to define technology transfer metrics. This effort is still in progress, and the metrics have not yet been identified. The delineation of clear metrics will be an important step toward adequately measuring the success of technology transfer programs and identifying areas where improvement is necessary.