Wednesday, June 06, 2018

Reading :: R&D Collaboration on Trial

R & D Collaboration on Trial: The Microelectronics and Computer Technology Corporation
By David V. Gibson and Everett M. Rogers

I've been studying entrepreneurship in Austin, so I picked up this 1994 book about MCC, "America's first major, for-profit R&D consortium," which was launched in 1982 and which arguably laid the foundations for Austin's current status as a technology hub (or "technopolis," a term we will discuss more in a moment). This book, written by IC2 senior research fellows David V. Gibson and Everett M. Rogers, uses archival materials and 9 years' worth of retrospective interviews to tell the story of this consortium from the viewpoints of leaders in technology, politics, and academia. The story ends well for Austin, although MCC itself struggled through much of its history and ceased operations in 2004, a decade after this book was published.

MCC was "the United States' first major, for-profit R&D consortium," launched "by a select group of U.S. computer executives to help save their industry from Japanese competition. They collaborated in planning, implementing, and funding MCC" (p.xv). It had rules: it did not seek US governmental funding and it did not allow foreign firms to join. It also skirted US antitrust law, at least until the 1984 National Cooperative Research Act was passed in reaction to it (p.xv). The book examines the lessons of this consortium, specifically in terms of forming such R&D alliances; understanding cross-organization technology transfer and commercialization; and public/private collaboration to develop jobs and capabilities (p.4).

To understand the need for MCC, we have to recall that in the early 1980s, the US technology industry was worried that Japanese tech companies—which cooperated closely via initiatives such as the VLSI Project—would overwhelm the capabilities of US firms (p.9). This fact worried not just the US tech industry but also the US federal government, which did not want its military technology to rely on foreign companies for "essential semiconductor and computer components" (p.10).

In fact, the authors examine various examples of research consortia, beginning with English research associations in 1917, then moving to Japanese consortia modeled on those associations in the 1950s, then small-scale US consortia and larger Japanese projects in the 1970s (p.14). They discuss MCC's formation in Chapter 2, but we'll rejoin the story in Ch.3, "MCC Comes to Texas."

MCC's site selection committee, headed by Admiral Bobby Inman (who is currently on faculty at the University of Texas), considered dozens of sites before narrowing them down to four: Raleigh-Durham, San Diego, Atlanta, and Austin. That was the order in which the cities were preferred at the beginning of the final selection process. But by the end of the process, a different order emerged: Austin first, then Atlanta, Raleigh-Durham, and finally San Diego (p.99). When MCC announced that it was coming to Austin, observers in the high-tech industry reacted in disbelief: it was nowhere near the top three universities in electronics and computer science research (Carnegie Mellon, MIT, Stanford) and it was perceived as a backwater (p.103).

The authors tell an instructive story about how the selection order changed and how Austin was eventually selected. But before they do, they discuss the notion of the technopolis:
The modern technopolis interactively links technology commercialization with public and private sectors to promote regional economic development and technology diversification. Four factors are fundamental in the development of a region as a technopolis: (1) the achievement of scientific preeminence in technology-based research, (2) the development of new technologies for emerging industries, (3) the attraction of major technology companies, and (4) the creation of home-grown technology companies. (p.100)
 Using this framework, the authors argue that Austin won out in large part "because of the planned-for excellence of its research universities in microelectronics research and graduate education, which coincided with MCC's research agenda" (p.105). Local and regional leaders, including business school dean George Kozmetsky, Governor Mark White, San Antonio mayor Henry Cisneros, and Ross Perot, coordinated closely to put together a package that involved endowing professorships in computer science and electrical engineering at UT (p.117). This was a good move: the proximity to a top research university was critical to the MCC site selection group (p.124), perhaps more critical than direct financial incentives for the consortium—although Texas offered these too:
However, what won for Texas was how its incentives were structured, which reflected how well the Texas leaders obtained and used information about MCC. The Texas incentive package came largely from the private sector, statewide, not from state and local taxes, and the incentives were structured so as to be an investment in the future of Texas as a state, its universities, and business development rather than funds given to MCC. (p.148)
About a third of the incentives involved building MCC a building, owned by the UT system, on land belonging to UT (p.148). Others included $15m for endowed UT positions in electrical engineering and computer science; 30 new faculty positions in microelectronics and computer science; and $2m for purchasing new equipment for research and teaching in these areas (p.149). Texas A&M made similar commitments, but with less specificity (p.150). "In the eyes of MCC's site visitors, the university component of the Texas incentive represented a brilliant strategy" — characterized as "'what we can do together with MCC to improve university research in microelectronics'" (p.158).

Critically, UT "agreed to triple the size of its microelectronics research program and establish 30 new endowed professorships in electrical engineering and computer science" via a two-week process (pp.158-159). This is perhaps the biggest miracle of all, if you are familiar with the inner workings of universities, and it was (obviously) accomplished by ignoring typical decision-making procedures (p.159).

Texas wanted MCC and its leaders put in the effort, did the homework, and talked to the right people in order to make it happen. As the authors point out, acquiring MCC set the conditions for Austin to become a technopolis. Specifically, it built the educational infrastructure for Austin's technology focus; attracted companies and people working in technology; worked with the Austin Technology Incubator (established in 1989; see p.271) to spin off new technology companies; and set priorities for keeping such companies.

In Ch.5, the authors go on to discuss the necessity and problems of technology transfer, which they characterize (rightly, in my view) as a type of communication:
There is usually agreement ... that (1) technology is not just a "thing," and (2) transfer is a profoundly human endeavor. Essentially, "technology" is information that is put to use in order to accomplish some task, the knowledge of how to do something. "Transfer" is the movement of technology via some channel from one individual or organization to another. So technology transfer involves the application of knowledge, putting a tool to use.
The transfer of technology is a particularly difficult type of communication, in that it often requires collaborative activity between two or more individuals or functional units that are separated by a range of barriers. ... we can think of technology transfer as an interactive process with a great deal of back-and-forth exchange among individuals over an extended period of time. (p.333)
The authors characterize technology transfer as having four levels: quality R&D; acceptance; implementation; and application (p.335).

Skipping a bit, let's get to an aside about the establishment of the Austin Technology Incubator (ATI). "ATI had been formed in 1989 as an alliance of public and private interests to nurture technology-based companies for regionally based job growth and economic development. The IC2 Institute, The University of Texas at Austin, and the Institute's director, George Kozmetsky, had launched ATI as an experiment in business, academic, and government collaboration." (pp.413-414). In 1989,
the idea of a regionally based technology incubator was being championed by Dr. George Kozmetsky. To Kozmetsky, such an incubator would facilitate public/private collaboration at the regional level and it would spur economic development, fill vacant office space, train entrepreneurs, and create high-value jobs. The facility, which came to be called the Austin Technology Incubator (ATI), would act as a 'lightening rod,' linking talent, technology, capital, and business know-how to market needs. (p.451). 
The authors also give a thumbnail history of IC2, which Kozmetsky founded in 1977, while still dean of the business school (p.453).

Overall, the book is just what I was looking for. In providing a history of MCC, it also provides a history of Austin's emergence as a technopolis, including backgrounds for institutions with which I am working—IC2, ATI—and greater insights into people who continue to be associated with them. It covers relevant subjects, such as technology transfer and infrastructure. And it's well told. If you're interested in technology, entrepreneurship, civic development, or Austin, definitely pick it up.

As a side note, this book made me think more about the question of cities competing to be sites for companies. Austin is currently one of the cities competing to be Amazon's second headquarters, and critics focus on the question of whether Amazon's potential contribution to the city actually outweighs the city's incentive package. But these deals have broader effects than raw revenue. Structured well—like the MCC deal—these deals can be realized in infrastructure-building that sets the city up for long-term success far beyond that of an individual company. After all, MCC closed its doors in 2004, but Austin remains a technopolis.