Putting the ‘U’ in EntrepreneUrship

• By Duncan Moore
• 03/01/13

For two decades the city of Rochester, NY, has been preparing for an era where large industrial manufacturing companies — such as Kodak, Xerox, and B+L — no longer dominate the region’s economy. Twenty-five years ago, 60 percent of Rochester’s workforce drew paychecks from those three firms. Today they employ just six percent, according to a recent New York Times article.

But the loss of tens of thousands of manufacturing jobs hasn’t devastated the region. In fact, despite relatively flat population growth, Rochester’s workforce is larger today — with Kodak employing fewer than 7,000 people — than it was when Kodak employed more than 62,000 people. How did this happen? Much of the reason is due to public-private partnerships that work with federal, state, and local governments and academics to train entrepreneurs and create new business ventures. Since 1996, Rochester has launched 38 start-ups based on University of Rochester technologies alone. The University also partners with industry — both locally and beyond — to help them meet their R&D needs.

Never the Twain Shall Meet … Until Now

In the past, when one thought about scrappy business upstarts and treasured colleges and universities, there was not much the two were felt to have in common. If anything, they were considered opposites: one trying to survive; the other continuing to thrive.

Increasing numbers of colleges and universities, however, are adopting more of a change-agent, upstart mentality. Schools such as the University of Rochester, Duke University, and Case Western Reserve University are prime examples of institutions that are finding ways to circumvent the go-slow approach that long has characterized American higher education. The processes and technologies that these institutions develop find their ways into the marketplace as business ventures. And the creation of these technologies leads universities to beef up their own hiring.

Why this “foot-on-the-gas” mentality? It has to do with culture changes and the conscious adoption of a philosophy that knowledge-based innovation drives the economy. It’s the kind of work that has been happening, to much acclaim, in the research triangle area of North Carolina for years. The movement, however, is equally vibrant in older industrial cities such as Rochester and Cleveland.

In 2009 alone, Rochester, Duke, and Case Western Reserve together accounted for more than $1B in federal research funding which has fueled local growth beyond the campus gates. The success of these schools in winning federal research grants puts each into the top 30 schools for federal research dollars in 2009, the last year for which complete figures are available.

Adding to Positive Job Numbers

Duke and Rochester are employment leaders in their communities. Duke, the largest employer in Durham, employs 19,755 residents with salaries and benefits totaling $931M, according to a 2007 economic impact study. A 2012 study showed the University of Rochester is responsible for 47,000 jobs in its region, directly and indirectly. This reliance for job growth on universities is becoming a national trend.

In 2005, headlines touted that the University of Georgia system was responsible for 2.8 percent of that state’s entire workforce. Internal studies at Loyola University in Chicago said theUniversity generated nearly $1.04B in economic impact and created or sustained nearly 15,000 jobs in the Chicago area in 2004. Nine out of the top 100 companies in the state of Ohio are universities, which employ more than 70,000 workers, according to a 2012 study.

Due to idea-based growth, many colleges and universities are expanding facilities, too.

Rochester now has more than two dozen new construction, addition, renovation, or improvement projects in the pipeline with a price tag of close to $400M. These projects range from a $56M cancer center expansion to a nearly $100M College Town project that Rochester broke ground on in November. Officials say that College Town, a 16-acre mixed-use redevelopment project, will alone create 180 jobs over three years. The State of New York has awarded $10M to the University to help launch the Rochester Health Sciences Center for Computational Innovation, a $100M project that combines resources from the University of Rochester, IBM, and the state of New York. The Center for Governmental Research (CGR) estimates that when the Health Sciences Center achieves full capacity it will generate 880 new jobs and more than $49M in additional labor.

“Bucking the trends observed by most firms and institutions during the recent national recession and subsequent slow recovery, the University has continued to add jobs and research capacity that position it for present and future impact locally, regionally, and nationally,” says Joel Seligman, president of the University of Rochester.

Adapting and Leading by Example

There is irony in the fact that while newspaper headlines are littered with questions of the value of a college education, it is inescapable that knowledge-based innovation drives the economy. A recent study conducted by the Georgetown University Center on Education and Workforce stated that by 2018, nearly two-thirds of new job openings will require some college education.

Increasingly, colleges and universities are adapting to their new responsibilities as economic engines. The creation and transfer of knowledge is still the paramount mission. Institutional leaders, however, particularly at the more prominent research universities, understand that additional expectations have been placed upon them.

As President Seligman has told me, no longer can institutions of higher learning sit back and only offer theories for success. It will be the responsibility of colleges and universities to lead by example.