A University of Hawai'i Feature Article
Printed in Malamalama Magazine, July 2002

UH as an Economic Player, A conversation

Malamalama invited community members known for their keen observations and thoughtful views to join UH experts in an informal and open discussion on the university’s role in the state’s economy.

Spring 2002

NEUTRAL GROUND

McClain: What is the hope and promise of the University of Hawai'i in the economic life of the state?

Coppa: To me, the university is the neutral ground for all the initiatives that we’ve heard about the last 10 or 12 years—we need economic diversification, we need better education, we need all these things. A lot of people have come up with really creative ideas, but there really never has been a foundation, a place of neutrality. The university is that place where these great thoughts could be developed and distributed to the vast majority of the state. It is the neutral ground and also has, the for lack of a better word, the power or the strength to take some of those ideas and make them reality.

McClain: That’s an interesting use of words—neutral, foundation. I want to come back to that point because it’s an intriguing one. Pat, in your work where does the university show up in so far as what it can and does contribute to the economic life of the state?

RESPONSIVE AND TIMELY

Loui: I think there are great expectations, particularly post autonomy. There’s an expectation that the university is going to lead the change in terms of preparing our future labor force for a new era of global business. I think there’s a great deal of excitement about the technology initiatives—the cloning of the mice, the health and wellness center, overall commercialization of technology—but there also is concern that time is moving. The sense is that the world is moving faster than we are and Hawai'i has to catch up. I would hope that the university can help educate this and the next generation on the need to continue to change, to respond, to innovate. It doesn’t mean necessarily leaving our traditions but integrating our historic traditions and culture and the best of Hawai'i into a state that is more responsive, more timely.

McClain: Richard, on the point about the technology being generated, land-grant universities are expected to educate the labor force of the state in which they’re located. You’ve had a chance to evaluate where the university is on generating new technology. What are some of the things that we do well in this area and what are some of the areas in which we need in improve?

Cox: The university has obvious strengths in earth and ocean sciences, travel industry management, genetic engineering, tropical agriculture and some other areas. What we are trying to do is promote the idea that this is a good place for technology opportunity, business opportunity, and be more proactive in promoting technologies to the marketplace, letting people at least have the opportunity to evaluate them. If we can at least alert the business community to the opportunities that are here, we have an opportunity to license those, whether it’s to a spin off or an existing business. The mandate to my staff is: let’s do licenses. We’re not really focused on how much money those are making for now; we’re trying to get the technologies into the marketplace.

McClain: So that the membrane between the university and the marketplace can be a little bit more porous?

Cox: That’s correct.

ECONOMIC ENGINE?

McClain: Let me go to the professional economists in the group. From your perspectives, where does the university stack up as an engine for our economy?

Imada-Iboshi: Universities provide the ideas that form the basis of growth. I don’t know if "engine" is the best word. I would see it more as that foundation from which everything can grow. I think of it more as the track, or something that determines how much knowledge is disseminated and in what direction the economy can grow. I see the university as an intellectual as well as a cultural stimulus. It could help push us forward in ways that are more leading edge and broader based. I think it’s difficult for the university in and of itself to be the driver.

McClain: This notion of a track or foundation certainly feeds into what Pat was saying about getting us to move faster. Carl, as head of the UH economic research organization, how does this resonate with you?

Bonham: Look at the words already used—autonomy, foundation, neutral. That is a key issue in our research, that we are the neutral analysis, whether it’s a policy issue or an economic forecast. It is also related to whether UH is an engine or more of a well spring, a foundation of knowledge and of information. OK, so UH is a well spring of new ideas and of bright people being bought together and of well-trained students and they’re doing great things. Now we have a duty, an obligation to facilitate the transfer of that information to the general community and to the business community. That’s more of an administrative issue. Academicians are sitting in their ivory towers and they’re having their great thoughts, but then there has to be this administration that’s moving really fast. The functioning of the university needs to move much, much more rapidly than it has in the past so that things can get done, grants can get processed and people can do their great work. Autonomy is clearly helping. There are still lots of things that can be improved—the way we process grants, how to get the red tape finished to get the research going.

Let me come back to the engine issue. The way universities have acted as engines in the past has been somewhat accidental. It’s not that someone said, "You go do this," or a politician said, "We’re going to fund millions of dollars for a new building so that you guys can do great things and push the economy forward." Rather it’s that you make a university where everybody wants to come because it’s a super university in a great place, where you can be around a lot of really bright people working really hard. And then you get this energy going, and then you can’t help but create good ideas.

McClain: So it’s not so linear?

Bonham: No, it can’t be linear. We’re academics; we go in all different directions.

Cox: Recent studies show that economic growth occurs primarily around clusters. A major university is a vital component of clusters, so even though the university isn’t pulling the rest of the economy along, it can be a critical component.

McClain: Bruce, tell us a little bit about UH Connections.

Coppa: Connections is just what it says, it is connecting the university and the business community and venture capitalists to move research into reality. Let’s look at the history. We got a new president who came in who now has the luxury of autonomy (and you’re right, he needs a lot more). When we didn’t have it, it was like being in the dark ages. Now we have it, we’ve got a medical school geared to go in bio. Connections is the tool that’s going to make it happen. It is connecting the landowners, the developers, the venture capitalists with this concept of biotechnology. Speed is the thing that is going to make this happen. We have a president come, and in not even a year we’re going to have this building being built in Kaka'ako—that takes autonomy. It takes leadership to say we’ve got to do it; it takes the business community coming to the table, venture capitalists. We’re going to see this thing flourish. Biotech is just one insight. We should be doing that with agriculture, astronomy, oceanography …

RISK TAKERS NEEDED

Loui: In order to capitalize on the knowledge base of the university we need risk takers in this community. The business school is doing a lot in terms of entrepreneurship, but we need people who can see a vision and are willing to take a risk. It’s a given that, at best, two out of 10 new products succeed. Our culture tends to be conservative—you know the expression "no tantaran." You don’t want to be the nail that sticks up too high. You’re taught to not do self promotion, to stay low key. I speak as a Kaimuki High School graduate. But all of this means that even if you see opportunities and even if the university is producing a terrific technology-based opportunities for new businesses, someone has to see it in an opportunistic way and leverage it. Sometimes I feel that a real problem in our community is this reluctance to take risks. It starts at the legislature, spreads through the business community. I often hear students say, "I want to have my own business, I want to be a one-person consultant because if it doesn’t work out, it’s just me," Instead of in the old days when people would say, "I want to build a company, I want to hire people. I want to create jobs." Is that a lost sense of mission among entrepreneurs these days?

McClain: I’m not so sure that today’s students are so risk averse.

Bonham: These are the people who are trading stocks at 4 a.m. before they came to class.

Loui: We need to mainstream them into the business

McClain: Information technology has made all this possible. I find our students at the MBA level, our undergraduates as well, welcome the opportunity to take a chance. I do think our community needs to go further in making it acceptable to fail. The concept of learning through failure is well accepted in many parts of the world and needs to be better accepted in Hawai'i.

Loui: That may require some cultural change. For many of our Asian societies, it is not just an individual failure and a learning experience, it’s an embarrassment to the broader family in a sense.

Imada-Iboshi: I agree with your point, but it’s a tough one to tackle.

McClain: Business plan completion winners from 12 leading Asian business schools came here for Asia Moot Corp., the super bowl of business plan competitions. These people, in their 20s, brought fascinating business plans, plans that are going to give people in wireless and biotech areas hot consumer products. They’re going to make some waves internationally. Folks coming out of completely Asian cultures seem to be very global, and they don’t seem to have lost their culture. I guess what I’m trying to say is if it can occur in India, Singapore, Hong Kong and Korea, it can occur here.

Imada-Iboshi: If you talk to those 20-somethings, they really have a different mindset. I have some employees in their 20s and they love challenge, they can’t stand the status quo. It’s exciting for us. In Hawai'i, we’ve seen the increase in bankruptcy; part of it is the poor economy, but I also think there is acceptance that you do what you have to do.

Coppa: Are those risk takers staying in Hawai'i? We’re seeing this in students and inside the university. What Pat and I see is in the trenches; I don’t see a lot of it. Maybe the opportunities are not enough. We’ve got to develop the biotechnologies and oceanography because that’s where those challenges, those risks are.

McClain: It is about removing frictions in order to make it attractive to stay here. I have an alumnus who went to the Bay area right after graduation in ’88 or ’89 who recently sold the fourth firm he started for $100 million dollars. He said he migrated to the valley because there were no friction there.

Bonham: We’re talking about societal issues and policy issues. The university can have some impact through research on policy and social issues, but doing research on biotech isn’t going to change that friction or create situations where businesses can operate here, where people want to stay here. I went to the University of Texas to get my PhD. Austin is one of those places where you have a booming economy, notwithstanding the collapse of the oil prices. The reason is you have this excellent university in a wonderful place to live. People come there and never want to leave because it’s a great environment—lot’s of things to do and they can make a living. Look at all the companies that are selling computer components—they are all out of Austin or in Berkeley because people went to school and didn’t want to leave so they created an opportunity for themselves. The ability to create that opportunity doesn’t so much come from the university as it does from the society and the policies in place.

Coppa: We’re starting to see some of those molds break, but you’re right—at the end of the day, it’s got to be attractive to someone who wants to come here for ocean science and yet know that there’s a business out there that wants him or her.

BRANDING AND LICENSING

Loui: I think the university can be more active. I bet we have no problems getting astronomers who want to get on Mauna Kea or biomed with the cloning and the work of the team there. We need to go out and create the brand for the university so that there is brand equity in the university that we don’t have to explain—that we have the best telescopes, that we have the foremost cloning team—so that when you say "University of Hawai'i" these brand associations are triggered immediately. That will help attract people as well as retain them. Sometimes we get into the mode to of trying to justify or defend the university; maybe we need to stop talking amongst ourselves and talk to the target markets of businesses and industries around the world. Going back to Dick’s point about clusters, we need to talk to targeted markets, target messages to clusters.

McClain: Dick, take us through the nuts and bolts of getting technology from inside the university out into the community.

Cox: We have four licensing teams. Each team leader is responsible for technologies in an assigned area, responsible for alerting faculty to the obligation and opportunity they have to disclose their technologies. It is an opportunity for them to realize some personal gain as well as to benefit the university. People don’t buy science, what they buy are the benefits that science provides, so we want to talk about how this science can be turned into benefits that consumers will be willing to purchase or applications that can be used in industry. From that point, we explore patent protection in those areas and the market. We begin to do a kind of economic analysis. Concurrent with that, we’re identifying the major players and begin to contact them and promote our technology. Our job is to act as that membrane, the liaison, at least get the conversation started. Once the conversation starts, we pretty much step out of the way and let the company scientists talk to the university scientists. Once the company scientists have convinced their management that the technology is worthwhile, we step back in to talk at the managerial level about what the terms of the deal are.

McClain: How many of them occur?

Cox: In 2001 we did about 10. This year we’ll do about the same. I’d like to see that increase. I think that’s where the venture capitalists want to be—at ground zero bringing in people who are the risk takers.

McClain: I should mention a couple of other entities. HiBEAM, a business accelerator that is a spin-off of UH Connections, is accelerating four or five high tech companies. Also, Rob Robinson, long-time professor at Harvard Business School recently hired into the Weinman Chair, has started the UH Angels network. Before you get to the venture capitalists you have to have the angels. Pearl, I know you and Bruce are involved in the University/Community Partnership. Talk a little bit about how the partnership is functioning and what it is doing.

Imada-Iboshi: One of the first things we did was a listening project to get an idea of what the community viewed as the university’s problems and its strengths and to get the UH community, administration, faculty and students together with the business and general community to discuss some specific issues. Autonomy was one of the things we as a committee really pushed forward. Other specific projects haven’t exactly come through, like beautifying the university and trying to push those things that bring the community in. The focus has shifted with Dobelle coming in. The emphasis now is on two areas—helping bring together this whole concept of a college town and looking at undergraduate education and how the DOE and UH need to fit together better. I think the key is that you have people from the university and people who are very interested in the university and well placed in the community at the same table, where they can discuss very frankly where things need to move and look specifically at how to move them.

K-12 EDUCATION

McClain: Forty percent of the students in the business school are first-time college attendees in their families. About 85 percent of our undergraduates and 70 percent of our MBAs are from Hawai'i, so the state Department of Education is clearly a feeder for us. Creating a seamless educational system that has good leadership is certainly in the university’s and community’s best interest. We brought in a program called GEAR UP through a $10 million federal grant for early awareness and readiness for undergraduate programs in middle schools with high enrollment in the federal free school lunch program. It makes students and their parents aware of college as an option and sets aside $5 million in scholarship funds. What else should the university be doing?

Loui: The sense that Hawai'i residents have is that basic education is insufficient. There’s a high degree of concern across the state that basic reading skills, writing skills, math skills are not where they need to be, and that without these, higher education is not possible. I think the perception that we don’t have high enough quality in our basic education is also leading to a concern in pocket communities—the Hawaiian community, and Filipino immigrant community, for example—that they will be left behind when it comes to technology. There is a sense that technology requires a little more self learning and parents understand this. If my child can’t read, can’t write and can’t do math, they will be left behind. I think we need to start lower in this as well.

Bonham: We have elementary schools that are pushing children through who can’t read and they don’t have the money to pay for remedial education. I have a hard time seeing the university as an engine for fixing the DOE; maybe I’m missing something…

Coppa: One of the things that come out of the partnership group is the issue of the principals. I think the university can play a big part in training. What’s happening is (we find this in construction a lot) we take a carpenter who is very skilled, very knowledgeable, has all the reading and math skills and we make them a superintendent and then a project manager. It worked very well in the old days. But what you’re finding today is that, as much as you think you can learn on the job, you have to have basic management skills, some understanding of people skills. I think the principals are the same—we’re taking teachers and saying, "You’re now the manager of a thousand kids." I think the university can offer training in that regard.

Bonham: You’re a 100 percent correct. If you ask any teacher in DOE what makes this school good and that school not so good, it’s the principal, always the principal. One of the things that needs to be taught at UH is how do you get around all the inane rules put in your face.

Coppa: I think they are going to be forced to change. It’s going to be slow, but as long as the people of Hawai'i are concerned about lower education, things will have to change.

Imada-Iboshi: One of the things we discussed in our partnership group is the way that our principals are being educated. It’s almost impossible to come from outside and be a principal, even if you have all of the skills, even if you take the UH classes. We are if not the only state, one of the very, very few that actually has a government agency, in effect, operating our K–12 educational system. That brings with it some of the policy issues that we’ve been discussing, where the agency is perhaps less an advocate for the children and parents than the protector of educational funds. We put up barriers, the checks and balances.

McClain: What it suggests, as in many other areas, is that the university can be that neutral place that says: Hey, here’s some information, here’s best practice and this is something that needs to be considered by people who care about various issues, including public education.

Loui: Can I go a step further? Can the university also propose measurable ways to assess best practice? I think we all can agree on what those best practices are going to be, but once they’re adopted we entrust the individual to implement then. We need to put measurements in place as well.

Coppa: Autonomy is doing great things here at the university—maybe not as fast as we want, but things are changing. Maybe this can be the same model we should start entertaining for DOE.

AUTONOMY

Bonham: I want to get back to autonomy as well because I see a real change on campus. A lot of what we’re seeing inside seems to be a direct result of the new president and the attitude change that seems to be occurring, and it happened almost instantaneously because all of a sudden we started hearing good things about the university and about the faculty. In my assessment it was a very rapid change.

McClain: If you recall one of the very first things that UH President Dobelle said is that he’s never been failed by an empowered faculty. The style of this administration has been very different, very transparent and it’s been very fast.

Bonham: The issue that I want to raise is the next step in autonomy, because we don’t have autonomy yet, not the way you have it in university systems around the country where you have a governing board that is given a budget and allocates it to the different schools in the system and the schools decide how to spend the money. That’s the California system, the Texas system. What we have is some autonomy, which is good. For me the next step is what will make it possible for the university to really become a great center.

McClain: Closing comment—one or two things you want to leave our readership with.

DIVERSIFY REVENUES

Imada-Iboshi: You need at least two things. UH Partnership discussed the composition of the governing board, that other places you have a judicial selection process and there are some best practices that would fit for that. I think that’s a difficult but probably a necessary thing in the long run. Second is a change in the mindset of the university on revenues. There needs to be more revenue generation beyond tuition, beyond Rainbowtique and football games. I think there’s so much land available from the university, it needs to make better use of the assets that it has. For many universities, a lot of their funding comes from land that they lease or use in other ways. I think revenues from licensing will make a big difference. The state will need to fund the university, but throughout the nation we see state funding reduced as a share of university budgets. The university itself as part of this autonomy needs to take a much more active role in terms of building revenues.

Cox: I close with the idea of promoting the university as a major component of the drive for diversified economy. I hope the university—and I see signs of this and think that it will continue—looks for areas where we can be excellent and focus on those. By doing so it will attract resources that will be disbursed into the economy and will benefit the state as well.

RAISING THE BAR

Bonham: The number one thing that the university needs to do is be excellent across the board. We’re going to go for niche areas, but one focus is now on undergraduate education in general. Making this a university where local students, students from California, from Asia want to come to go to school as a first or second choice is crucial, so making this an excellent university for liberal arts education as well as for space, biotech and so on is a major goal. Then, just run the management well. That’s all you have to do: raise the bar and run UH well.

Loui: I put it in a more marketing-oriented perspective since that’s where I come from. I hope UH can become one of the great brands not only for the academic community and residents but also the global business community. There should be an immediate association, what we call top-of-mind awareness, of our many centers of excellence that will be feeders into the development of businesses. The second thing is that as we produce, we celebrate our successes. A brand not only has problems, a brand is opportunistic. Sometime we only hear about all the failures. I’d like to see us start benchmarking the university’s successes so that over time we know just how many technology licenses we’ve put out and how that bar is being raised so we all have a restored sense of pride in our higher educational system in Hawai'i.

Coppa: The marketing side is a big issue, and we don’t do enough of it about this university. When you hear about a president like Dobelle saying, "I’m going to go out and raise the funds across the country for something for the University of Hawai'i," it’s the kind of enthusiasm all the people of Hawai'i should have about this university—to say that I’m willing to go out there and make the pitch about the good things that come out of Hawai'i. The management school for tourism, that should be prime. Look at our community colleges—culinary arts, we need to market that. The other things we’re talking about will work out and they are changing. Autonomy has been a great step forward, and the business school and Dobelle coming here. I think we’re going to see a lot happening in Connections, Partnership—so now, on the other side, it’s marketing.