Word came recently, via one of those catch-up obituaries in The New York Times, of the passing of Bob Allen, who had been the chairman and CEO of AT&T during a time of merciless transition in the telecom industry during the 1980s and 1990s.

I have a reminiscence to offer, not as a criticism of Allen, who by all accounts was a decent man and strove mightily to reinvent AT&T in the wake of the forced 1984 divestiture of the regional operating companies, but to underline an example of “innovator’s dilemma” with which I had direct experience.

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First the [former Merck CEO Roy] Vagelos Commission; then the [former Governor Tom] Kean Commission; just this past week, the final report of the UMDNJ Advisory Committee. Here’s a recap of what’s happening with the reorganization of public medical education in New Jersey, and my own evaluation of the outcome, emphasizing the impacts on research budgets (a matter which is underplayed in the advisory committee report).

Since 2003, New Jersey has moved in fits and starts to undo the damage done more than four decades ago under former Gov. William Cahill, who in 1970 — perhaps angered by what he saw as gold-plated research facilities or maybe for more prosaic political reasons following the 1967 Newark riots — severed the Rutgers Medical School from the state university and attached it instead as the new Robert Wood Johnson Medical School (RWJMS) to what was then called the College of Medicine and Dentistry of New Jersey (CMDNJ).

That move placed under different institutional ownership facilities that were actually across the street from each other, requiring crippling negotiations between two bureaucracies for any major bioscience research projects, significantly constraining both public universities’ abilities to contribute to regional economic development.

Beyond that, what eventually became UMDNJ was a unique beast, a health-sciences university spread across four widely separated campuses. Among its eight graduate and professional schools were no fewer than three different medical schools, two allopathic and one osteopathic (don’t ask), and one university-owned teaching hospital. It was truly an ungovernable nightmare, and one that soon and unendingly got into trouble.

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With all the attention on renewable-energy technology, and for all the hopes that politicians have expressed that by pushing dollars into the innovation system they can magically get “cluster” jobs out the other side, I thought I would tell the cautionary story of three extremely impressive energy-tech-type companies that my colleagues1 and I assisted when we worked for the (lately defunct) New Jersey Commission on Science and Technology (NJCST) back in the late 1980s/early 1990s.2

As free-marketeers like to say, politicians don’t create jobs: entrepreneurs and investors do. Absolutely correct. All we did in government was help by providing resources that the entrepreneurs leveraged and exploited at a very early stage of corporate existence. Except in one case where we provided a modest amount of pre-seed financing, I wouldn’t say we even tried to “pick winners.” We applied public funding to create physical environments and incentives for academic/industrial collaboration, we provided a little free publicity and moral support, and then we sat back and watched the inventors and innovators/entrepreneurs do their thing.

After the break I’ll tell what I remember about these firms from the days years ago when I had some inside knowledge, and what I can deduce about their trajectory since based on current publicly available information.3 And then I have some questions for you to ponder about how complex are the forces at work, and what you might expect from innovation programming in energy-tech if you are a politician or policymaker.

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  1. Especially Joe Montemarano, in the case of the first two companies discussed []
  2. No, this isn’t the first time in modern history that energy tech has been “hot,” and it’s been obvious for a long time that market innovations would be closely related to R&D in materials science and various engineering technologies. Hence the role for universities and tbed intermediary organizations. []
  3. Although I’ve done my best to be accurate, I’m sure I’ve made mistakes. If you see any and would like them corrected, let me know and I’ll update the post. []