We need an abundance of growth companies in Arkansas because these companies drive employment and wealth creation. And based on the Brookings Institution study I wrote about a few weeks ago, one of the four key factors that support growth companies is having a significant number of people employed in high-tech companies, something we lack in Arkansas. Hence, we need more high-tech companies in Arkansas if we are to support the proliferation of growth companies, including non-high-tech growth companies.
One of the most important ways we can create those opportunities is by increasing our collective focus and spending on research and development (R&D). The Milken Institute’s most recent State of Technology and Science Index, co-authored by Ross DeVol, Joe Lee and Minoli Ratnatunga, identifies spending on R&D as one of the drivers of real high-tech Gross Domestic Product (GDP) per capita. And the study highlights the importance of universities in this regard.
Our entire state really needs to rally behind growth in R&D at the University of Arkansas. We need many more stories like Alex Lostetter, who received his Ph.D. at the University of Arkansas, spun out a power electronics technology developed from his dissertation, and built a successful company. North Carolina-based Cree later bought the company and renamed it Wolfspeed, but Lostetter runs it from Arkansas as a Cree vice president.
This has created high-tech jobs that are vital to our state. In fact, as Douglas Hutchings of PicaSolar has pointed out to me on several occasions, these types of jobs are sticky – they are difficult to move because the knowledge creation ecosystem is so tied to the university.
PicaSolar is another great example of how university R&D leads to “sticky” jobs that promote growth in our state. Hutchings was working on his Ph.D. in the UA’s microelectronics and photonics program when he enrolled in Dr. Carol Reeves’ New Venture Development course. The course requires students to come up with an idea, write a business plan, and try to launch a company. So when he learned about a breakthrough technology the university had developed around solar, he formed a team that became the genesis of what is now PicaSolar. The company developed a process to increase the efficiency of silicon-based solar cells, and that process is at the heart of the equipment the company sells to solar cell manufacturers.
“Our process has been labeled the biggest single efficiency improvement in solar since 1987,” Hutchings said.
PicaSolar is one of very few companies to receive three rounds of funding from the U.S. Department of Energy’s SunShot program, which supports teams and technologies that can have a huge impact on solar.
“A lot of folks coming through master’s and Ph.D.-level engineering and science at the University of Arkansas don’t really know that entrepreneurship is a valuable career opportunity,” he said. “I think things like the New Venture Development courses play a huge role in exposing you to that so that you can at least make a decision if it’s something that you want to do.”
Hutchings has a vision for what he calls the Science Venture Studio, which would help early stage entrepreneurs of high-risk, high-reward access federal funding.
“Out of about $2.5 billion that the federal government spends every year on this commercialization ready, high-risk, high-reward research,” he pointed out, “Arkansas last year got about $5 million.”
His goal with the venture studio is to help entrepreneurs access at least $100 million of this federal research funding over the next decade and launch at least 50 companies and that will create more than 400 jobs.
“When you look at where the science-based technologies are coming from,” he said, “the university spends over $100 million a year on early stage research. You would have to anticipate that some amount of that is ready to come out of the lab and go into the private sector.”
I consider Hutchings a real visionary for technology commercialization. He is very active in the startup community and is continuing to be involved with the university, in addition to running his company.
Efforts like his have convinced me that we’ve reached an unusual point in history for business in Arkansas and at the University of Arkansas. In fact, it seems to me that the stage is set for an explosion of technology commercialization at the UA. Among other things, …
- Asa Hutchinson is driving computer science education, which is salient to technology commercialization in today’s high-tech industries. In addition, three of the governor’s goals include (1) promoting business growth, entrepreneurship, and commercialization; (2) maximizing access to capital for startups and growing businesses; and (3) expanding science, technology, engineering and mathematics (STEM) and computer coding education.
- Ross DeVol is working with the Walton Family Foundation to facilitate the growth of the entrepreneurial ecosystem in the American heartland, which includes Arkansas. DeVol, formerly the chief research officer at the Milken Institute and coauthor of the Milken study cited earlier, is one of the most authoritative economic experts on this subject.
- Nelson Peacock, president and CEO of the Northwest Arkansas Council, was previously senior vice president of the University of California system and has extensive insights into the inner workings of universities and how they can partner with industry and government for technology development and commercialization.
- Roughly 60 percent of R&D spending in the U.S. happens in the private sector, and Arkansas-based companies regularly contributed to that cause. Walmart leads the way and has seen a spike in recent years in its patent applications. It has more than 500 in the pipeline, including one for a blimp-style floating warehouse.
- Many of the companies investing in R&D are small- to mid-size. For instance, Little Rock-based Delta Plastics spent millions of dollars developing the wash system and extrusion process that it uses to decontaminate plastic irrigation pipes that it then recycles into a clean post-consumer resin, much of which it uses to make EPA-compliant garbage bags. And Springdale-based Now Diagnostics has spent years developing and working on government approval for innovative medical testing kits that promise to speed up the time it takes for doctors, nurses, technicians and even patients to get an accurate diagnosis of a variety of diseases and conditions.
- Finally, in many cases, the public and private sectors are locking arms on innovation. Last year, for instance, J.B. Hunt Transport Services made a $2.75 million investment into research and development at the University of Arkansas. The funding created the J.B. Hunt Innovation Center of Excellence, a collaborative effort between the company, the College of Engineering and the Walton College of Business to advance supply chain management efficiency through technology.
I could go on, but the real point I’m making is that I don’t think we ever have had more people in positions of influence in Arkansas, including government, the university, and industry, who are more capable of driving the growth of high-tech companies.
There are many other aspects of the Milken study that I didn’t discuss here, but I recommend you read the full report if you are interested in this topic. You will see that while we are well-position for improvements, we have lots of work ahead of us. If we embrace the challenge together, progress will become inevitable.
Matthew A. Waller is the Dean of the Sam M. Walton College of Business, Sam M. Walton Leadership Chair, and Professor of Supply Chain Management. As Dean he leads the Walton College, which has over 6,000 undergraduates and about 500 graduate students. He has been an active entrepreneur most of his life. He was co-founder of a software company which had over 100 employees as well as a consulting firm. He is an inventor on the following patent: Waller, M.A. and Dulaney, E.F. System, Method and Article of Manufacture to Optimize Inventory and Merchandising Shelf Space Utilization, Patent No. US 6,341,269 B1. Date of Patent: January 22, 2002. His opinion pieces have appeared in Wall Street Journal and Financial Times. Dr. Waller is an SEC Academic Leadership Fellow. He is coauthor of The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain, published by Pearson Education. He received a B.S.B.A. summa cum laude from the University of Missouri, and a M.S. and Ph.D. from The Pennsylvania State University. He is the former Co-Editor-In-Chief of Journal of Business Logistics. Matt is coauthoring a book with Kirk Thompson, Chairman of J.B. Hunt Transport Services, Inc. about strategy and how J.B. Hunt Transport Services, Inc. applied various business strategies.