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Perspectives: Region needs to make most out of intellectual capital
Sunday, July 04, 1999 By Linda Dickerson
The U.S. has an ability to convert knowledge to goods and services which is the envy of the world," says George Fechter, chief executive officer of the University of Pittsburgh's McGowan Center for Artificial Organ Development. Like much of Western Europe, the United States spends about 2.5 percent of its GDP on research and development.
Linda A. Dickerson is a principal in Dickerson & Mangus Ink, an issues management consulting firm.
"We spend money on R&D but don't see the entrepreneurial activity from it," Fechter says. In Western Pennsylvania, Fechter and his team of world-class researchers are working diligently to change this.
The McGowan Center is charged not only with creating artificial organs but also with creating new companies.
"We expect to have all sorts of for-profit spinouts," says Fechter, a veteran of new venture start-ups. At Limbach Company, where he served as president from 1982 until 1985, Fechter managed the company's foray from construction into other service-related ventures. He was the consummate "intrapreneur," an entrepreneur within a large corporate structure.
Fechter hopes to help the region to capitalize on what he refers to as "the most experienced transplant surgeons in the world." Initially funded by the founder of MCI, William McGowan, the center is focused on developing internal organs that will substitute for transplanted organs for keeping patients alive until a transplant is available.
All companies emerge from the identification of unmet needs, and all companies thrive based upon their ability to leverage value from a distinctive competency. The McGowan Center exists to address the needs of candidates for a transplant. "The lines are getting longer and longer for transplants," says Fechter.
"We are thought of as best-in-class," he claims proudly, urging other entrepreneurs to aspire to similar greatness. "Find something where you have distinctive competencies."
Pinning many of his start-up hopes on the commercialization of what's called a magnetically suspended axial flow pump, Fechter predicts that "it will take another five to six years to see wealth creation activities" emanating from the McGowan Center. He's equally optimistic about the prospect of the blood oxygenator in the works in the laboratories.
"Science is the primary inhibitor," says Fechter, adding, "Now we know what we don't know." In order to succeed, however, "you have to turn over the old world order."
The University of Pittsburgh took this advice. It is exploring new ways of doing business. Fechter says, "The university wants to go beyond the generation of academic knowledge." Now, Pitt also sees itself as a vehicle for the creation of wealth.
"When you create wealth, you create jobs," Fechter says. He believes that wealth creation should come naturally to most Pittsburghers since the world's first billionaires made their fortunes here.
"Wealth 100 years ago was built on controlling natural resources," states Fechter. "One hundred years later, the richest man in the world, Bill Gates, controls no resources. Instead he controls intellect."
Fechter calls "the export of intellectual talent as the region's absolute biggest sin," and says the region should gauge its success based on "the net inflow or outflow of intellectual capital." Unfortunately, transplant technology serves as the classic example of what not to do.
"We trained all of our competition, and then they moved elsewhere," says Fechter. The technology is "a gift of Pittsburgh to the world."
Through the McGowan Center, Fechter plans for Pittsburgh to give a gift to itself. And he realizes that his is not the exclusive engine to drive economic development and to retain the most talented researchers and managers.
"In the future, I'd bet on a few industries: software development, biotechnology and robotics," Fechter says. "These are three safe bets that are going to be major industries in the next century."
Fechter is a proponent of building on the strengths that this region has already rather than persuading large, established ventures to relocate here. "We can't buy our way to prosperity. Growing regional companies is a much better strategy," he says.
Fechter challenges the region to develop more vehicles to create opportunities for peer-to-peer exchange among emerging growth company CEOs. "We need that nurturing process," he says. "Part of nurturing is having the culture that is supportive of entrepreneurs."
The McGowan Center is a nurturing environment for a highly specialized group of entrepreneurs and would-be entrepreneurs. Applied to the community as a whole, their model would create a superstructure to encourage those best-in-class capabilities across multiple disciplines.
To Fechter, business is all about "figuring out where there's a disequilibrium between a customer's need and his ability to satisfy these needs."
A concentrated effort to identify this disequilibrium and to match it with the region's distinctive competencies would catapult the local economy into the next century.
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