National Industrial Policy Driver
For decades, the tried-and-true formula in Asia had been to mobilize national industrial policy. Some methods —including organizing government policy into a long-term strategic framework managed by trusted ministry mandarins, marshaling national conglomerates and companies to engage in the target sector, directing banks and financial resources to support with preferential loans and financing, and ensuring universities, organized labor and civil society march in lockstep with these narratives — have indeed seen significant success in the region.
Whether in Korea or Malaysia, Japan or Singapore, this approach has worked for sectors including heavy industry, mobile telecoms, energy, petrochemicals, and more.
But like any model, its implementation has been fraying in recent years. And for new service industries, as well as information and web-based sectors, the results have been mixed. What’s more, for increasingly critical social enterprise sectors spanning issues related to environment and social justice, the role, relevance and efficacy of national industrial policy is being called into question.
The New ‘Conservation’ Challenge
Conservation, in its broader manifestation, encompasses not only what we typically consider as saving “this-or-that” species of plant or animal. Rather, it is the framework for the macro challenges of climate change, sustainable development, genetic and biome diversity, and other trillion-dollar scale challenges. In the context of this new reality, national industrial policy must also find new channels and drivers.
In recent history, remnants of the industrialization era meant capital gains would often result directly from increasing scale or efficiency in process, and progress measured in tons of steel or units of output.
In the new economy, however, it is technological innovation and research that will be the main driver of financial growth. Often, though, businesses struggle to fulfil this leading role, as shorter returns horizons and the late-stage applied nature of their R&D often means that they cannot afford to engage in the foundational groundwork needed to broadly encompass such trillion-dollar scale challenges.
Similarly, typical venture capital and new ventures financing players are also ill-positioned, as their approach scales up from micro transactions and platforms, rather than a holistic macro-downwards approach that the trillion-dollar challenges require in order to properly stem the bleed from such issues.
Role for Universities
With their emphasis on deep, base-straddling fundamental research, global research universities are uniquely positioned to be such foundational role catalysts. Their R&D and innovation is often framed to look first at the broad macro issue boundary, and then patiently scaffold research specifically to backfill the scale into that broader problem.
In contrast, corporates must perform in the inverse: whereas a pharmaceuticals firm, for example, must seek the next marketable new drug, the university can mine basic DNA characteristics from diverse biomes; whereas energy firms must output a predetermined volume of megawatts from gas wells or solar panels, the university could innovate new hybrid pyrolysis technologies or substrates.
Global university R&D provides a bridge in terms of timescale, size of challenge, and foundational-to-marketable activities.
There are celebrated stories of successful university research, such as for the Oxford AstraZeneca vaccine on Covid-19. But thus far, the work of universities has not been coordinated – especially at the foundation early stage – with a scaled commercial development framework. Universities may also lack the commercialization management framework that venture capital often brings.
While there has been sporadic collaboration between universities and venture capital, it has not yet been systemic – and it has definitely not been targeted to the trillion-dollar conservation challenges, which are, as noted above, too broadly boundaried in nature.
A 21st Century Approach
A new approach to national industrial policy would neatly bridge such a gap. Instead of a government directed top-down, result-targeted, command approach, this new approach should be based on a more collaborative coordination between universities, corporations and new venture capital, tying research, commercialization, and venture mobilization with government policy to provide the result-agnostic medium from which innovation can bloom. The venture studio model helps incubate and accelerate new commercialization of technology. The conservation venture studio model targets the venture studio model specifically towards the challenges in trillion-dollar scale conservation and sustainability.
Each party has a unique and vital role to play: the university will bring the foundational “whole boundary” innovation approach; the venture capital will provide the breakthrough corporatization and funding; the conglomerate corporate partners will bring scale commercialization; and the government will help provide the fertile societal and regulatory framework.
Just as new commerce is increasingly based on crowdsourcing activities, the new national industrial policy framework, then, would be built on the mobilization of such “peer-pooling” of resources and talents directly targeting the challenges, and opportunities, in the trillion-dollar space.
William I.Y. Byun, Senior Partner, Oxford GAV Conservation Venture Studio