SMART ECONOMY:Having the right resources and attitude will help Ireland turn graduates into valuable entrepreneurs, says Stanford University president John Hennessy during a visit here

IRELAND CAN grow a research-intensive knowledge economy to rival that of Finland or Singapore provided it does a few things and does them very well. This includes fostering an ethos of innovation within our third-level institutions and also building an "innovation ecosystem" to help them grow.

So suggests John Hennessy, president of Stanford University, one of the most research-intensive universities in the world. It sits in Palo Alto, California in the heart of Silicon Valley, where creative researchers seem to pop up like mushrooms in a rainy Irish pasture and where the local commercial ecosystem is geared to turn good ideas into money-making businesses.

Hennessy was in town last month to give a talk at the US ambassador's residence on The Role of the Research University in the Twenty-first Century. He came as a guest of the Higher Education Authority, and while here he conducted a series of meetings including one with the Minister for Education and Science Batt O'Keeffe.

He also met Trinity Provost John Hegarty and University College Dublin president Hugh Brady within days of the announcement of their radical plan to merge some of their research activities and also to realign PhD education to help produce scientists and engineers with business savvy.

When it comes to innovation and commercial nouse Hennessy knows a thing or two. For more than 20 years he has watched the university-based innovation process at work both as an observer and as a participant.

He co-founded MIPS Computer Systems, later named MIPS Technologies Inc, in the mid-1980s, an effort to commercialise research findings made while a student at Stanford. He was also around to watch a few of the university's interesting start-ups take off, companies such as Sun Microsystems, Cisco, Yahoo!, Silicon Graphics, Varian and Google.

He also harks back to an earlier Stanford duo, Bill Hewlett and Dave Packard, electrical engineering graduates from the class of 1935. They started up a small company, literally in a garage, that has grown to become the largest technology company in the world.

He mentions these companies not just to drop a few names but because in each case the successful company was founded through the efforts of a discoverer of some technology who wanted to commercialise their ideas. In many cases the beginnings were limited and the path to follow obscure. Hewlett and Packard had designed an audio oscillator - no mention of computers anywhere.

But each company was driven forward by a young research-based inventor who wanted to bring his discovery to market. And for this reason the capacity to grow innovative companies starts with the capacity to create these inventors. It is down to "people, people, people", Hennessy told his invited audience during his talk.

A great irony arises once you have the people, he notes. You have to let them go away. Innovation arises when you transfer people, he argues. "You do not transfer technology, you transfer people," he said. Student researchers are encouraged to move out of the university and into a commercial environment, taking their technology with them. "Transferring people is absolutely the key to that process and that has been our model all along."

Once the jump to entrepreneurship is made it then comes down to the local environment, he believes. To have a downstream effect you also need to have a local ecosystem that will allow start-up companies to take root. You can't run a company out of a garage for very long and you can't keep a company growing without money and support services.

Silicon Valley benefits from having the necessary innovation ecosystem, Hennessy says, and for this reason companies based on little more than good ideas can take hold and grow. The mix includes sources of money, venture capitalists willing to risk hard cash on the hopes of a big payoff later. Lawyers there are willing to barter their services for a shareholding in a company that has potential.

The region also provides experienced personnel from managers to technical and sales staff, the people you need to populate a company. Silicon Valley has all of these, as well as a cluster of neighbouring universities where the entrepreneurs of the future are being produced. Ireland needs these things too if it is to grow a "smart economy", Hennessy believes, and also a degree of patience. It is a "long term haul" to build a Silicon Valley.

He delivered a shopping list of things that would help Ireland on its way; the first being the highest calibre of research activity.

We must develop "a density of excellence, a focused excellence" in a small number of areas that will allow us to participate at a world level. "You need to be at the edge of some of these technologies."

We will also have to learn to tolerate this transfer thing, he believes. "You have to be comfortable about people coming into and out of the university." This could mean keeping the door ajar when a research fellow leaves to do research abroad, in the hope that they will return with better skills and new ideas. "They are better teachers and better leaders from that kind of experience," he says.

There will also have to be a tolerance for failure, as not all start-ups will deliver sustainable companies. "You have to allow people to fail without telling them their career is over." While a current venture might fail, the next one might be a world-beater.

"You also need to import talent," he argues. "We look for the brightest and best talent anywhere in the world."

Getting the mix of support services right is also a challenge. "You have to build the outside ecosystem. This is so hard to do right." It is also necessary to "adapt that model to the local environment", and not just to try and transplant a model from abroad.

"How do you jump-start that? You build early stage entrepreneurs and build on to the next stage entrepreneur," he suggests. It is not just about getting money, it is about having mentors who can encourage and advise. And if you get the mix right then the rewards will be there.