© 2007 Warren B. Powell Slide 1 So you want to get funding from industry? Funding workshop Informs Annual Meeting Seattle, 2007 Warren Powell CASTLE Laboratory Princeton University © 2006 Warren B. Powell, Princeton University

© 2007 Warren B. Powell Slide 2 Schneider National

© 2007 Warren B. Powell Slide 3

© 2007 Warren B. Powell Slide 4 The fractional jet ownership industry

© 2007 Warren B. Powell Slide 5 NetJets Inc.

© 2007 Warren B. Powell Slide 6 CASTLE Lab CASTLE Lab financial support »Trucks (Schneider National, Yellow Freight, Burlington Motor Carriers, North American Van Lines, IU International) »Trains (Norfolk Southern, Burlington Northern Sante Fe, Canadian National) »Planes (Netjets, U.S. Air Force, Canadian Air Force, Embraer) »Energy (Lawrence Livermore, PJM Interconnections) »Security (DIMACS/Dept of Homeland Security) »Government (NSF, AFOSR)

© 2007 Warren B. Powell Slide 7 CASTLE Lab Research challenges »How do you optimize these problems in real-time? »How do we plan operations over the near-term? »How do we design these systems? With the right resources? With the right contracts? With the right work rules? To be robust under different forms of uncertainty? »Are we charging the right prices? »Are we serving the right customers? »Are we using the right information technologies? »…. Etc. etc.

© 2007 Warren B. Powell Slide 8 CASTLE Lab The CASTLE Lab research model »Research dimensions: Theoretical research (e.g. convergence proofs) Computational research (speed of convergence, solution quality) Field research (does it work?) »Mixture of government and industry funding which supports Faculty (W. Powell) Full-time research staff (2-4, depending on the year and projects) Graduate students »Professional staff produce production-quality, deliverable code All software owned by Princeton University

© 2007 Warren B. Powell Slide 9 Research expenditures

© 2007 Warren B. Powell Slide 10 So you want to work with industry… Why do you want to work with industry? »Money – Funding for summer support and graduate students, computers, travel, etc., etc. »New problems – You are looking for fresh ideas, rather than simply recycling problems from the literature. »New theory – Real world problems sometimes challenge fundamental theory. »Data - Government agencies are a source of funding, but they don’t have data. Companies have data. »Field testing – Does your research actually work?

© 2007 Warren B. Powell Slide 11 So you want to work with industry… Why should industry want to work with you? »Prestige – To be able to say they are working with a university to solve their problem. »Access to faculty – By providing funding, they are buying the ability to call you in for a meeting, or to come and visit to meet with you (and possibly other faculty). »Access to students – It is a way for them to gain better visibility with the students, making it easier to attract them. »Deliverables: They want the results of studies you might perform to help them with their planning. They want technology (software which delivers new models and algorithms) they can use to improve their business.

© 2007 Warren B. Powell Slide 12 So you want to work with industry… Your challenge: »Do the deliverables contribute to the research mission of a university? »Yes if: The questions represent questions that we cannot answer with current methods. Answering the questions provides you access to data to test new or existing models and algorithms in a way that has not been done (to academic standards) in the research literature. The work will provide field demonstration of technology in industry that has not been done before. Most important: There must be a significant degree of uncertainty in the outcome. If you are sure the method will work, then the activity is not research!

© 2007 Warren B. Powell Slide 13 Technology transfer Traditional model development creates a wall between academic research labs and operational environments.

© 2007 Warren B. Powell Slide 14 Technology transfer In some cases, there are multiple layers of walls between model development and implementation. Academic research Software vendor Industry

© 2007 Warren B. Powell Slide 15 Working with faculty startups »University rules limit ability to participate in enterprises which relate to our research. »Companies cannot fund further research at the university. »“Awkward” having staff from these companies visiting the university. »Limits our ability to continue to work with these companies to develop technologies that are not quite ready. Partner companies »Princeton Consultants (no affiliation with any Princeton faculty). Princeton Transportation Consulting Group Technology transfer

© 2007 Warren B. Powell Slide 16 Problems with the “over the wall” approach »It assumes the technology is basically sound before it is tested in the field. »Laboratory testing uses data that reflects your initial understanding of the problem. »Real problems are often much more complex than what we learned in textbooks. An illustrative application: »A real-time model for boxcars at a major railroad. Technology transfer

© 2007 Warren B. Powell Slide 17

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© 2007 Warren B. Powell Slide 19 Managing boxcars

© 2007 Warren B. Powell Slide 20 Managing boxcars The academic view: »Stochastic, multicommodity flow problem:

© 2007 Warren B. Powell Slide 21 Managing boxcars The evolution of attributes: 4,000 5,040,000 50,400,000 Single commodity flow 40,000 Multi- commodity flow 1,680,000 Multi- attribute flow

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© 2007 Warren B. Powell Slide 23 So you want to work with industry… When is it “consulting,” and when is it research? »Most managers cannot tell the difference. »Question: Can the problem be solved with a very high probability of success using known technology? Research requires some level of risk. »You should be able to use the experience of doing the project to contribute to publishable research in a significant way. Common myths »“Research” = “theory”, “experiments” and “anything that can be done entirely in a lab.” »“Implementation” = “consulting” Operations research needs to develop a culture of doing field research.

© 2007 Warren B. Powell Slide 24 So you want to work with industry… What if they are looking for software: »There is a lot of funding available from industry if you are willing to deliver a product (software). »Software is hard. Reasons to deliver software they can use: »The company will only provide funding if they can get software they can use. »With corporate involvement, you get access to data and management that would otherwise not be available. »Provides a true field-test of your research. »You get to see implementation problems first-hand. If your software does not work, is the problem engineering (data, software), implementation (people issues) or fundamental research (models and algorithms)?

© 2007 Warren B. Powell Slide 25 So you want to work with industry… Delivering software: »Who is going to write the code? You? A graduate student? Post-doc? Full-time research staff? A third-party consulting firm? »Who is going to maintain the code? You? The sponsor? A third-party?

© 2007 Warren B. Powell Slide 26 So you want to work with industry… Traps to look out for: »Common mathematicians mistake: “If you know how to do it, it is easy.” Real projects introduce dimensions you may have never anticipated. »Is the company using you or your graduate students as cheap programmers? First rule: Graduate students can’t code (production quality). Second rule: Most professors can’t code (and the rest shouldn’t). Third rule: Sometimes have to ignore rules 1 and 2 to get the relationship started. »“We are just looking for prototype code.” »Are you charging $25k for a $250k project? Are you charging $250k for a $2.5M project?

© 2007 Warren B. Powell Slide 27 So you want to work with industry… Dealing with the lawyers: »Who is going to own the code? The university? The sponsor? A third-party consulting firm? »What about the “intellectual property”? What is “IP” in an OR model? What is “fundamental” research? Should you apply for a patent? If so, what is patentable? At what point does the model capture private business information (and therefore should be proprietary to the business)?

© 2007 Warren B. Powell Slide 28 Yellow Freight System

© 2007 Warren B. Powell Slide 29 Yellow Freight System © 2004 Warren B. Powell, Princeton University

© 2007 Warren B. Powell Slide 30 “But the crown jewel of [CEO] Zollars’ and [CIO] Caddell’s technology overhaul has been SYSNET, a state-of-the-art computer system designed jointly by Yellow and CASTLE Lab… at Princeton University.”