SFAz leaders strive to preserve, advance state’s research-driven economy

November 6, 2009

By hammersmith

11/23/09 update: In the fourth special session of 2009, the Arizona Legislature approved S.2003, which included the restoration of $18,474,923 in funding to SFAz. The funds were appropriated from the state’s risk-management revolving fund.

So, you think Arizona can compete against the best in the world in scientific research and industry? Prove it.

As Don Budinger tells the story, that’s essentially what Arizona House Speaker Jim Weiers challenged him to do in 2005 when Budinger and other community leaders called for the creation of Science Foundation Arizona (SFAz).

The new public-private partnership, designed to accelerate Arizona’s cultivation of high-technology industries like the biosciences, would be modeled after Science Foundation Ireland (SFI), an endeavor that had been given credit for transforming Ireland’s universities from functioning primarily as teaching institutions to research-and-teaching institutions that integrated the bioscience and information-and-communication-technology (ICT) industries in new ways, stimulating economic growth.

At the helm for SFI was William Harris, the former director of the enormous mathematical and physical sciences division of the U.S. National Science Foundation, and at one time director of the Biosphere 2 Center north of Tucson.

If Science Foundation Ireland is your blueprint, Rep. Weiers told Budinger, go get Bill Harris, and bring him back to Arizona.

That Budinger, who became SFAz’s founding chairman, accepted that challenge, and that Dr. Harris accepted the offer to become SFAz’s CEO, says much about two people who today hold significant responsibility for sustaining the progress and promise of Arizona’s bioscience sector.

Don Budinger

“The generation I am a part of needs to fulfill its promise to leave the world better than we found it,” Budinger says.

No shortage of communitarian-minded individuals have declared similar intentions. But only a small minority could match Budinger’s record of dedicating personal resources–time, money, reputation–to the task.

In 1973, several years after graduating from the University of Arizona, Budinger joined a small company his brother Bill had launched from his garage in 1969. Rodel Inc. manufactured a chemical with characteristics that turned out to be essential to computer-chip makers; the substance was the vital ingredient in a system for polishing silicon wafers. And the surface-finishing process that Rodel devised was much faster than what industry giants had yet come up with on their own.

As the personal-computer industry took flight in the 1980s and 1990s, the Budingers’ business grew prodigiously. Rodel emerged as the supplier of choice for computer companies and semiconductor manufacturers like Hitachi, IBM, Intel, Motorola, and Samsung. Bill Budinger, the firm’s CEO, oversaw design and manufacturing operations in Newark, Del., while Don Budinger, Rodel’s president, led marketing and sales from Arizona. Susan Budinger, Bill’s daughter, also served as an executive in the Arizona office.

Though it was the market leader, Rodel couldn’t rest easy. Competitors in precision surface-polishing technology were multiplying, and, as a 1997 feature in Inc. magazine reported, each new entrant demonstrated ambition and impressive attention to improving quality and efficiency.

“They had people engaged in a rigorous effort to upgrade performance,” Don Budinger said in the Inc. article. “The key point was that no matter how good their performance was, it would not be good enough in the future.”

For Rodel, similar emphasis on relentless self-improvement demanded attention to leadership development within the company–identifying and empowering employees at all levels who would point out problems forthrightly, foster teamwork, and exercise creativity. The approach apparently worked. Revenue growth that was already impressive accelerated still more, and in 1999, Rodel was sold to Rohm and Haas Co. for $700 million.

A new–philanthropic–Rodel

From the proceeds of the firm’s sale, the Budingers endowed the Rodel Foundations, a suite of several private and public philanthropic organizations in Arizona, Delaware, and Key West, Fla.. Don Budinger became the chairman of the $65 million private foundation headquartered in Arizona and the $35 million public foundation, the Rodel Charitable Foundation of Arizona.

The role that Rodel the nonprofit foundation would take was defined by observations the Budingers made while leading Rodel the for-profit company. They saw that U.S. public-education system was falling behind its equivalents around the world, and was preparing low-income children especially poorly. It was one thing for a company to grapple with the pressures of low-wage competitors in India and China. It was quite another to discover that high-tech firms in Scandinavia and Japan were recruiting from a more qualified workforce.

“One thing that concerned us,” Budinger says, “is that more and more of our top positions were going to people not educated in our K-12 system.”

In essence, the same stiffening competition that the Budingers had seen in their industry, they were seeing in the global race to educate young people.

The mission of the Rodel Charitable Foundation of Arizona became, then, “to bring about greatness” in Arizona’s public schools, with the year 2020 its target for the state to have one of the nation’s best K-12 educational systems.

“Everything that affects this state is addressed by, solved by, and improved by our education system,” Budinger said in the Arizona Republic in 2002.

That year, the foundation hired its first president and CEO, Carol Peck, who had been for 16 years the superintendent of the Alhambra Elementary School District in west Phoenix. During her tenure, Dr. Peck had effected the kind of results Budinger wanted to see at a statewide level. The poor performance of a low-income school district had turned around, in part because Dr. Peck was able to build collaborations between Alhambra schools and local community and business interests. In 1991, Dr. Peck had been named the National Superintendent of the Year by the American Association of School Administrators.

Under Dr. Peck’s leadership, Rodel now funds and oversees a half-dozen programs to strengthen K-12 education, from the Math Achievement Club by Rodel (MAC-Ro) for elementary-school students, to the Rodel Community Scholars program, which matches Arizona State University undergraduates with administrators in high-poverty high schools. In 2007, the most recent year for which data is available, Rodel issued more than 90 grants to individual schools, districts, universities, and other nonprofit organizations to support the programs.

Linking education to economic development

By 2005, as Dr. Peck and Budinger were rolling out Rodel’s programs to classrooms throughout Arizona, Budinger was also working with colleagues in the business community on what would ultimately become Science Foundation Arizona. He had concluded, in the years since his family had launched the Rodel Foundations, that efforts to strengthen education were inextricable from efforts to strengthen the research-driven economy.

“We had taken $150 million to commit to improving public education,” Budinger says. “What we didn’t understand at first was how inter-related economic development is to a strong K-12 system.

“To attract companies, you need a great K-12 system, and vice-versa,” he continues. “When the opportunity came to help birth Science Foundation Arizona, I had to take it.”

Arizona’s Bioscience Roadmap had been released at the end of 2002, including the recommendations that Arizona establish a fund to enhance bioscience research and a mechanism to foster partnerships between industry and university researchers. Ultimately, representatives of the Bioscience Roadmap Steering Committee approached Greater Phoenix Leadership (GPL), the state’s largest CEO group, and asked for assistance in building a coalition to turn the Roadmap’s recommendations into a functional operation.

“They recognized that executive horsepower was needed. We recognized that research is the leading spear of economic development,” says Budinger, who serves on GPL’s board of directors, and is also a member of GPL’s Tucson-area counterpart, the Southern Arizona Leadership Council (SALC).

GPL president Tom Browning tapped Budinger and Richard Silverman, Salt River Project’s general manager, to lead a study about what the new institution might look like and what resources it would require. SALC and the Flagstaff 40, the state’s third CEO group, were also drawn into the process.

The vision that emerged was as ambitious as they come: Assembling some $300 million over the next five years to build an unprecedented engine for innovation in the biosciences and related high-technology fields. Funding would be sought from the Arizona Legislature, corporations, and philanthropists; the coalitions, programs, and projects funded by those dollars would attract to Arizona major infusions of talent, federal grant funding, and additional industry investment.

Next: Part II: The Creation of SFAz

For more information:

The struggle to save Arizona’s science push,” Arizona Republic, 10/02/2009

SFAZ Return on Investment,” Battelle Performance Report, 07/08/2009

Winning in the Global Knowledge-Based Economy,” Battelle Performance Report, 02/2009

Science Foundation Arizona chief works to create an innovative future,” Phoenix Business Journal, 01/04/2008

Science Foundation Arizona is born,” Arizona Republic, 02/26/2006

$85 million funds set up for schools,” Arizona Republic, 12/12/2002

Irish Betting on Biotech,” Wired, 12/05/2001

Ready, Aim, Focus,” Inc., 03/01/1997