I have heard a lot over the past month about the state’s STEM initiative-that the governor and legislature are particularly interested in funding the STEM disciplines (science, technology, engineering, and mathematics) believing that they are the keys to economic diversification and prosperity.   A similar discussion was occurring in Nevada when I headed east.  It is easy to understand why government policy makers are so enamored with the STEMs: They are the fields most likely to create ideas that will lead to scalable businesses employing thousands at high wages (someone working in nanotechnology is way more likely to do this than someone working in hospitality).

The problem is that while there are many gifted people with terrific technical skills operating in the STEM disciplines, few of them understand the market.  I remember a conversation I had with Tom Lester, the long-time dean of the College of Engineering at the University of Kentucky about the source of innovation.  Tom proudly proclaimed that innovation starts in the lab.  I smiled and said: “no, it starts with a consumer’s need.  No engineer would have invented the iPod. it doesn’t have enough buttons on it.”  We both laughed….me more than him.  But my point was that innovations that don’t meet customer needs don’t have a bright economic future.  If you want to create successful scalable business, you need to understand what the consumer wants and how you can wrap a business model around that need that will turn a profit.  It doesn’t just happen by itself.  The world is littered with worthless patents.

If government policy-makers want to use academic institutions as engines of economic growth and diversification (and they should), they need to think in terms of slaying a BEAST. This BEAST (Business, Engineering, Applied Science and Technology), like the mythical Cerberus, has three heads.  (I can’t take credit for this acronym I’m stealing it from someone, I don’t remember who.) One head is government policy that invests too narrowly in STEM and fails to understand the role that business thinking plays in evaluating the marketability of new ideas and successfully bringing them to market.  The second head is the silos that separate the disciplines in universities that hamper dialogue and discourages risky collaboration. The third head is the human desire to stay safely in your comfort zone and only talk and work with people who are similar to you.  To slay the beast and reap the benefits of economic dynamism and diversification through investment in higher education, you need to cut off all three heads.

It can be done. I experienced the returns to such an enterprise first-hand when I was at UNLV.  Rama Venkat, who is the dean of Engineering, had run a senior design competition for almost a decade.  Rama is an entrepreneur masquerading as a dean of Engineering.  But despite his passion, none of the projects from the senior design competition had ever seen the market.  One day over lunch, Rama and I decided it was time to pair those engineering students with some business students who would help them understand market opportunities and how to build products the market wanted.  The result: In the first year, two of those projects formed LLCs.  In year two, three teams created LLCs and drew the interest of venture capitalists and wealthy donors.  This is another benefit of slaying the BEAST: it will attract private investment and lead to the best kind of public-private partnerships.

I saw a glimmer of this at UCF this week when I visited the Florida Interactive Entertainment Academy’s student project presentations.  There I saw right brain and left brain people (artists, programmers and production people), working together to create video games that didn’t just kill deformed hyenas, but taught vocabulary and in one extraordinary instance made most of the people in the room cry.  Industry people served as judges and the commercial potential of the projects went far beyond GameStop.  I venture to guess that teaming those aspiring gamers with some business students (and maybe some from psychology too) would produce amazing economic results in short order.  The good news is that Knights have been slaying beasts for centuries.  Next to rescuing fair maidens, it is what they do best. Just saying….

Paul Jarley, Ph.D., is the dean of the UCF College of Business Administration. He blogs every week at http://www.bus.ucf.edu/dean. The following post appeared on August 13, 2012. Follow him on Twitter @pauljarley.