RESEARCH TRIANGLE PARK — In these tough times, executives are making a mistake if they cut back drastically or wipe out money committed to research and development.

So said Dave Rizzo, the chief executive officer at not-for-profit MCNC, in a presentation to the Association for Corporate Growth on Thursday. Anyone hoping to grow a company can’t underestimate the value of intellectual property, he warned.

“In order to have a salable company, you have to have intellectual property,” Rizzo told some 100 guests at the ACG breakfast. “In order to have IP, you have to have research.”

Rizzo, who founded and sold Osprey Systems in Charlotte before moving to MCNC this year, has had plenty of experience at free enterprise. And he said just because MCNC is a not-for-profit doesn’t mean it can ignore realities of a free market. MCNC no longer receives money directly from the state, and to stay open its business units have to seek grants and contracts such as a new $1.35 million deal to explore means of improving networks.

“IP is the gas in the engine,” Rizzo said, pointing out that MCNC’s Advanced Networking Group is working on a wide variety of projects. But he stressed that researchers also have to understand their work must lead to products or IP that can open the way to new discoveries.

“How do you get out of the lab and into a job-producing environment,” he said, adding: “You have to develop a culture of competition. Having to compete (for grants and business) results in the long run being very healthy.”

He cited the recent crisis that could have led to the closure of the Supercomputing Center had not MCNC and its primary high-performance computing customers — the state’s universities — come up with a mixture of fees and a new technology plan.

“When we lost our entitlement funding,” he said, referring to money directed to the Supercomputing Center by the universities, which had in return been granted funds by the General Assembly, “the employees became very concerned. They said ‘Holy smoke!”

As a result, he added, the team worked internally to discover ways to cut the burn rate.

Rizzo is pushing a reorganization of MCNC into two divisions — one for R&D and networking, the other for venture funding.

In order to succeed, he said executives have to push for change. “We have to encourage a pace of innovation. We have to ask, ‘What’s next?'”

A formal plan to reorganize MCNC has yet to be approved. Rizzo also is still looking for a replacement for Thom Dunning, the head of networking and supercomputing who left earlier this year for a position at the University of Tennessee and Oak Ridge Labs. When MCNC is finally split, Rizzo will head the VC group. Whoever replaces Dunning will take over networking.

But during a question-and-answer session, Rizzo was asked about how he dealt with MCNC’s board of directors. They represent a mix of university and free-enterprise interests which can be quite different..

“It’s quite amusing,” he said.

Rick Smith is managing editor of Local Tech Wire.