Entrepreneurship, or, Enabling the Innovation Economy

I've been giving innovation and entrepreneurship a lot of thought - particularly since we are having a whole day on this at the Polytechnics Canada conference on 5 and 6 May. Part of the conference will be working sessions designed to articulate solutions that leverages all aspects of the education and innovation system and the innovation skills needed for Canadian productivity.

One thing that I came across recently that is of interest to anyone in this space: Skills for Innovation and Research (2011) OECD Publishing. There is a good definition of entrepreneurship, including the summation: "creativity seems to be a necessary but not sufficient precondition of entrepreneurship." To this I would add the ability to analyze, think critically, and focus on human-centred product or process development and what I have called "adoptation"--the ability to adopt and adapt: precepts central to innovation literacy.

I've written before on the double helix nature of the multiplier effect needed for our "innovation DNA": the need for both graduate/undergraduate trained innovators with complementary STEM/nonSTEM skills as essential for productive innovation. A mixture of skills is needed for innovation, but this mixture is always in flux. There is no static model for what constitutes the optimal mix of skills as these are variable and according to the need of innovation-in-context. This is a very important point as it means there is no magic bullet solution for fixing innovation. Rather, we need a constant commitment to reinvention and an additive ability to learn, to translate (user needs to design specifications, for example), to embrace change and adoptation. These skills are additive both in terms of what it means to an individual and in terms of the multiplier effect in work groups or teams, but also in the ongoing iterative nature of innovation that builds on histories of innovation and invention.

OECD's Skills for Innovation and Research tells us that there are several influencers of what innovation skill sets are required. These include: "the stage of innovation, the type of innovation, and the industry structure," to which I would add industry context vis-à-vis other industries. This last point refers to concepts such as open innovation, participatory innovation, and the ability for firms to collaborate across industries. Here again, the OECD Innovation Strategy skills show the value of nonSTEM skills as a complement to STEM skills in providing ways to develop business ideas based on science. Technical skills are the substrate on which innovation is based. We must assume this "ground", and look at the ancillary skills we associate with innovation literacy as being the "figure" of innovation. This figure is the entrepreneur, set against the backdrop of innovation-in-context.

One thing this OECD document states is that "More evidence is needed on the relationship between specific skill groups and innovation" (12). I've not mentioned this in this space before, but GBC is leading a large scale study on Measuring Innovation Literacy that will do this - the first of its kind in Canada. I'll post more on this study later, but our hypothesis is that we will show the value of the double multiplier, particularly the STEM/nonSTEM mix aspect - to be crucial to improving our innovative capacity as a country. In the Skills for Innovation section (p31 ff) we see the difficulty of coming up with a taxonomy of sorts to define what is needed to foster innovation. This is our collective opportunity to define the genre of innovation in Canada. That is, a complementary mix of skills is needed, including a solid grounding in STEM disciplines. But innovation leadership requires more than this. STEM grads need business training in order to fully realize their place in the innovation economy. Managerial and entrepreneurial talent are the purview of nonSTEM disciplines. This does not get enough discussion. Pundits typically decry the lack of STEM skills in North American society - and to be sure we need scientific literacy firmly grounded in our educational psyche. But we must not ignore the nonSTEM disciplines as adding a lot of value to the mix. Again, this is not a zero-sum game. (As an aside, here are two Twitter posts on both sides of this equation: People-Centred Innovation: WSJ.com - Vint Cerf's Opinion: How to Fire Up U.S. Innovation and Want Innovative Thinking? Hire from the Humanities. My opinion: neither is right; neither is wrong.)

Education is the single biggest element of innovation here - providing it, encouraging it, and supporting it life-long, and life-wide. What I am arguing for here is an "entrepreneurial upskilling" of STEM/nonSTEM talent alike, as well as the need for innovation literacy at all levels of the workforce. Complementarity of education systems - university, polytechnic and college - is essential. Here the OECD tells us that universities are adept at disruptive innovation and basic research, whereas the vocational college/polytechnic is adept at incremental innovation - the applied research and experimental development parts of the innovation value chain. Both are necessary. This complementary linkage of differentiated actors in the educational/innovation system was nicely highlighted in the discussion that followed my appearance, alongside Queen's University's John Molloy at the R&D Review Panel last December.

The Public Policy Forum recently published Innovation Next: Leading Canada to Greater Productivity, Competitiveness and Resilience, which further underscores the need for bold leadership across and within sectors and silos. We are all oriented to the same goal of increasing and improving our productivity. Our discussion in May will be drawing on these insights and leveraging the group convened to push this agenda forward. Entrepreneurship is key to enabling the innovation economy. The responsibility for improving innovation does not rest on any one system actor, group, or set of disciplines. Rather, it is in the mix of a people-centred, participatory innovation.

On interaction, integration

Here are some more thoughts on people-centred innovation following this train of thought:

Some time ago I read a book by the founder of Ideo in which they talk a lot about human centred design. In trolling through the G-List search string I came across their site for a human centred design toolkit, "A free innovation guide for social enterprises and NGOs worldwide." It's worth a look. The principles of human centred design (HCD) are, as I've indicated earlier, highly amenable and adaptable to innovation. Focusing on how any innovation will have downstream impact - from people to social/economic productivity - is an essential way to ensure adoption. As noted in my twitter feed a while ago, "adoptation" is my new word to describe applied research and promoting the adoption/adaptation of innovation. Adoptation requires integrated thinking, it requires interaction among the users and producers of innovation, and it requires us to think about the people who will use a new product or service from the outset of design. it also requires conspicuous contribution - an open source approach to collaboration and complementarity.

Post-Budget Address By Minister Goodyear outlines Canada's business innovation agenda

Minister of State for Science and Technology and the Federal Economic Development Agency for Southern Ontario Gary Goodyear addressed the Economic Club this morning in a post-budget speech outlining Canada's approach to fostering greater business innovation. Minister Goodyear opened with a reminder that, while Canada is doing well economically, "we are facing competition from emerging, fast-growing economies." The entrepreneur is the driving force behind the economy, and supporting business innovation is a priority emerging from Budget 2012, as I outlined in my last post. While Canada is first in HERD in the G7, Minister Goodyear reminded the audience that "results matter more than rank".  (As an aside, the person I was sitting next to reported hearing on the radio this week that Canada is #2 in HERD; 19th in BERD. If true, this is worse than last year.) This is the well known refrain of how Canada lags in business investment in R&D. The new funding announced in Budget 2012 retains our world leading research spending (HERD), while focusing new money on fostering greater industry-academic partnerships and business investments in R&D and innovation. This is exactly what Canada needs.

James Bradshaw, in a Globe and Mail article last Friday, quoted me (and others) in support of the Budget, which I said was “good for competitiveness and good for productivity. The big message here is that the federal government is focusing its innovation efforts on the private sector, and that’s something that’s sorely needed in this country,” Dr. Luke said. “We need to be a world-leading applied research and commercialization country. That’s where this budget is heading us to.”

Canada's approach to business innovation is in keeping with Bank of Canada Marc Carney's speech on "Exporting in a Post Crisis World." Carney outlines the need for Canada to update our approach to international markets, signalling a shift that will see "Canadian businesses retooling and reorienting to the new global economy." Currently we are "concentrated in slow-growing advanced economies, particularly the United States, rather than fast-growing emerging markets." This was the point Minister Goodyear made this morning, and it relates very well to the concept of a soft landing in international markets, which I outlined just over a year ago. That is, educational institutions like George Brown College are working with our international education partners to provide our entrepreneurs and industry partners with connections to global markets. Our international partners can connect industry to their markets, working with us to adapt and adopt (adoptation) technologies to the realities of place within each locality. Not only can we work together to internationalize education, but we can work toward engaging our industry directly in providing entrance to new, emerging markets. And that's good for Canadian competitiveness and productivity.

ORION Summit 2011 a Success

The ORION 2011 Summit - Innovation Needs A Backbone - was one week ago, and I've been remiss in posting some thoughts on it (other than through Twitter). In short, it was a very good conference that included many excellent discussions on the future of RD&I: research, development and innovation, as enabled by high bandwidth technologies such as ORION. On Monday I convened a panel discussion on the role of colleges in applied research. It was an excellent overview from knowledgeable people who are focused on improving our record on innovation and productivity. The role of student training was nicely discussed - reflecting earlier thoughts on the multiplier effect of preparing a future workforce with innovation literacy skills.

Ilse Treurnicht, CEO of MaRS, introduced day 2, reminding us to galvanize our local assets as highly qualified and skilled people are highly mobile globally. Significantly, she said we need to generate "stickiness": an affinity to Canada that will help get our best ideas into the market. During a panel convened by MRI on the new Research and Innovation Centres (RICs), one panelist commented on the need for virtual density - the way in which RICs and all actors in the innovation ecosystem are connected through ORION to provide any point of access service to discoveries seeking market entry from university labs and/or firms seeking innovation support. The notion of distributed research clusters is one that Canada can particularly excel at, given our wide geography and distributed expertise. Linking talent across the country to provide innovation support services - a point  GBC made in our submission to the R&D Review Panel - is one way we can build Canadian capacity to accelerate innovation, and enable the innovation economy generally. And there is good precedent for this: have a look at a recent study on clusters in Norway referenced in this Blogging Innovation post: Innovation Requires Global Pipelines Not Local Clusters.

It's worth providing the following in full; it's food for thought:

The results indicate that firm innovation in urban Norway is mainly driven by global pipelines, rather than local interaction. The most innovative – both in terms of basic product innovation and radical product and process innovation – firms are those with a greater diversity of international partners. Local and even national interaction seems to be irrelevant for innovation. Furthermore, the individual attitudes of the manager make a difference for the firms’ engagement with the outside world. More open-minded managers have a greater diversity of international partners and rely more on global pipelines, whereas those with higher levels of regional trust depend on local and, to a lesser extent, national contacts. (p5)

When local interaction does not suffice: Sources of firm innovation in urban Norway, by Rune Dahl Fitjar and Andrés Rodríguez-Pos.

Dr Gilles Patry, President of the Canada Foundation for Innovation, gave an overview of infrastructure supports CFI provides, including the new College-Industry Innovation Fund. He reminded the audience that "it's people not organizations who innovate." Innovation is a social act; promoting people-centred innovation is a key focus for those of us engaged in supporting Canada's innovation system. Patry outlined three issues:
1. We are in a global war for talent (see Ilse Treurnicht's comment, above)
2. Innovation is a national agenda
3. The power of networks.
Patry's point is that we need to develop an entrepreneurial, risk-taking culture as part of a national innovation strategy, and this should be enabled by the training of skilled workers through research-based education. Part of this involves developing what Matt Ratto, UofT faculty member and founder of the Academic-Private-Public consortium DDMIT lab calls "interactional expertise." This is a great term useful for describing the kinds of amorphous skills we can associate with people-centred innovation and innovation literacy - the capacity for adoptation and development for in situ innovation.

Changes to SR&ED welcome, but not enough

The Canada Revenue Agency announced changes to the Scientific Research and Experimental Development (SR&ED) program. As the Globe reports in Ottawa moves to streamline R&D tax-credit program, this is part of the effort to improve the system following last year's Budget. The changes should be welcome news fro firms investing in R&D, and for tax payers who want to see more accountability in the program. We also need to see more business investment in R&D. These changes however do not go far enough. Part of the issue with the SR&ED program is that it focuses too much on the SR and not enough on the ED.

The OECD's Frascati Manual defines three forms of research: basic research, applied research and experimental development. Here is the exact definition from the Frascati Manual:

Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view. Applied research is also original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific practical aim or objective. Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, which is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed. (2.1.64)

Here is how CRA defines the three under What work qualifies for SR&ED tax incentives?:

“scientific research and experimental development” means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is
(a) basic research, namely, work undertaken for the advancement of scientific knowledge without a specific practical application in view,
(b) applied research, namely, work undertaken for the advancement of scientific knowledge with a specific practical application in view, or
(c) experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto,
and, in applying this definition in respect of a taxpayer, includes
(d) work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research, where the work is commensurate with the needs, and directly in support, of work described in paragraph (a), (b), or (c) that is undertaken in Canada by or on behalf of the taxpayer,
but does not include work with respect to
(e) market research or sales promotion,
(f) quality control or routine testing of materials, devices, products or processes,
(g) research in the social sciences or the humanities,
(h) prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas,
(i) the commercial production of a new or improved material, device or product or the commercial use of a new or improved process,
(j) style changes, or
(k) routine data collection;

SR&ED does not consider key components outlined in Frascati: things like installing and improving for example - that is, putting into practice incremental innovation. In short, SR&ED is biased toward basic research and ignores the very important aspects of actually getting R&D into markets. Now, one may say we have to draw the line somewhere because we don't want just anything to be eligible as this would be prohibitively expensive. Fair comment. But Canada is a country with  one of the highest per capita spends on HERD, has world leading basic research, yet a lackluster BERD where firms lag our international counterparts. This is compounded by a need to focus our inventions on innovation - on how we get innovations to market. Without supports for actual market entry, we are doomed to repeat the failures of the past: giving away our inventions for other countries to commercialize for us and, ultimately, to sell back to us. It`s time we moved incentives to where they are needed: upstream, as in the form of innovation vouchers to let the market decide where to access P3RD support, and supports for activities that actually relate to the market, understanding customers, and incremental innovation. We have a 19th Century view of research, when we need a 21st Century approach to innovation. It`s time we focused on "adoptation" and market entry for our research, and on commercialization inventions. That would be money well spent.

Reverse Innovation

Here's an interesting look at the role of global markets and the diffusion of innovation. Reverse innovation refers to "trickle up" from the periphery to the centre where innovations come from under-developed nations and then enter developed nations.  What is interesting about the HBR post is the realization of being on the "cusp of a new era" (as well as the posters claiming neo-colonial bias). Language aside, perhaps what this means is that we are seeing less one way innovations and better integration of global mindset and market places with more fluidity and flexibility. Or, to put it more simply, this is what people-centred innovation is really about. In my last post on the OECD workforce skills article (a must read for anyone in this space) I linked to the article which provides solid data on the prevalence of incremental innovation being key to increasing productivity, and the role that those with intermediate skills play in fostering innovation. Those of us working on  technology design have seen how the "RWX" approach to has transformed the user experience from one of passive browsing to active interaction (not quite a tautology...) where the end-user is a viable and active contributor to the continual refinement and ongoing development of the technology itself. This is innovation as perpetual beta, what I have earlier coined as adoptation: the adoption/adaptation of innovation.

The future of innovation is bright: Business Innovation Summit recap

The Conference Board of Canada convened the Business Innovation Summit these past two days, which featured a lot of great discussion on how Canada can step up its game in terms of encouraging firms to invest in productivity and innovation. The Honourable Gary Goodyear, Minister of State for Science and Technology and the Federal Economic Development Agency of Ontario (FEDDEV) opened the conference with a keynote address that focused on skills development and encouraging students from K-12 through to college and university to embrace innovation in their skills and entrepreneurship. This was an important theme of the conference.

Doug Watt and Dan Munro of the Conference Board picked up the theme of skills with an overview of their updated Innovation Skills Profile and the newly created Commercialization Skills Profile. These are important tools that can aid educators and firms alike to assess and develop the innovation and commercialization skills people need in order to enhance and engage in innovation and commercialization. A couple of years ago I put together a study to measure innovation literacy in students engaged in applied research; Doug and Dan and the Conference Board were partners in this. Our plan was to use the Conference Board's General Innovation Skills Aptitude Test (GISAT) to assess the innovation skills in order to start unpacking outcomes associated with how we foster innovation literacy in our programs and applied research with industry. I am pleased to say that we will relaunch this effort. Part of George Brown College's commitment to Enabling the innovation economy in our Strategy 2020 Balanced Score Card is to create an impact measure that will enable us to asses the downstream effects of our programs and applied research projects. Our Innovation Advisory Board has been very instrumental in helping to move this work along, and we are ready to relaunch the Measuring Innovation Literacy study. Stay tuned for more details.

Another notable element of the conference was a talk about Deloitte's study on The Future of Productivity. This contains prescriptions for industry, government and academia. For the latter, this includes the need to "Align curricula with business and industrial needs for scientists, engineers and leaders" and "Develop, protect and exploit intellectual properties developed at the post-secondary level." Colleges and polytechnics, as well as professional programs in universities, are well attuned to the first point. Canada does a deplorable job on the second. As I've said before, ideas emerging from Canadian basic research seem to be just another raw resource we extract and give away without adding value (i.e. commercializing). It's time to rethink the ways in which we promote basic research and university tenure to foster greater value-added R&D.

Latent in the first point about aligning business needs to curricula is the idea of public-private partnerships for R&D, or what I call P3RD. Taken together - fostering innovation skills throughout the education systems, linking industry needs to curricula, and taking an instrumental approach to aligning R&D outputs and input - are all part of taking a managed approach to innovation and outcomes. On the topic of P3RD, NSERC president Suzanne Fortier announced the results of their mid-term evaluation of their partnerships program at the Summit. The news is good: Sixty Percent Increase in Businesses Doing Partnered Research and Innovation with Universities and Colleges, an increase that can be strongly attributed to the success of the College and Community Innovation Program that funds colleges and polytechnics to work with firms on applied research.

The future of innovation is bright when you see the kinds of outcomes associated with applied research we conduct with industry partners. I convened a session at the Summit on How Colleges Support Business Innovation and Commercialization, featuring Carlos Paz-Soldan, president of Tenet Computer Group and a GBC Research partner, and John-Allan Ellingson, a student in our Mechanical Engineering program. Carlos, who also chairs our Innovation Advisory Board, told the audience about Tenet's Pandemic Planning Toolkit for Mobile Devices product that GBC Research worked on, and outlined Tenet's new Green Rack Service (coming soon to a conference near you) that we are now supporting through applied research engagement. Carlos talked about the value of engaging in collaborative applied research as it enabled him to extend his own R&D and commercialization capacity while being a conduit for recruitment of full time and co-op students.

A real highlight for me was our student, John-Allan Ellingson, who spoke about applied research work he is doing on industry partner SOS Customer Service's crane project. The project is being led by Professor Jamie McIntrye of the Centre for Construction and Engineering Technologies, who is also the innovation lead for our Advanced Prototyping Lab. SOS Customer Service Inc. (SOS) is an Ontario SME that specializes in the design, development, sales and services of cranes, hoists, process automation and handling devices. SOS is collaborating with the George Brown College and Jamie McIntryre’s group to design, prototype and test a novel, lightweight and portable crane to lift windows into place for installation during construction of low-rise commercial and residential buildings. SOS has developed an innovative and simple design concept for the prototype. The new crane is expected to have significant advantages over technologies and approaches and has potential to significantly impact the return on investment (ROI) at building worksites. John-Allan is part of the team that is working with SOS to develop, prototype, test and commercialize their innovative design.

John-Allan spoke about the kinds of skills he is learning as a result of this applied research project, and how the project is giving him cumulative experience encompassing not just the engineering skills, but also design skills. This is an important point, as it relates to the need for both STEM and nonSTEM skills, and that innovation literacy and adoptation - the ability to adopt and adapt - demand a combined skillset. Chad Gaffield, President of SSHRC, put this well during another session on partnerships when he said that firms have the opportunity to partner with the whole campus when we engage all relevant fields, from the natural sciences and engineering to the social sciences and humanities. Not every faculty member in every department at universities or colleges wants to or is interested in engaging with firms on innovation challenges. But for those that do there is a lot of value: for the firms, the faculty members, and most of all, the students who, like John-Allan, demonstrate the kinds of innovation skills that will drive Canada's future productivity. Discussion on these important issues such as was enabled by the Business Innovation Summit gives me optimism about our future.