Federal government launches Innovation Agenda, Science Review

The last couple of days have been a busy one on the Canadian innovation policy front. The new Innovation Agenda consultation process has been launched by Minister Bains, and prior to that Minister Duncan launched the Science Review. The latter looks at basic research, and the former applied research and experimental development. Amidst this the Institute for Research on Public Policy convened a discussion and published a review of the Jenkins Panel report. All of this is good for Canada - if it leads to substantive changes in how we invest in the continuum of research and innovation.

The Innovation Agenda is most relevant to colleges and polytechnics, and we are well represented in the language - our focus on industry-partnered research is a key platform for innovation, for both the private and public sectors. Specifically the background on the Innovation Agenda asks: "How can colleges play a larger role in the innovation ecosystem?" This is a positive step forward for the country and our urgent need to refocus efforts on research and innovation for Canadian productivity gains.

In addition, the Technology Access Centres, represented by Tech-Access Canada, are well suited to being the portal into local and regional innovation ecosystems (a point expertly made by NSERC president Dr Mario Pinto at the recent launch of Tech-Access Canada). TACs are at the forefront of college applied research, enabling the innovation economy in several important sectors and clusters. The colleges, cegeps and polytechnics that form Tech-Access Canada are already functioning as important portals into regional ecosystems, supporting private firms to get new products to market swiftly.

As the Canadian college and polytechnic applied research system matures, the Innovation Agenda offers an important avenue for enhancing the strategic value we represent to the country. Earlier in May GBC submitted advice to Minister Bains on the Innovation Agenda. In preparing this input we gained advice from our Innovation Advisory Board, industry partners, and the Practical Policy Exchange (PPX), an ad hoc collaboration of public and private sector participants we convene for input on important policy matters relevant to the College. Our input was organized according to the following themes:

• Canada has a two-fold productivity problem
• Start-ups need to Scale-up, and Stay up
• Work-Integrated Learning drives industry innovation
• Supporting homegrown talent
• Place matters to innovation
• De-Risk personal innovation investments
• Engaging First Nations communities 
• Enhancing Academic Productivity 
• IP Pooling from public R&D creates public value
• Bridging the Academic-Industry divide
• Innovate the machinery of government

Watch this space in the days to come for our input.

From basic research to the entrepreneurial state

An interview in the Globe with the Honourable Kirsty Duncan, Minister of Science, offers a notably balanced view on the state of Science and Technology (S&T) and the differentiation between basic research and innovation. It nicely separates five often conflated issues: scientific muzzling in federal departments by the previous government (to be fair the Globe's Konrad Yakabuski says that the Chretien government did the same thing), the anti-environmentalism of the Harper government, the HERD spend, the BERD spend, and finally the need to increase commercialization and BERD.

It is important to point out that despite what the Globe reports in its interview with Minister Duncan, Canada ranks much higher than average on S&T. This was demonstrated by the Council of Canadian Academies' Expert Panel report on S&T, published in 2012 (and on which I served).

The consistent lumping together of low BERD (a proxy for poor industry innovation and productivity) with the lack of commercialization of basic research muddies understanding and does a continual disservice to public policy in Canada. 

First off, Canada has an excellent record when it comes to basic research (see the CCA's S&T report, linked above). Turning our research outputs into commercialization successes is where we fall down. Canada’s consistent lack of commercialization of basic research, well documented by many expert panels, is generally seen as a failure of business to invest in R&D or to be receptive to the outputs of academic research. This does not make sense as it confuses the basic research function with industry innovation capacity. These are related, but separate.   

There is an issue of receptivity for academic and industry partnerships, as outlined in my last post. These originate in the lab from discovery or basic research, or from industry, and are demand driven. A review of the mandate letters for Minister Duncan and Minister Bains shows that the government understands this distinction and is taking steps to correct a deficit of evidence-based policy. As well, they're taking steps to promote (and fund, presumably) the discovery to innovation continuum. This means basic research, through applied research right on to experimental development.

And into this mix the Science, Technology and Innovation Council (STIC) has filed its latest report. There are no surprises here: a focus on increasing both HERD and BERD, support more firm level innovation, take more risks, and importantly, "invest strategically, further focusing government funds to build globally competitive critical mass in targeted areas." This last point aligns well with the new government's incipient Innovation Agenda and its focus on being "the entrepreneurial state." Minister Duncan's goal to "Lead the establishment of new Canada Research Chairs in sustainable technologies, working with the Minister of Innovation, Science and Economic Development" aligns well with this mode of thinking. The state must be an active agent in the setting of national priorities for basic research. Climate change and sustainable technologies are among the most urgent priorities of the day.

The STIC recommendations, read alongside the incoming innovation agenda, show that the polytechnic and college applied research model is needed now more than ever. As I pointed out back in 2010:

The key for college applied research is instrumentality, or the intentional application of applied research and innovation services to industry needs and contexts. This means that we are focused on addressing the industry problems faced by firms who are seeking to innovate and create new value in their sectors. We are an explicit instrument for addressing these industry problems, meaning that we respond to what is needed, fitting into the R&D continuum for latter stage innovation support. 

Polytechnic and college applied research offers an instrumental component to increasing commercialization of basic research while helping to foster greater industry innovation capacity. We do this while providing our students with crucial innovation skills across a wide variety of industries, skills and experiences that are complementary to those that university graduates gain in their fields of study. 

We can benefit from more investment in basic research, as long as there is explicit planning and management of applied research and experimental development – the innovation side of the equation. Ultimately what we know right now of the new government's innovation agenda is good news for Canada and R&D generally. The challenge is to realize the downstream value of our HERD investments. Pushing harder on the innovate button won’t work. The role of the entrepreneurial state here is to specifically foster two things: greater academic productivity (read: commercialization) and industry innovation capacity (read: BERD).

There is really no mystery here: unpacking the “black box” of research commercialization and industry innovation requires the capacity for collaboration, and necessitates complementary approaches to increasing academic and industrial innovation capacity and productivity. Understanding these as two distinct yet intertwined phenomena is essential to ensuring we can leverage the right instrument against the right problem at the right time. Think of this as innovation therapy.

Unpacking the Black Box of Innovation or, the Planning and Management of Innovation

As noted earlier the Canadian Council of Chief Executives recently initiated work on the Business Higher Education Round Table (BHER). There are two areas of focus for the BHER: research collaborations and work integrated learning.

Industry-academic partnerships are an excellent vehicle for increasing both academic and industrial productivity when it comes to research and development and innovation. Strengthening these partnerships requires industrial receptivity to working with academic partners, as well academic receptivity to working with industry.

This can be further unpacked as ensuring that there is industrial capacity to receive the outputs of basic research performed in our world leading research labs (either directly or through “bundling” approaches to IP where individual IP is combined with others to create companies/marketable products). Tandem Launch is one company specializing in bundling of IP. Read an overview of it here.

Similarly, industry-academic cooperation models need to account for applied research and experimental development (the innovation side of the discovery to innovation continuum in OECD terms) where industry has a need and seeks academic help to address (this is the applied research model common in colleges and polytechnics. This also happens in universities.)

Models of cooperation thus need to account for the need to socialize both sides of the equation to working with each other according to context: who is the initiator of the research (industry or academic) and what goals or outcomes are desired (commercialization of basic research or addressing applied research needs of firms). And, who is the right person or what is the right facility at what point in time to address the stated outcome.

These models of cooperation could feasibly account for the type or nature of skills/competencies/facilities required for a given project. If we understand the discovery to innovation continuum as a horizontal process (though not necessarily linear), then the vertical axis at each stage of the process requires various people with complementary skills. This could be pairing a PhD with technician lab support at one end, through to engineers, technologists and technicians for prototype development on to marketing materials design and sales at the other. The point is that at each stage there are a host of complementary skill sets and facilities that various types of institutions can provide. This model would serve the need of increasing commercialization success of basic research through to addressing the applied research needs of firms.

In addition to the way in which colleges and polytechnics work to support demand-driven innovation in firms and universities (GBC for example supports many projects at the University of Toronto, helping scientists there create products for market based on research discovery), there are universities engaged in similar pursuits. The best example I know of is the UHN’s  Techna Institute, whose mandate is to link clinicians and scientists with the needs of industry and vice versa.

Innovation Policy Advice: Time to get rid of SR&ED

Writing in today's Globe regarding the incoming government's approach to innovation, Sean Silcoff provides some good advice on shaping a better innovation policy. Silcoff posits out that the Trudeau innovation platform was light on new ideas, and was merely an attempt to "Throw money at a problem without defining the problem." I don't agree. Implicit in the Liberal innovation platform is the need to foster greater business investment in R&D. This is important to unpack as it relates to our overall productivity and innovation challenges. Of course the issue is complex, but weak industry productivity and innovation coupled with poor academic receptivity to industrial efforts is a significant part of the problem.

The Liberal government's innovation platform includes targeted investments in clean technology and other important economic sectors (it's worth repeating: read the interview with Bill Gates in the Atlantic). And the incipient platform outlines

...direct support to business incubators and accelerators, research facilities, financing, and other support for successful small companies wanting to grow and export. The objective is to create successful networks like the American and German partnerships between businesses, government, and university and college research. Working with provinces, post-secondary institutions, and industry, this funding will also help modernize and strengthen the technology transfer and commercialization functions at universities and colleges.

The reference to international comparators (such as Fraunhoffer) and a Small Business Innovation and Research Program, modelled on the US program, looks to directly prompt industry to increase investment in R&D. Thus the problem is tacitly identified; rendering this explicit will be the job of the incoming government. Ensuring there is a strong, complementary academic support structure in our colleges, polytechnics and universities will help industry to innovate (and get more academic discoveries to market). This is an embrace of the entire research through to innovation continuum.

And it is here that Silcoff approaches some sensible advice, specifically on the Scientific Research and Experimental Development (SR&ED) tax credit scheme, as this is needlessly complex and seemingly a vehicle for to much overhead to be spent on applying to the program. He should go further: SR&ED should be eliminated and the money moved upstream to support direct industry R&D, or hiring as Silcoff writes about. I have previously outlined some of the problems with SR&ED; it really is time to get rid of this program. 

The Small Business Innovation and Research Program, and the IRAP industry voucher program as initiated by the last federal government, are key ways to incentivize industry to engage in R&D, and to partner with the most appropriate academic centre to get this done. 

Generation renew: innovation policy and education

I've been reading the revised edition of The Entrepreneurial State which supports the idea of state intervention and the development (and funding) of priorities in basic research. Those interested in this viewpoint would do well to read the interview with Bill Gates in the Atlantic, in which he says the same thing regarding the need for basic science investment in climate change. This is an important point that needs to be discussed as it relates to innovation policy and the public funding of basic and applied research, as well as experimental development (which is the innovation side of the equation - see post script below). There is also an interview in the recent Report on Business magazine with nobel laureate George Akerlof, in which he also supports the notion of state intervention. We are witnessing the rise of behavioural economics that shows how rational actors are induced to act irrationally.

A positive link here is the work that the Canadian Council of Chief Executives initiated recently: the Business Higher Education Round Table (BHER). There are two foci here: research collaborations and work integrated learning. Of particular import is the fact that leaders of business and higher education are working together to find productive solutions to inherent challenges in our economy - the lack of productivity and innovation, as well as persistent (and perceived) skills gaps. Universities Canada new CEO Elizabeth Cannon (co-chair, with GBC President Anne Sado, of the BHER) recently came out with a list of 5 priorities, which includes better industry academic partnerships.

All of this points to what I will call Generation Renew: we are generating renewal through a politics of detente that sees business, colleges, polytechnics and universities working together to address common needs. This includes industrial and academic productivity and partnerships, as well as a greater focus on skills the economy of the future needs.

Generation Renew is not just the generation of new models of cooperation and collaboration, it is also the generation of people that will come up within this milieu and start to address the long standing issues faced by the Canadian economy. Generation Renew supplants the alphabet soup of generational change and flux. Generation Renew are those people who work their way through the educational systems in Canada to acquire skills and competencies, are entrepreneurial and innovative, and who work together to make Canada a better place for all. The right mix of intervention and coopetition will enable Canada to make maximal use of our basic and applied research capacity, while ensuring we have the right skills for the innovation economy.



Post Script: Today's One Thought a Day blog post by Alex Usher offers some good advice on innovation policy. Usher offers views on differential spending between what he calls "pure research and applied research." There is an inherent problem with calling basic research pure research - it implies that applied research is somehow impure (and this in one statement sums up Canada's problem with commercialization as seemingly not pure). And, Usher, like most, ignores the third component of R&D - experimental development, in which innovation emerges. However, let's focus on Usher's repeat of the Jenkins Panel recommendation to support the establishment of an innovation granting council. This is important. While the previous government did a lot to promote HERD as well as to continue the previous Liberal government's initialization of the college research funding program, a lot of the good was lost in the rhetoric of entitlement to what I would call a libertarian view on "pure research": don't tell me what I can and cannot research, just fund me to do what I want to do. As I have pointed out in this space many times over the years, state intervention is required to support the establishment of clusters and national priorities. This is because, even though Canada spends more per capita on HERD than any other G7 country, we do not have the GDP to support research into anything and everything.