Postscript: Improving our abysmal innovation record

April 8, 2010   by Stephen Murgatroyd

Stephen Murgatroyd, based in Edmonton, is a management consultant and writer.

There has been some substantiated concern that Canada is losing the innovation battle: according to the Conference Board of Canada, we are ranked 14th out of 17 nations when it comes to innovation.

In the past, Canada has invested in university research, development and commercialization activities in the vain hope of producing great commercial outcomes. The reality, of course, has proven the opposite. The roughly $14-billion annual investment in R&D to our universities has produced only modest returns, the result of the fact that universities are simply not designed to create commercial value from ideas and that they lack the incentives to do so.

It’s obvious the solution is not to continue spending even more on our universities to try and fix the path to commercialization.

The real solution is to focus energy on where innovation really takes place—business. Rather than boost spending on R&D in universities, the federal government needs to use any new funds to significantly boost IRAP—the Industrial Research Assistance Program—and create incentives for private and public partnerships. More specifically, make focussed and strategic investments in key industry sectors it wants to grow and minimize investments in dying industry sectors.

The government must also boost funding for post-graduate student placements, especially those with a co-op component with business or leading to a post-doctoral position within business. It’s worth noting that those countries ahead of Canada in innovation have a higher percentage of post-grads working in business, which is key to leveraging ideas and innovation.

Third, invest in applied research where it’s currently taking place, that is, in the colleges and polytechnic institutions. It’s these institutions, after all, which are most closely aligned to industry, providing it with both the skilled people and the critical (and relatively inexpensive) applied work it needs.

Fourth, address the real lack of tier one venture capital in the country. Whether situated in Ontario, BC or Alberta, companies need to be “fed” two things—risk capital, supported by expert managerial talent, and realistic current market intelligence. Tier one venture firms supply both; banks and angel investors do not.

Stand firm
Further, the government needs to partner with the provinces in developing appropriate local innovation strategies; simplify the processes it uses for securing IRAP funds; start pooling its intelligence; stop believing its own press releases; and start getting realistic about the challenges facing Canada over the next 25 years. It’s time for some leadership and courage on the innovation file.

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