Probing Canada’s commercialization problem
Canada-wide study to bridge commercialization gap
OTTAWA—Innovation came easily for Angella Hughes and her Canadian cleantech company, Xogen Technologies Inc.
The Orangeville, Ont. firm started out more than ten years ago building up a technology to split water into hydrogen and oxygen gas.
“Accidentally, we discovered it could also treat wastewater,” recalls CEO Hughes.
Coming up with the idea was effortless, but actually bringing it to market has been anything but.
“The path to commercialization is not easy and it takes longer than everyone expects,” Hughes says.
Accessing capital and skilled workers who will stick through the process were among the firm’s biggest challenges.
With help from government funding and university collaborations, the company has finally reached pre-commercial stage. Xogen expects to break the market with its first system in place by at least the first quarter of next year.
Not all Canadian companies will make it that far. Canada has a commercialization problem.
The World Economic Forum’s Global Competitiveness Report found Canada has dropped from third place in 2001 to 16th in 2007―a change attributed mostly to weaknesses in bringing innovations to market.
Canada also received a “D” grade in a recent Conference Board of Canada report card on innovation, ranking 14th out of 17 other countries in the Organization for Economic Cooperation and Development (OECD).
But a new nation-wide study is underway that could change that.
The 2011 study on Effective Commercialization of Innovations in Canada is being led by the Canadian Advanced Technology Alliance (CATA) in partnership with the University of Waterloo and the Ontario Institute of Technology.
The study will draw on in-depth interviews with Canadian firms, as well as academic and government organizations involved in the commercialization of innovation.
Its results are expected to help industry and government benchmark their success or lack of thereof, says Sorin Cohn, CATA leader of the study.
“There are two gaps: the technology gap, which is taking an idea and turning it a tangible technology, and then the gap of taking that product or service to market,” Cohn says.
“Our biggest weakness is not so much lack of innovation, but the lack of capability to commercialize on a global scale,” he adds.
A big barrier is funding, especially for small to medium-sized companies that often lack the resources to go the distance. Innovation can happen on the spot for free, but commercialization requires time and capital.
“Most companies put all their efforts and resources into making products and then find out there’s not enough funding or resources to go and commercialize their products and services. This is very typical in manufacturing,” he adds.
Cohn says the study could help Canadian companies develop better practices and programs by identifying which commercialization processes are working.
For Xogen, government funding and university collaborations were huge helps along the path to commercialization, but Hughes admits it’s not enough.
“Raising capital becomes especially difficult if your timeline for commercialization is long, as ours has been. Investors in Canada don’t have patience for return on investments,” she says.
To get by, it took resourcefulness.
“You learn to run a tight budget and find ways to get things done with less money,” Hughes says.
The company moved its offices outside the Toronto area to Orangeville, where housing and living costs are lower.
“Instead of hiring recruiters, which can cost thousands of dollars, we posted jobs for free at universities or government websites,” Hughes says.
As well, a collaboration with the University of Toronto allowed them to do product development with students at a cheaper price than full-time employees.
That strategy also worked for Kitchener firm Miovision Technologies Inc.
The company manufactures a technology that makes transportation networks smarter. The product started off as a University of Waterloo research initiative and has now been commercialized in 18 countries.
Argonault, a north Toronto company, also credits its market entry to academic partnerships.
The company developed a high-tech wheelchair that oversteps obstacles, loads to and from minivans, and assists people from the bed and toilet.
Inventor and owner Vladimir Ivanchenko says resources such MaRS―an Ontario innovation centre for entrepreneurs―and business partnerships have helped.
“Collaboration is a great commercialization engine. Look around, search partners and harness social networks too,” he advises.
Cohn agrees that teamwork will be essential to improve Canada’s competitiveness in the world market.
“We need to collaborate with local partners—think globally and act locally,” he says.