Opinions not captured by innovation strategy
Taxes, talent and attitude top the list of issues that innovation-intensive company executives view as the main obstacles to reaching the federal government’s ambitious target of becoming the fifth most innovative economy in the world. They were among the findings of a follow-on report to a study of R&D spending data conducted and released by Dr Douglas Barber earlier this year (R$, April 16/03).
Entitled Can the Private Sector Get Canada into the Top Five Innovative Economies of the World by 2010?, the new report concludes that many high-tech executives believe Canada has the potential to achieve its R&D intensity target. But that will occur only if a series of policy, regulatory, fiscal and programmatic changes are implemented.
Pragmatic and to the point, the latest report incorporates findings derived from interviews with 31 executives of Canada’s most R&D-intensive companies. It says the majority of Canada’s high-tech leaders are willing to meet one-on-one with Canada’s top policy makers and politicians at the federal and provincial levels to make their views known. This would go a long way to compensating for their near total absence from the last year’s consultations surround the innovation agenda.
“Almost without exception they are prepared to give voice to their position but they have one qualifier,” says Barber, who co-authored the report with financial backing from Industry Canada. “They are prepared to be a voice but it has to be personal and it has to be private. For most, their position is, ‘We’re Canadian and would like to be in Canada, but we have to make pragmatic decisions’. The big question is whether they stay in Canada.”
REPORT CALLS FOR CHANGE IN ATTITUDE
The call for a more competitive tax environment and measures to avoid the looming skills shortage are not new recommendations and are typically found in studies examining innovation. What is perhaps unique, however, is the report’s conclusion that a major cultural shift must occur in Canadian society towards innovative firms and those who run them. It’s a contention borne out by one of the executives interviewed for the report.
“The voters out there don’t understand the role of S&T and business in the economic well-being of the country. The Luddites have a lot to feed on,” says Ericsson Canada Inc chairman Lionel Hurtubise. “In countries like Sweden, which I know well, there’s a high level of understanding in the population of the equation between education, high technology and the economy. ”
Hurtubise agrees that much improved dialogue must take place between government and industry and says he plans to carry the message to Ottawa in his new capacity as a member of the Advisory Council on Science and Technology.
Barber is also adamant that the attitude of many Canadians must change towards innovation and commerce before the nation has a chance of becoming a top R&D achiever. He says that when high-tech company executives witness the attitudes of people in competing countries, the contrast with the distrust expressed by many Canadians can be distressing.
“What they really want is a high recognition which is true in every other jurisdiction they travel in, an awareness that global commerce is essential to the population,” says Barber. “They are out there in a very competitive, unkind world. If they’re doing it from a base where they feel the people don’t care, that becomes a festering sore.”
The idea for the report and its predecessor led Barber to engage in a close analysis of the database of Canada’s top corporate R&D spenders, maintained by Research Infosource Inc, an affiliate firm to RE$EARCH MONEY. Barber identified 120 companies that spent more than $3 million on R&D and had a research intensity of between 3% and 50%. Based on their growth rates and R&D spending patterns, Barber contends that these firms could generate another $150 billion in revenues and $20 billion more in R&D by 2010. That would be sufficient to move Canada into the top five innovative nations as measured by R&D as a percentage of gross domestic product. But even Barber has his doubts about whether the target can realistically be reached.
“My belief is that it is probably not achievable in that timeframe. But if we get serious about it and do it by 2015, it will change Canada,” he says. “Political leaders have to talk to commercial leaders and the challenge of shifting the culture is also the role of national leaders.”
In addition to taxation, highly qualified people and cultural attitudes, executives interviewed cite other challenges. Several expressed the need for a stronger emphasis on strategic procurement to level the playing field with competing countries.
An uncompetitive regulatory environment was cited as a concern by many biotech executives. They are convinced that Canada would attract more R&D if it improved the speed and quality of its regulatory apparatus.
And in a nod to post-September 11 relations between Canada and the US, some executives said Canadian politicians must demonstrate more civility. They claim that recent negative statements about the US resulted in a drop in business for their firms.
GOVERNMENT’S UNIVERSITY POLICY MISGUIDED
Perhaps the most controversial challenge included in the report pertains to government policies towards university research. Several interviewees described them as “misguided”, particularly policies relating to commercialization.
“It’s really the concept of commercialization in Canada that’s off base. Post-secondary institutions should not distract themselves from their primary goals,” says Barber. “The idea that commerce starts with fabulous research is not how commerce works. It’s about the top line, not research. Commerce is about listening to and responding to customers.”
Until industry gets a firm handle on the commercialization process, Canada’s poor track record of growing a significant number of small firms into mid-sized, globally focused and competitive companies is unlikely to improve.
“Let industry decide where the business opportunities are,” says Hurtubise.