David B Watters, president and CEO, Global Advantage Consulting Group Inc.

The NCE programs – A remarkable innovation

By David Watters

The federal Networks of Centres of Excellence (NCE) suite of programs began in 1989 as a remarkable experiment in public sector innovation. The programs were designed to mobilize Canada's research talent in the academic, private and public sectors on a virtual and networked basis, and apply them to the task of developing the economy and improving the quality of life of Canadians.

As Peter Nicholson (chair, NCE Standing Selection Committee) recently stated about the NCE, "Its networking model, which has been pioneered in Canada, enables big multidisciplinary issues to be tackled that are well beyond the scope and resources of individual academic research teams."

The 48 current networks are funded by the federal government at almost $1 billion over their operational mandate. However, experience has shown that the networks can leverage as much as 1.85 to 3 times this amount from participating partners. And of course there are a range of benefits generated by the networks including: trained researchers; scientific publications; new patents granted and licences negotiated; public-private sector partnerships; new companies and related employment; attraction of foreign investment; and development of new products for the marketplace.

The program has evolved and expanded over the years and the networks are allocated as follows: 16 NCEs – (includes 5 Knowledge Mobilization NCEs and 1 India-Canada international NCE); 23 Centres of Excellence for the Commercialization of Research (CECRs); and, 5 Business-led Networks of Centres of Excellence (BL-NCEs).

By many key metrics, the NCE suite of programs have been a successful ongoing experiment, and have adapted to the changing needs of the public, private and academic sectors. But can they be improved? Should they be aligned more directly with Canada's new Science, Technology and Innovation (STI) Strategy?

Improving the Suite of NCE Programs

I. Alignment with Sector Priorities.

The new federal STI Strategy identifies 5 priority sectors for innovation:

1. Environment and Agriculture

2. Health and Life Sciences

3. Natural Resources and Energy

4. Information and CommunicationTechnologies

5. Advanced Manufacturing

How well do NCE Networks align with these priorities? One might expect that, over time, the allocation of funding for NCE Networks might be expected to approximate an even distribution among these five priority sectors. In this regard, note that the $826 million in investments made by the Natural Sciences and Engineering Research Council in 2012-13 were allocated very equitably.

However, note in the chart below that the NCE distribution of funding currently varies significantly from such an even distribution over the five federal priorities.

While there are many subtleties and reasons for these NCE allocations, with the introduction of a new federal STI strategy it may be timely to ask if we have the right balance. This may be particularly relevant, for example, given the government's new and understandable emphasis on innovation in the advanced manufacturing sector.

II. Colleges and Applied Research.

The new STI Strategy provides a renewed emphasis on innovation and as the prime minister stated in his introduction to the Strategy, Canada's innovation stakeholders need "to translate brilliant theory and ideas into applications that will improve the day-to-day lives of Canadians and generate economic jobs and growth across the country." With this objective in mind and considering that none of the 48 networks is centered on a polytechnic or college (as opposed to a university) should we not try to provide more support for Canadian applied research by allocating one or two new NCEs to polytechnics/colleges?

III. International NCEs.

Regarding alignment with the new STI Strategy and building on minister Ed Holder's statement in his preface to the strategy that innovation is to "help Canadian businesses prepare to compete and win in the global marketplace", should we consider expanding the single international NCE we have (India - Canada NCE) and over time establish international NCEs with China, Brazil or other emerging markets?

IV. Best Practices.

One excellent practice the NCE secretariat has introduced is to convene an annual conference for NCEs to discuss operational issues, including best practices. Could this initiative be expanded to include the development of a manual of operating instructions incorporating all best practices, perhaps called "How to Establish and Manage an Innovation Network for Dummies"? In reality each new network is an "entrepreneurial start-up" and seasoned advice and mentoring can be of great assistance. Experience has shown that creating and sustaining an effective innovation network is a remarkable challenge.

V. Research on Networks.

Similar to the emphasis throughout the new STI Strategy to strengthen a culture of innovation, shouldn't we encourage all organizations to invest in research to improve their capabilities? Of course, such an approach should also be true for the suite of networks in the NCE programs. How much do we understand about the performance of effective networks? How do they share information? How do they take decisions? How do they resolve conflicts? How do they decide priorities? How do they agree on contributing inputs into a partnership and, an equitable sharing of the benefits of network success? How do they incent and reward effective network behavior? How do they communicate outside the network? What criteria do they use to expand membership in the network? How do they become self-sustaining?

These and other questions could be usefully addressed by a research program on "innovation networks" themselves – possibly sponsored by the Social Sciences and Humanities Research Council (since it would involve a range of social sciences).

VI Intellectual Property.

The new STI Strategy points out a need for innovation stakeholders to strengthen the understanding and use of effective intellectual property (IP) instruments. As the NCEs become larger and more complex (and international) there may be a growing need to address this challenge and strengthen the benefits to Canada from investments in NCEs.

VII. Sectoral Integration.

Currently there are 48 Networks of Centres of Excellence operating across the country. Each network has its own staff, resources, overhead, communications and knowledge and technology transfer functions. Does it make sense over time to consider coordinating some network activities, or integrating some of these networks or consolidating some functions? Are there areas of significant overlap among the 25 Health and life science networks? Would it make sense to coordinate some aspects of their research and technology development activities?

Since combinations of IP and technology are needed to produce a new product — should IP be allocated to an NCE patent cooperative? Would this facilitate private sector access to emerging technologies? As the NCE business model evolves and more NCEs are created, these kinds of issues need to be anticipated and examined.

The NCE suite of programs is a remarkable and successful experiment in building public, private and academic innovation networks. However, with the release of the new STI Strategy and the introduction of some new priorities, it is perhaps timely to reflect on how to improve the suite of NCE programs and ensure their strengthened alignment with federal priorities.

David B Watters is a former Assistant DM at Finance Canada responsible for economic development and corporate finance, and is president and CEO of Global Advantage Consulting Group Inc.