Dr Alan Cornford

Ripping the Cover Off Innovation - Part III

By Dr Alan B Cornford

In the first article of this series (R$, October 27/03) we exposed a few myths that surround innovation. The second part (R$, December 11/03) focussed almost exclusively on major influence drivers of “innovation capacity” – people and the private/public R&D ratio. In this final segment, we demystify still further, leading to a prescriptive context for some of the medicine Canada must take for policy transition to regain healthy innovative competitiveness.

Part II looked at present emphasis on R&D centric innovation and getting the balance of the R&D mix more competitive. Industry is the engine of innovation and hence it makes perfect sense that local commercial relevance of public R&D is key. Local industry must champion commercialization of ideas, so relevance is linked to local innovative capacity. Industry typically must spend much more than the original R&D investment on application of the idea to develop competitive commercial products. Then industry must spend10 times that amount for marketing and sales. R&D expenditures favouring the commercial end of the spectrum are therefore to be expected if innovation is to lead to innovative capacity and local wealth. No real surprises here.

But Canada is a collection of communities. Some have colleges; while some in larger urban centres and cities have universities; most have neither. However, communities are involved in innovation – more than 80% of innovation comes from grassroots industry that constantly does things a little better, faster and niftier.

NEW IDEAS FLOW FROM MARKETPLACE

This is not R&D centric, or R&D driven innovation; it is just “innovation”. R&D ratios here must be looked at differently. New idea generation (innovation) is from the marketplace, employees, customers, competitors or internal projects. Commercialization and adoption/adaptation/applications (R&D) to align ideas to company processes and products must still be undertaken to produce new and better products.

Therefore community innovation is driven by monitoring the marketplace for new ideas that may be quickly and competitively adopted, developed and sold (and then perhaps made obsolete by internal R&D for subsequent improvements).

So what should be the present balance of public innovation investment applied to this 80% of the equation? Well, in 2000, $8 billion was expended on public R&D ($5.5 billion in universities and $2.5 billion in government research labs). Therefore to get the balance right, four times this expenditure on community acquisition of ideas and then their adoption/adaptation would then equate to ….. Sorry , dropped the calculator.

CURRENT SYSTEM FAILS AT COMMUNITY LEVEL

The system has disenfranchised our regional communities in the Canadian innovation strategy. They have the people talent, they have the small- and medium-sized enterprises (SMEs), they have the interest and they have the will. They need the way. Smaller jurisdictions in New Brunswick, Newfoundland, Prince Edward Island, Northern Ontario, the Yukon and others are presently trying to establish community innovation strategies.

We don’t have the right balance because we don’t have many ventures maturing and building value with all of the requisite attributes for investment. We don’t have enough venture deal flow to attract and retain venture capital. So we don’t have an access-to-capital problem – we have a venture packaging and development problem that could evolve to an access to capital problem (which we will avoid if we get the former right). Community innovation is solvable. We have the will. A community innovation template for self assessment and innovation and commercialization development is now available.

PRESCRIPTION & POLICIES FOR SUCESS

It would be a little trite to try to provide a generic prescription and related policies to quickly cure the Canadian situation. It is not trite, however, to point out a few of the fundamental principles and policies leading in this direction and developed in these articles.

1. Do not weaken public R&D, but strengthen its research for innovation, 15/1 natural leverage and influence by public private partnership (PPP) “partnering on ideas” with LOCAL industry. This should occur right from inception before the research commences to ensure local relevance and a pre-identified local commercial champion. For each new public R&D dollar invested in existing and new programs, progressively increase this PPP element through incentives. Then it will become part of our innovation culture and philosophy, as a positive and welcomed attribute by public research agencies. Remain committed to developing high quality people — both S&T and business — in the process.

2. Enhance scientific research and experimental development (SR&ED) tax credits and other incentives to accelerate transition towards private/public R&D ratios greater than 3:1 in ALL regions of Canada. The benefits far outweigh the investments. Each region should develop its own corporate innovation investment prospectus that transitions its economy to this ratio over requisite time and within a common national prospectus. University applied research will automatically benefit to some multiple of the present in partnership with SME’s while building receptor capacity.

3. Transition a major portion of new (innovation or R&D labeled) investment to community innovation idea outreach and acquisition via community innovation partnership facilitators, to recapture the under utilized 80% of non-R&D Canadian innovative capacity. The community innovation template will facilitate self -diagnosis and best practice development permitting shared opportunities, experience and success.

Now that medicine (and policy) isn’t too hard to take! Just watch the positive results in the body of innovative capacity produced, a recovery that is 15 times faster than with the current medicine. And it can all be done within existing resources and those planned for Canadian innovation well being.

Dr Alan Cornford is a Vancouver-based technology entrepreneur. He previously served in the BC government as ADM for S&T and was president/CEO of Simon Fraser Univ's SF Universities Corp.