John McDougall

Canada needs to focus on adding value to research

By John R McDougall

One of the key issues for Canada today is whether and how well we gain advantage from the increasing government investment in research and development (R&D). In the middle of the last decade, federal and provincial governments recognized the need to beef up R&D activity. The result is significantly increased public expenditure on R&D in Canada during the past few years, lead by initiatives such as the Canada Foundation for Innovation and the Canada Chairs Program. We have all celebrated these efforts. But, a serious question remains. Is this increased R&D investment translating into a proportionate increase in the number of jobs and commercial activity?

There is widespread recognition that the innovation system is complex. It involves much more than discovery. And higher and higher costs are incurred the further one moves down the innovation chain. With the benefit of hindsight, it is apparent that focusing investment primarily at the front-end of the innovation system means we will never realize much of the potential from our investment. Such an approach is somewhat like buying raw ingredients and hoping they will magically turn into chocolate cake. We all know it takes much more than that.

Why does this matter? Well, when we support front-end activities without any consideration of other issues, the primary benefit to Canada is to employ researchers. Although such employment is certainly of some value, and can perhaps be justified by related roles in educating highly qualified personnel, it offers little in the way of added value from our primary investment in research.

Studies of innovation in Canada and elsewhere show that the raw value of a new idea is generally less than 5% of the ultimate end worth of a discovery, and often only 1-3%. So, when we hand off a discovery by licensing, we are implicitly deciding to give 95% or more of its value to others. Such a decision is neither bad nor good in and of itself. Most of us are easily persuaded by the opportunity to share in 5% of something rather than 100% of nothing. Similarly, most university technology transfer offices will make the rational decision to license for two reasons. First, something is better than nothing. And second, in the absence of resources to add additional value, any return is better than no return.

My time at the University of Alberta and now the Alberta Research Council (ARC) has reinforced my view that success in technology commercialization is primarily about attitude and culture. An organization tends to do its best job in areas that match its dominant culture and values. That is why one of the most important decisions I had to make upon arriving at ARC was to decide what our dominant role would be. Since the dominant roles of universities are teaching and research, we chose to position ARC down the food chain — to strive to become the best in Canada at developing and commercializing technology for societal benefit.

We do have a strong R&D capacity in Canadian universities. While we can always do better, the steps of the past few years have gone a long way to rejuvenating and strengthening that capacity. Unfortunately, there is far too little capacity in Canada of the sort found at ARC, focused on converting early stage ideas to marketable products and services. That, I think, is one of the reasons we see constant pressure for universities to become more “industry relevant”. While I applaud the recognition of the need, I wonder whether that is, in fact, the optimal solution. Maybe instead, we should invest in organizations whose role, culture and value sets are geared to adding significant domestic value and benefits to the exciting ideas emerging from our increased investments in university research.

John McDougall is managing director and CEO of the Alberta Research Council