Nancy Hughes Anthony, chair, NCE's Private Sector Advisory Board and former president and CEO of the Canadian Bankers Association

How to make industry-academic partnerships work

By Nancy Hughes Anthony

Running a research centre that involves both academia and industry isn't all that different from running a successful technology company. You need an experienced management team with the marketing and legal know-how to develop new products and services that customers will want and buy. You need an engaged board of directors with the requisite business, legal, financial and technical expertise. And, perhaps most importantly, you need a solid business and financial plan that can meet milestones and change direction quickly if things get off course.

These aren't approaches one would normally see within a traditional research organization. But apply them to a group that puts academic research to work solving industry challenges and you have the basis for an effective collaboration model. Canada has developed two such programs over the past five years: the Centres of Excellence for Commercialization and Research (CECR) and Business-Led Networks of Centres of Excellence (BL-NCE) — tri-council programs managed by the Networks of Centres of Excellence (NCE) Secretariat.

CECRs match clusters of research expertise with the business community to share knowledge and resources to bring new technologies to market faster. BL-NCEs are large-scale collaborative networks headed by not-for-profit industry consortia that increase private sector investments in R&D. A Private Sector Advisory Board (PSAB) comprised of venture capitalists, bankers, serial entrepreneurs and seasoned industry executives provides expert advice and recommendations on these two programs.

These cost-shared networks and centres provide money to support R&D and students with job-ready skills, responding directly to real-world challenges facing Canadian industry. They will stick with your research team or company through the inevitable ups and downs of innovation to help push promising research closer to market.

The first wave of CECRs and BL-NCEs, 11 and four respectively, were true pioneers in this bold experiment. There were no proven commercialization models, no agreed upon best practices, no magic bullets for sustaining a centre after public funding ended and no "right" approach to handling the thorny issue of intellectual property when competitors collaborate in a business-driven research network. There was, however, an unwavering commitment by respected science and business leaders to test new ways of collaborating.

The government has since made the programs permanent and funded another 11 CECRs. Despite the current fiscal belt tightening, new competitions are underway or planned to launch even more CECRs and BL-NCEs, and extend support for existing ones.

Why the confidence in these particular programs? In a word, "results": millions of dollars in venture capital for start-up firms, commercialization centres with a clear path to self-sustainability and, for BL-NCEs, cooperation between competitors to find solutions to shared industry challenges. For every $1 in public funding invested in the CECR and BL-NCE programs, industry contributes $0.76 and $1.68 respectively. This increases to $1.85 and $3.01 respectively when contributions from other partners are included.

Industry engagement key

Inclusive governance is key to a successful centre or network. This requires working from the start with the companies that will make and market these technologies, as well as the customers who will ultimately benefit from them.

This goes well beyond a letter of support or even a financial contribution. With both CECRs and BL-NCEs, you see small and mid-sized companies through to multinationals represented on boards of directors, management committees and advisory boards. They are part of the decision-making process, helping to set the organization's strategic direction, its research priorities and closely monitor each project's progress to ensure its commercial feasibility.

The PSAB has learned much about what works and what doesn't when it comes to commercialization and private sector consortia. As a result, we have raised the bar for what will be expected of new CECRs and BL-NCEs, and those applying for a funding extension. Just because a network or centre was funded in a first round does not guarantee it will be automatically renewed — fewer than half are. New applicants are expected to use best business practices to develop an effective business plan, exit strategy and realistic projections for self-sustainability. These are challenging criteria, even for networks and centres supporting impressive research and commercialization initiatives.

path to sustainability

CECRs are expected to become self-sustaining during their funding period. This sustainability can take many forms. GreenCentre Canada, for example, takes a sweat equity approach, exchanging its technical, management and legal services for a stake in any new spin-off. MaRS Innovation uses a combination of institutional membership fees and takes a percentage of royalty streams from new products or an equity stake in spin-off firms. For other networks and centres, it may be revenues from contract research agreements, product sales, royalties or licensing, as well as contributions from other private and public sector entities. Whatever the model, ongoing involvement from industry is essential.

The PSAB recognized the inherent difficulty in requiring CECRs to become sustainable in just five years. Different technologies have different development cycles — commercializing a new drug obviously take much longer than a new smart phone app.

In response, the NCE will no longer impose a fixed funding period on new CECR applicants. While the contribution levels will remain the same, that support may be provided over 10 years, for example, assuming applicants have meaningful industry engagement, and provide a realistic assessment of how long it will take to become fully operational, move their innovations to market and become self-sustainable. Similarly, the BL-NCE program will now allow networks to apply for renewed support after five years to achieve research objectives in their sector – up to an additional five years.

Organizations around the world are searching for what works best when it comes to industry-academic partnerships. I'm proud to see Canada continuing to raise the bar for two programs that are breaking ground internationally.

Nancy Hughes Anthony chairs the NCE's Private Sector Advisory Board and is the former president and CEO of the Canadian Bankers Association.