An ambitious commercialization initiative exploring ways to increase the number of large high-tech companies in the Ottawa region has been given a national voice with the release of a white paper by the Canadian Advanced Technology Alliance (CATA). The OCRI Commercialization Task Force (OCTF) is now being groomed as a regional pilot that, if championed by the federal and provincial governments and industry, could establish a template for later-stage commercialization efforts across the country.
The primary organizing force behind the OCTF is the Ottawa Centre for Research and Innovation (OCRI), the lead economic development agency in the region. Launched earlier this year, the OCTF has achieved an impressive buy-in from many businesses and virtually every relevant organization in the Ottawa region (R$, June 9/03).
Chaired by Eli Fathi, CEO of New York City-headquartered Orbit IQ, the OCFT is generating original research through the business schools of the city’s two universities and has spawned a series of executive forums that are examining commercialization issues. The forums are moderated by David Watters, head of the Ottawa-based Global Advantage Consulting Group Inc with close ties to incoming prime minister Paul Martin (R$, October 3/03).
The OCTF is more than half way through a five-stage process of defining the problems and conducting research to validate assumptions to defining and implementing solutions. Fathi says it’s too early to determine exactly what recommendations will emerge. But he does acknowledge that the Task Force is targetting the next federal Budget which will likely be tabled in March and that it will be seeking $15 million to establish a not-for-profit centre of excellence for commercialization operated by OCRI. It’s a proposal that could find support in a Paul Martin government, who supports a stronger role for cities.
“We need to finance OCRI but we still don’t know what the exact solutions are yet,” says Fathi, adding that the concept for the commercialization centre is at least partly based on the Ontario Centres of Excellence program. “Large Ottawa companies tend to be branches and R&D arms of big companies. It’s not a healthy structure. We need a VC-friendly environment, export capabilities and business friendly policies from government because right now it’s a very acute situation for us.”
Of the more than 1,000 high-tech firms in the Ottawa region, 66% have 25 employees or less, while only 3.2% employ more than 250. The data show that too many small companies can’t break through crucial thresholds necessary to become successful and globally competitive.
The OCTF is focussing those firms with products and revenue streams with a view to making recommendations on how to overcome what the Task Force has described as the “choked pyramid” pattern of company growth. Many Ottawa high-tech firms were beneficiaries of the flood of venture capital (VC) that flowed into the region between 1999 and 2001. But that capital inflow has dried up and many fear that if these companies can’t develop global markets for their products, VC is unlikely to return in any significant volume.
OCRI president/CEO Jeffrey Dale says the decision to broaden the Task Force’s scope gives the initiative a greater chance of success.
“There’s not a lot of political will to put a solution in place just for Ottawa,” says Dale. “There could be a series of six or seven cluster regions across Canada.”
CATA WHITE PAPER
Incorporating much of the OCTF’s work to date, the CATA white paper — Turning Ideas into Prosperity – Commercialization: The Canadian Challenge — argues that government’s primary focus should migrate from R&D to commercialization while continuing to support university-based research. It acknowledges that the OCTF’s centre of excellence concept could be of value to communities elsewhere, but notes that the initiative isn’t merely a one-way cash grab.
“Ottawa’s high-tech community also understands that it too has to change its culture from within, and it is taking steps to make that happen. Ottawa’s discoveries on the path to commercialization may be of value to communities elsewhere, ” states the CATA paper. “(The OCTF’s) goal is to convince the federal and Ontario governments to nurture a home-grown industry and shift the current focus of support for R&D to commercializing technologies — a subject area that could, with federal funds, form the basis of a centre of excellence dedicated to studying it and one which could ultimately serve as an incubator for new high-tech businesses.”
The CATA paper cites five sectors that it contends are the ripe for any new commercialization activities, based on their R&D spending (see chart). Each sector is examined in detail and the report contains valuable data on each. For instance, the information and communications technologies sector attracted $3.2 billion or nearly two thirds of all capital invested in Canadian firms in 2001. The aerospace sector generated $21.5 billion in revenue for 2002, with Quebec-based firms accounting for 62.2%.
Those organizations include CATA, which has been lobbying heavily for a community-based innovation strategy and implementing policies that stress marketing and branding as well as R&D excellence.
The CATA paper also makes several other key recommendations, including the creation of a national commercialization agency similar to the National Research Council and greater incentives for commercialization. For more details on the CATA “Red Book”, go to www.cata.ca.