Perrin Beatty

Shared-risk key to driving business innovation

By Perrin Beatty

This should come as no surprise, but governments do not possess all the financial or other resources needed to meet the challenges of the 21st Century. Neither do our academic institutions nor our companies. Whether we are talking about improving the health of Canadians, environmental sustainability or the competitiveness of our industries, effective and lasting solutions require a shared risk approach in which all stakeholders contribute time, money and resources. Going alone simply isn't an option anymore.

That being said, it's unrealistic to think that such collaborations will happen when and where they are needed most. Companies are extremely busy. Finding the time, resources and money to commit to a research project that may-or may not-result in tangible results is a gamble not all are willing to make. This is especially true for small and medium sized companies where margins can be razor thin.

While there is no magic bullet solution to Canada's innovation challenges, there are two federally supported programs managed by the Networks of Centres of Excellence (NCE) that are showing promise in making university research more relevant to industry: the Centres of Excellence for Research and Commercialization (CECR) and Business-Led Networks of Centres of Excellence (BL-NCE).

These tri-council programs of the three major research granting agencies have resulted in more companies participating in the NCE than ever before. These companies represent a wide range of industry sectors, particularly those identified in Canada's Science and Technology Strategy as priority areas where the country can leverage its research strengths.

In Canada's oil sector, for example, NCE-supported researchers are working with industry and government partners to develop technologies that can cost-effectively extract the billions of barrels of inaccessible heavy oil and bitumen beneath Saskatchewan and Alberta — and in a way that leaves a smaller environmental footprint.

Adding value to existing products is another way to stay ahead of the competition. This is what's happening in Canada's forest sector where the NCE brings together researchers from vastly different industries to research and develop products based on a plant-derived nanomaterial — NanoCrystalline Cellulose. Potential applications include biocomposites, bioplastics, iridescent coatings, wear-resistance surface treatments and drug delivery systems.

A similar bio-revolution is emerging in Canada's chemical industry. Proof-of-principle funding is helping university researchers develop promising green chemistry technologies into non-toxic chemical processes, green molecules, green building materials and pollutant reduction technologies. Suppliers and customers from across the chemical value chain are engaged in both technology screening and governance.

Changing business models are also forcing a paradigm shift in how drug research is conducted. Pharmaceutical companies aren't as willing as 15 years ago to license early stage drug candidates from universities or start-ups. To reduce the risk, they want ideas at a later stage of development.

The NCE has three CECRs and one BL-NCE that are addressing this challenge. One centre supports academics and companies in moving the most promising drug candidates from the discovery to the pre-clinical stage, and sources additional capital and expertise to support further development.

When a network is led by the companies themselves, unexpected collaborations can happen. In Quebec, for example, three large competitors from the global pharmaceutical industry (Pfizer, AstraZeneca and Merck Frosst) have joined forces with academia to develop common research platforms that will result in more discoveries, shorter development cycles and safer and more effective drugs for each industry sponsor.

Putting the customer first

Why does the NCE model work so well? In short, because it insists on substantive collaborations between industry, academic and government. In addition to providing money and resources, business partners sit on the board of directors and scientific advisory committees of CECRs and BL-NCEs, providing guidance at the early stage of a project, and as it advances, to increase the likelihood of producing products and services that society wants.

Applications for new CECRs and BL-NCEs are subjected to rigorous due diligence by a Private Sector Advisory Board comprised of senior executives from large and smaller companies. The PSAB applies a lens that puts the consumer and the market front and centre: is the application backed by an experienced team; is the research addressing a clear market need; who are the customers; how long will it take and how much will it cost to bring the technology to market; what value does it provide; will it make a profit; will it really create jobs?

This business-like approach to innovation and commercialization is having an impact. This past year witnessed the greatest level of industry collaboration since the NCE was established 20 years ago. Our 1,200 industry partners invested more in NCE programs in 2009-10 than in the previous 12 months, despite the global economic downturn.

Of course, one of the lasting benefits of the NCE is the more than 36,000 students who have gained valuable skills over the past 20 years. In 2009-10 alone, the NCE's core program supported 1,600 graduate and postgraduate students from the natural, social and health sciences and engineering. Leveraged funding from each of the networks made it possible to support a further 1,994 trainees, for a total of 3,594 last year.

Another 800 graduate students and post-doctoral fellows worked directly with companies under the NCE's Industrial Research and Development Internship program. Many of these young professionals are now working in industry, helping Canadian companies to become more competitive.

Canada has many strengths upon which to build. Our universities produce leading edge research and highly skilled graduates,and our companies have proven they can compete with the best in the world. Mobilizing this talent to do things better is what the NCE does best. And, as all governments know, doing things better is the innovative mettle that brings sustainable economic growth and a better quality of life for its citizens.

Perrin Beatty is president of the NCE's Private Sector Advisory Board and president/CEO of the Canadian Chamber of Commerce.