Tom Jenkins, executive chairman and chief strategy officer, Waterloo-based Open Text Corp

The importance of competition & procurement

By Tom Jenkins

Canada, be a customer. This is not a simple issue for government. A customer is the one that drives innovation. We've seen that in defence procurement recently. We heard a lot on this issue with the innovation (Jenkins) panel — people didn't want handouts or subsidies, they wanted government to be their first customer. When we went to look at some of those very successful economies like Norway, government was a very active participant in driving innovation.

Universities suck all of the oxygen out of the room. They are so effective, so focused on every incremental dollar of government money. I have seen universities twist themselves to be Gumby and take on the role of colleges or take on the role of commercialization. Universities are our finest institutions and that core research is absolutely essential. But let's not kid ourselves. When the minister stands up here and says I want to do something for colleges or for commercialization and all of that gets done through the university perspective, universities are harming themselves.

Competition matters.

Competition is everything. Like military procurement, sometimes in our society these are rather ugly things to talk about (but) if we're going to go global, it's a tough world out there. Here's something I hear all the time – Canadians just aren't efficient. I can promise you that Canadians are just as smart and just as efficient. But they are so smart, so efficient, they play by the rules of Canada. The rules create some of the behaviours.

The bottom line is, competition is the elephant in the room. This is the big factor (and it) leads to our productivity performance. This is a huge malaise for our country. You cannot deny the decline of the last 30 years and it's costing everyone.

In our innovation panel we found that 62% of all responses cited customers or employees (as a proxy for customers) as the drivers of innovation. A competitive situation compels the private sector to innovate. All you have to think of is the actions of the last two years by our retailers with the advent of Target. What you will see over the next year is competition driving that.

You all know this to be true, so shape our policies to reflect that. We want research in this country because we know it is the wellspring on our quality of life and the wealth of the next generation. But research without commercialization and innovation (what's) the payback? If we don't pay attention to this causality change, if we go through just like some of the other countries went through for the last four or five years, in one fell swoop their R&D funding got cut in half. That's the way it will go. Don't be complacent because at some point the elastic band will snap.

Innovation & its impact on global leadership

Less than 10% of our global leaders are from sectors with protection regimes. Read the Red Wilson report. There are six protected regimes that were created in the era of our concerns about NAFTA — well-founded concerns by the way — 30 years ago. Think of the profound changes that have occurred. We have six pieces of legislation that absolutely inhibit innovation. Upstream, the game has already been set against you. If you work within one of those protected regimes your aspirations are national. The moment you go international, it's a rough world out there.

You can only play the elastic band for so long. It's amazing we've been able to get away with it for years and years. Maybe we'll get another five. We won't get another 30. Certainly the next generation will pay the price. One only has to look at Canadian manufacturing.

Roger Martin in his work says you've got to have a balanced model. We've got to help with the pressure to motivate but at the same time we have to support. That was at the heart of some of the innovation panel's recommendations — that we needed to start to have more direct programs as opposed to indirect.

The role of government. Canada First: Leveraging Defence Procurement Through Key Industrial Capabilities is a report that came out about six weeks ago. Procurement in government, especially at the federal level, is very difficult in the context of nation state to nation state agreements. We should create a very competitive environment for innovation and research.

What are our WTO obligations? Defence and national security are exempt from trade obligations. All of our allies always pull out the national security card. And by great happenstance, we are also making the largest expenditure in the last 60 years because we're refitting our ground, air and naval forces. It's a refit called the Canada First Defence Strategy.

This is half a trillion dollars. The economic impact of this is larger than the oil sands. It's $490 billion over 20 years. This is an enormous opportunity for the country. To put it in perspective universities will be able to take advantage of the IRB (Industrial Regional Benefits) program. This is why the US and others use procurement to drive research and drive innovation and we must learn how to do this better.

We must connect research to solving problems. That is the only place we're going to get recursive value. Suzanne Fortier and Chad Gaffield started studying this issue about five years ago. When they asked researchers —after they started to do more community engagement and more third party engagement — they found that researcher satisfaction was 25% higher because the research they were doing — curiosity based, inspiration-led –— was relevant to someone. We should embrace this, not fear it. Let's not give up core research. Let's make it relevant.

But here's the challenge — getting the balance right. I'm not saying we have to open up all our national regimes to foreign competition. Government needs to be more of a customer, companies do need to go global and universities need to go with the flow more, not take all the oxygen out of the room. It's ultimately in their self-interest.

Competitiveness as a country and a society will depend on our ability to make these policy choices. This will happen. We have to remain competitive and not put our head in the sand. Our companies must complete internationally and we have to think about how we motivate them. We have to drive innovation by government and they have to take the risk. The reality is, we've got to have a better discussion.

Tom Jenkins is executive chairman and chief strategy officer for Waterloo-based Open Text Corp. This column is an edited transcript of his April 9 presentation at the Research Money Conference in Ottawa.