Government banks on supercluster initiative to boost economy through innovation

Superclusters to the rescue

Almost a billion dollars in taxpayers’ funds are the carrot that the federal government hopes will bring industry and other stakeholders together to talk to each other and tap into each other’s resources to boost the Canadian economy through innovation. That’s the logic behind the $950-million Innovation Supercluster Initiative (ISI) which is heading into the final stretch of the two-phase selection process for between three and five winners.

Nine shortlisted superclusters – or large groups of industry-led stakeholders with a common research and commercialization agenda – are expected to submit their full proposals by November 24 for a chance to partake of the funding.

John Knubley, DM Innovation, Science and Economic Development (ISED), says that based on feedback received in the initial Letters of Intent round, stakeholders are embracing the opportunity to collaborate across the supply chain and with universities and colleges.

Knubley opened up about ISI during a panel discussion at the Canadian Science Policy Conference held last week in Ottawa.

The ISI is the Liberal government’s flagship innovation funding mechanism to encourage stakeholders to form large groups around promising and innovative industry sectors. The groups are envisioned to include large firms and small- and medium-sized enterprises (SMEs), not-for-profit groups and academia. Some provincial and municipal government support can also be included in the groupings. The superclusters are expected to raise funds which will be matched by government for funding up to 2022.

Knubley says that from a policy perspective, the ISI is positioned to solve three key issues to drive the Canadian economy – Canada’s low business R&D expenditure; lack of industry collaboration; and, failure to commercialize disruptive technologies. The government hopes superclusters will solve these issues by encouraging Canadian firms to do more R&D, thus increasing their share of R&D expenditure to GDP; establishing strong supply chains among large firms and SMEs; and enabling the full cycle of innovation all the way to commercialization.

Knubley points to the metrics that prompted the federal government to go the supercluster route — Canada’s share of business R&D is 0.8% of GDP while the average among countries in the Organisation for Economic Co-operation and Development (OECD) is 1.4%.

According to official OECD data, Canada’s overall R&D spending as a share of GDP was at 1.7% in 2015. In contrast, the US was at 2.78%; Finland, 2.89%; South Korea, 4.2% and Japan, 3.2%.

“This large-scale program … is about trying to drive that business expenditure in R&D up,” Knubley says, adding that ISI will back projects in the order of $400 million with $150 – $200 million in federal funding to be matched by the private sector.

Knubley says forming supply chains among large firms and SMEs is important to the economy because this model has been working for the US, where 25% of its economy is contributed by the economic clusters of Silicon Valley, Boston and Texas, which are the largest US innovation hubs. He adds: “If we want to drive our growth rate up, … this (US model) is something that we need to look at.”

He notes that for some large firms establishing these strong supply chains may be a different way from how they’ve been conducting business. Large firms tend to look at return on investment (ROI) and how technology can bring ROI. “We’re actually asking some businesses to think differently – to think about how important it is to create a supply chain with a strong set of SMEs in Canada to support (them),” Knubley explains.

Universities and colleges are also included in the superclusters because the innovation ecosystem needs strong fundamental and multidisciplinary research and the skill sets to deliver that knowledge. “We’re trying to encourage leading-edge technology platforms so we’re counting on you (universities and colleges) to be leaders in artificial intelligence, genomics, nanotechnology, Internet of Things, etc., and we’re looking to you for talent,” Knubley adds. “This won’t succeed if we don’t have the ecosystem that has the right people and the right leadership.”

Put together, these hopes and ambitions aim to propel Canada onto the world stage through global business leaders.

Knubley says there were other “good” proposals in the 50 Letters of Intent submitted in the first round of the superclusters program, but they “didn’t fit with the superclusters idea.” However, he says the government is going to find ways to fund the other “good projects.” He referred to the other sources of innovation funding mechanisms mentioned during the panel discussion as possible funding sources, namely: the $1.26-billion Strategic Innovation Fund, the $50-million Innovative Solutions Canada fund, the Impact Canada Fund and the $400-million Venture Capital Catalyst Initiative, to name a few.

Knubley also urges the nine shortlisted superclusters to “merge” with the other projects.

The nine shortlisted will be assessed not through peer review, he adds. Instead, ISED will be engaging interdepartmental experts and expert panels from industry to help with the commercialization assessment.

“What we are really looking for is ambition and potential. We’re talking about new leadership in areas where people haven’t gone before,” says Knubley. “The level of ambition is very high. We’re talking about transformation, global leadership and wanting everyone to contribute.”