Canada needs distinct innovation policies to bolster lagging industrial R&D

Canadian Science Policy Conference

Canada's faltering industrial R&D (IR&D) performance can be traced to long-standing misconception that innovation policy is an extension of science policy. By viewing innovation policy as a linear process from academic research excellence to success in the marketplace, the central role of the firm is largely ignored.

The urgent need to separate innovation and science policies was brought home by Dr Bob Fessenden at the recent Canadian Science Policy Conference during a panel session examining the role of IR&D within the context of Canadian innovation.

Fessenden – a veteran Alberta policy maker who's currently a fellow at the Univ of Alberta's Institute for Public Economics – argued that unless the distinction is made by policy makers, Canadian governments will continue misdirecting resources and industry will continue to be only as innovative as it needs to be.

"Innovation policy needs to begin with a firm-centric concept. R&D needs to be thought of as a response to innovation policy, not as a response to science policy. The key to increasing IR&D and hence productivity and competitiveness is through innovation policy," said Fessenden.

Fessenden and his fellow panelists — Lisa Crossley and Kathleen Sendall – were members of the Canadian Council of Academies' (CCA) Expert Panel on the State of Industrial R&D in Canada (R$, October 10/13) while Fessenden also served on the CCA's Paradox Lost: Explaining Canada's Research Strength and Innovation Weakness expert panel, which synthesized the observations and findings of seven CCA reports ranging from 2006 to 2013 (R$, October 10/13)

The picture the panelists painted of the current state of IR&D is not encouraging. Sendall said Canadian strength in S&T, with some exceptions, doesn't translate into IR&D strength as there are different incentives for academic and industrial research. Add to that the major role foreign firms play in IR&D in Canada and low innovation intensity in the manufacturing sector, and it's not surprising that Canada has low innovation and productivity in relation to comparator nations. Sendall — director of CGG, a large Paris-based geoscience firm, director of Calgary's Enmax Corp and vice chair, Alberta Innovates – Energy and Environment Solutions — noted that Canadian IR&D remains strong in aerospace parts and manufacturing, information and communications technology, oil and gas extraction and pharmaceutical manufacturing.

But panelist Lisa Crossley, CEO of Toronto-based VitalHub Corp, said the pharmaceutical sector and associated IR&D is in free fall with the large multinational firms pulling personnel into big centres in the US and Europe seeing a 25% drop in R&D since 2007.

Crossley said the type of R&D conducted by big pharma in Canada was rarely about drug discovery and more about clinical trials and development work.

"Canadian pharma is becoming less and less innovative (and) we will soon see a negative impact on Canada," said Crossley, noting that the Quebec biotech corridor is rapidly hollowing out. "If we lose one of the four pillars (of IR&D strength) it will be devastating to us."

Fessenden said that the dominate science policy lens used by most governments means the true needs of innovative Canadian firms won't be addressed.

"Science policy is a necessary, just not sufficient condition for innovation ... Business innovation is pulled by the marketplace, not pushed by the availability of new ideas," said Fessenden. "If our governments, both federal and provincial, continue to think of innovation policy as an extension of science policy, they will continue to emphasize the supply-push policies — the SR&ED?tax credit and forcing universities into commercialization — rather than taking a broader policy approach to foster innovation. This could well include the continued shifting of funding from discovery R&D into applied R&D — a wrong-headed thought coming out of the old linear model."

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