Canada's knack for research collaborations key to IBM's success in Canada

Talking to innovators: IBM's Patrick Horgan

IBM Canada has been one of Canada's top corporate research spenders for 15 years. In 2015, the Markham ON-headquartered company invested $477 million in R&D, up 2.4% from the previous year—putting it firmly in the #7 ranking in this year's Canada's Top 100 Corporate R&D Spenders, released November 16 by Research Infosource.

RE$EARCH MONEY's consulting editor Debbie Lawes recently spoke with Patrick Horgan, IBM Canada's VP Manufacturing, Development and Operations, on how collaborations and clusters have helped the Canadian subsidiary become IBM's second largest software development organization.

A report earlier this year by the Lawrence National Centre for Policy and Management at Western Univ cited IBM as a poster child for how to attract foreign investment, notably its success in winning a global research mandate in 2012 to develop the Southern Ontario Smart Computing Innovation Platform.

SOSCIP represented a new kind of research collaboration between the private sector, academia and government, and one that supports IBM's global priorities for applied research.

As the report, Attracting Global Mandates, notes: "IBM Canada is the only IBM subsidiary that reports directly to headquarters and the senior leadership of IBM visits Canada regularly."

R$: What distinguishes IBM Canada from its competitors when it comes to turning innovation into new products or services?

Horgan: When we were asked by policymakers how our company could do more and how they could learn lessons from what we have done, we said you could drive more collaborative innovation by building centres of excellence, clusters and partnerships between different sectors. It's not only our competitors that drive us. It's also to win missions from the IBM Corporation versus other parts of the world where (IBM) could spend their R&D dollars.

R$: What are some of the partnerships you've developed over the past few years?

Horgan: The biggest one is the Southern Ontario Smart Computing Innovation Platform. It started with seven major universities, and is now 16 higher ed (14 universities, two college)s and the Ontario and federal governments. We created a collaborative space for technology, in terms of computing power and an analytics cloud—the largest in the world for research. Researchers bring their research to this open environment and, using our world-class tools, come up with inventions that would lead the world for Canada. We help them through that development process to protect their IP (intellectual property) and commercialize and build it. Four and a half years later that model has proven to be quite a success… 50 major projects were launched with a board of directors run by the universities. They all own the technology but we were providing mentorship and post-docs to those projects. What's interesting out of that was that 38 companies were produced. The first half of them that went to investors built a pipeline of about $2 billion in revenue, so you can tell this is starting to work. We're commercializing.

R$: You also just recently opened the IBM Innovation Space, a new start-up hub in Toronto that is the first initiative under the $54-million IBM Innovation Incubator Project.

Horgan: That's a by-product of the original (SOSCIP). We realized these projects can't stay in the research cloud if they become a commercial business so we went to this phase. The Ontario government asked if we could support incubators in the ONE Network of Entrepreneurs in the same way we were building this successful model with universities. The idea was to make the analytics cloud and tools available ubiquitously to these small businesses, and provide technical and business mentoring to them. Then hopefully the start-ups could become scale ups.

R$: What's the business case for large companies like IBM in working with academia and start-ups?

Horgan: It's not altruistic; it's very long term in our thinking. The idea first is skills development. We have a huge number of developers in the country and analytics and data analytics is part of a theme that underlies all of this. How do you get a skills base built so that people understand that discipline very well across the many disciplines it touches?

R$: Research is increasingly being done collaboratively between industry, academia, government, supply chain partners and others. Is Canada getting better at collaborations, maybe more out of necessity than anything else?

Horgan: I think we are getting a reputation. After we launched (SOSCIP), the feedback we're getting (from IBM) is ‘holy smokes, you guys have done that better than anyone else in the world and you're moving into new levels of partnership that we're really proud of'. We've now started doing this across the country (including Halifax and Montreal. See page 7).

R$: What advice or lessons do you have for companies that are trying to scale-up?

Horgan: Part is understanding how to get to international markets, part is protecting their interests and part is scanning the world to see if you have something that's really unique. For bigger anchor firms like ours, those are things we do every day. We know the international market. We understand the supply chain and we also have trusted contacts with our IBM colleagues around the world. The second point is that you may have an expertise in research, but you don't necessarily know payroll, accounts receivable or accounts payable. A larger firm does know that and knows how to help smaller firms understand the business.

R$: What advice would you have for government when it comes to improving the country's innovation performance?

Horgan: Figure out how you can build these partnerships and collaboration models. That sometimes requires a flexible approach. If you're being too prescriptive on how the rules or programs need to be done then it often slows things down. Instead, come up with a principled approach that provides a more open environment, protects the smaller players and where the rules of the road are understand.

Secondly, encourage more areas Canada can succeed at. We're really good at health care, fresh water and ocean research, energy, natural resources, smart grids, mining, digital media and cybersecurity. These are things Canadians should lead, and can lead on the world stage.

Editor's note: This interview has been edited and condensed.

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