Dr Alex Navarre, VP, Numinor Conseil Inc

Innovation policies: different paths & outcomes

By Dr Alex Navarre

We all know how complex innovation systems are: universities are meant first to train students, industry must innovate to survive, states rely on innovation to create economic value and academic researchers relish their freedom of mind to innovate. Arriving at the winning arbitrage between these parameters is the key. Few countries have managed it well so far.

The US has become a leader since the 1980's mainly because of its policies: strong industry and military research engagement and support to small- and medium-sized enterprises (SMEs) through the Small Business Innovation Research (SBRI) program ($2.2 billion in 2015). All US R&D agencies set aside 2.8% of their funding for SBRI. There's also massive funding for the National Science Foundation ($7.3 billion), National Institutes of Health ($32 billion), and the Bayh Dole Act, fostering offices of technology transfer (OTT's).

In Canada, federal R&D tax credits comprise the largest incentive program ($3.4 billion). In addition, there's the Networks of Centers of Excellence (NCEs) bridging university researchers and industry in key areas, the Engage NSERC partnership program for SMEs and some support to OTTs in the early 2000s. Both in Canada and Europe, universities have been enticed to partner with industry as other sources of funding have eroded.

In 2010, France recognized its innovation gap and launched a €35-billion program under the Grand Emprunt, extended later by €17 billion. Referred to as Programme Investissements d'Avenir (PIA), it will be renewed in 2016 and increasingly aimed at industry-driven research initiatives. A dozen large public-private R&D institutes have been created as a result of PIA, as well as the creation of quasi-private technology transfer operations (14 Sociétés d'Accélération et de Transferts de Technologies - SATT), injecting €1 billion to that end over 10 years.

Germany is supporting a large infrastructure of renowned institutes that provide services to industry. Sweden attempts to reduce the number of its research institutes while being a European leader in terms of its GERD ratio of 3.4% (gross expenditures of R&D over GDP).

OECD innovation ratings for Canada or France indicate that the outcomes of R&D investments are not yet meeting expectations and the innovation system is not optimal. So do research funding instruments permit us to assess different outcomes? Since R&D investments are substantial in these countries, are we suggesting it should just be increased?

Technology pull models attract most of the new funding. But is it the only way? Would Apple have survived if it just did incremental leaps as opposed to developing truly frontier technologies? From a societal view point, outcome goes beyond good research and publications. What and how is it translating to?

Down the road, the yardstick for impact relies on technology transfer. The Canadian tech transfer track record is revealing. In the years since 2000, Canada reinforced tech transfer offices (TTOs), regional training programs for TT professionals, and an association (ACCT) with over 450 members, gaining recognition as it created more spin-offs than its southern counterpart. This was monitored through a Statistics Canada annual survey.

Support for TTOs evaporated

However between 2006 and 2008 the building blocks disintegrated one at a time. Subtly, university management, whose support for tech transfer has always been lukewarm, introduced new terminology such as university-industry partnerships, knowledge transfer, entrepreneurism, and industry engagement. Contrary forces have also questioned, with reason, the economic benefit of patents and their relevance in areas such as information and communications technology (ICT). Subsequently, most OTTs have reoriented themselves towards partnership contracts with industry and frontier technology development has been abandoned. Yet the latter is the gravy portion of potential outcomes from research results and an insurance towards future world positions.

The French experience is much more recent since the critical mass for tech transfer only became a reality in 2014 with about 400 dedicated professionals. Its advantage is the availability of seed financing and the non-equivocal support of the state. Not unlike Quebec's experience a decade ago with the implementation of the Sociétés de valorisation universitaires (SVUs), some level of rejection took place within university walls. Thus, the jury is out for their full implementation and self-sufficiency.

Let's distinguish the different types of technology development. On the one hand, incremental technologies are being developed in partnership with, or at the suggestion of industry. It leads to royalty-free licences for the sponsors and a withholding period to be licensed for a fee to others. On the other hand, university researchers, often through grants, produce seminal, unexpected, and sometimes accidental inventions. Such frontier inventions require seed investment to entice industry deciders to pursue.

Remember how long it took the laser discovery or carbon fibers to enter industry? Such inventions take time to nurture and to arrive at the licensing stage. Yet we fail to recognize the inherent differences between those two patterns, both essential to the progression of our economy and its renewal.

These two complementary patterns are also called tech pull and tech push. They are not an amalgam but very distinct patterns of invention. We have to recognize the need to manage them differently and fund them with separate instruments, recognizing that the seminal inventions are far more valuable long-term, but require far more funding short-term.

Canada has proven it can do well in university research and tech transfer but many contradictory interests have surfaced. Above all, the research community is not yet at ease with its role as an economic engine in society. Failing to recognize the potential synergy between training, research and the economy is failing to recognize that public funding can have an impact on human advancement.

Let's collectively build a new world and press upon decision makers the need to recognize the economic value of university research results, even if only its potential. Frontier research inventions originate from non-industry sponsored research projects. Could our governments give this file the attention it deserves?

Dr Alex Navarre is VP, Numinor Conseil Inc, and founder and ex-president of SATT Grand Centre, France.