Disruptive Innovation Policy

By Dr Brian Wixted

Even a close examination of the history of science policy, technology policy and now innovation policy reveals that little of the post-war mindset has changed. The emphasis is still primarily on the production of innovation through tweaking inputs – dollars into research, the mechanisms for spending that money and its direction. The newest twists, measuring impact and emphasizing commercialization still place most of the focus on the inputs end of the system — the academics. Innovation policy should surely be more than this.

However, even starting with this ‘production system' model of innovation, if we are observant there is evidence that the current landscape is shifting around us. In the December 17 issue of RE$EARCH MONEY, Dr Gilles Patry, president and CEO of the Canada Foundation for Innovation, wrote a very interesting piece on the role of research infrastructure in supporting Canada's competitiveness. He rightly lauded new investments coming into Canada because of its research infrastructure.

But, and this is a big BUT, what went unremarked upon in that article was that the two examples of investors into Canada were German government-supported intermediary research organizations (Fraunhofer Institutes and the Helmholtz Association of German Research Centres). Thus, research- and knowledge-focussed institutions are beginning to act like global companies — looking for where to invest to get the knowledge they need.

First, the unasked question is where is the payoff for such organizations? Typically, they receive government and business money to fund applied research, so what framework are these organizations now working within? Second, these investments highlight the lack of Canadian intermediary organizations of a type which exist elsewhere in the world under different models.

Thus, third, there is a need for the transformation of Canadian institutions. Where are there Canadian research organizations investing in European or Asian research to help in creating the knowledge that will help Canada continue to be successful? Research is no longer a feudal structure of jurisdictions and boundaries. The alternative is that Canadian research funding will create the 21st Century natural resource for others to hew and draw.

But this is still not innovation policy.

While traditional innovation policy remains fixed on the production of knowledge and technology, it focuses on the creative Schumpeter, not the destructive Schumpeter. Innovation policy needs to be Schumpeterian and Rogerian (Rogers – Diffusion of Innovations). When the longed-for innovations disrupt industries and employment patterns, they become the responsibility of ministries of health, human resources, employment, industry etc across federal, provincial and municipal jurisdictions. When governments are controlled by the neo-classical economic worldview — which assumes technology with appropriate transitions, and a legal profession that works on the basis of precedence — it is hard to craft legislation and policies for disruptive innovations.

We know that big innovations take a long time to materialize, but we also know that the strategic response of industry and governments can be even slower than those innovations. Take the digital revolution. There were the early techno buffs talking about the possibilities for online retail yet it took so long that industries ignored it.

Large companies like Blockbuster and HMV simply waited too long to respond strategically. Have major newspapers also waited too long? We shall see soon. So this is not a private/public sector divide, they both do badly. Years after file sharing started, governments have started enacting new copyright legislation, which in the opinion of many is a band aid solution because it does not fundamentally address digital realities.

So what ‘innovation policies' should we start to think about before they arrive. The following thought experiments – scenarios if you will, are designed to be provocative – but perhaps they are too tame. A number of ‘second economy' (a term used by Brian Arthur and useful not because of its technical accuracy or its measurability but for the power of its imagery) innovations are currently emerging.

What will be good policy responses when:

• when the first taxi company applies to licence automated piloted vehicles, with implications for low skill jobs often for new migrants, insurance coverage and liability etc?;

• a university system built on the premise of nationality and location continues to confront digital change in many forms, including online course delivery and entrepreneurial universities endeavouring to globalize?;

• patent laws look out of date as 3D printing emerges along with file sharing of blueprints?; and,

• licenses are sought for unmanned aircraft in domestic skies (this is a now issue for the US Federal Aviation Administration)?

Innovation policy needs to continue to be engaged with the funding structures of innovation production but it needs to be more than that. Disruptive innovations are emerging in transport, energy, manufacturing and others which impact on infrastructure policy, education policy, employment policy etc. Of course each of these is a ‘long way' off, so we do not have to worry. Yet transitions also take a long time and do we want to waste decades of peoples' lives attempting to transition to new opportunities.

Can we encourage innovation in the legal profession such that regulations based on old models do not emerge 10 years after the event and that can be designed to be more easily updated as technologies evolve?

Governments need to reinvigorate their policy capacity so that competing futures can be analysed and debated in advance and policy can realistically be timely. The alternative is that the Canadian response will be borrowed from elsewhere and long after the curve emerges.

Dr Brian Wixted, is a research fellow at the Centre for Policy Research on Science and Technology (CPROST) at Simon Fraser University.