Dr Peter Nicholson

Asking more of public R&D institutions

By Dr Peter Nicholson

National innovation policies need to pay greater attention to the role and support of "public research and development institutions". These are national laboratories and research organizations of various kinds that are neither universities nor divisions of corporations but include pre-competitive R&D consortia of business, academia and government. In summary, the case is as follows:

National economies today are relying more and more on innovation as the ultimate driver of competitiveness and prosperity. Yet, paradoxically, the business sector is doing less and less of the research that can underpin truly fundamental innovation, as distinct from the kind of incremental innovation that responds primarily to the demands of customers and the advice of plant floor engineers.

To fill that gap, businesses have turned increasingly to university research as a potential fountain of new ideas, and they have been encouraged in doing so by governments, and often by universities themselves which are always pressed to find new sources of revenue. But the fit between the culture of university research and the market-driven needs of business is neither particularly comfortable, nor often appropriate.

This risks distorting the curiosity-driven research priorities of the university which would undermine the very capability that we rely on universities to provide in the first place. How, then, are we to fill the gap between the university's role to generate new fundamental knowledge and the business sector's role to deliver profitable innovation?

The answer lies in renewed focus on the public R&D institution – re-energized, re-financed, and re-focused to play a much more prominent role in Canada's innovation system.

Companies are doing less research these days because the beat of the market is just too fast, and the corporate monopolies that once could justify quasi-academic, in-house labs are gone forever. University researchers can play a role in filling the gap, particularly in certain research-intensive areas of the life sciences. Moreover, the innovation challenges faced by the business sector can provide a healthy reality check on university research agendas and can also be a source of stimulating new lines of inquiry. And graduate students can get a better taste of the real world problems most of them will eventually face. That's the upside of the university-business partnership.

But there is also a significant downside. In the first place, the business-university research relationship is hard to get right because one is trying to bridge together two very different systems of incentives and institutional values. University research is curiosity-driven, whereas the needs of business are market-driven. University rewards are largely tied to professional recognition and what is needed to become a tenured professor, whereas the rewards of business relate largely to authority within the organization and monetary compensation. The university has public objectives and its research relies on open access. A business has private shareholder objectives and its competitive interests often require the propriety use of knowledge. (In the university, it's publish or perish – in business it's publish and perish.)

limits to interactions between universities and industry

So, unless university researchers are prepared to make some fundamental adjustments in philosophy and behaviour, it will not be easy for them to satisfy the urgent and specific needs of the competitive marketplace. I don't claim that there should be no role for university-business research partnerships – indeed, as noted above, those partnerships can have important benefits for both sides. But there are limits. My concern is that the combination of market forces, and a political desire to show more measurable pay-off from society's investment in basic research, will lead both universities and business to rely on one another to an extent that is not healthy for either.

But if more and closer university-industry research partnerships are not the whole answer, what is? I believe it is to rely more on the public R&D institutions, many of which were created over the past hundred years or so to fill the kind of gap I have been describing. The unique value of the public R&D institution is that its mission can be focussed explicitly on projects of national importance. It can be given a clear mandate to help businesses transform basic research insights into commercially relevant goods and services. It can integrate resources across disciplines. It can bring scale and scope to the table.

Despite these potential advantages, public R&D institutions have become the poor cousins of Canada's innovation system. This reflects a broad disaffection with "government" at a time when market forces, business sector institutions, and research universities, have come to be regarded as more effective ways to deliver the economic benefits of innovation. As one indicator, government-performed R&D in Canada has been declining pretty steadily as a percent of GDP for at least 25 years.

This trend has not been without justification, but it now risks going too far. The challenge, and the opportunity, is to rethink, re-create, and re-invigorate our public R&D institutions so that they can play a much more prominent role between, and in partnership with, the research university and the business sector. In particular, we need to put a great deal more policy effort into designing the incentives and systems of governance that would allow Canada's public R&D institutions to play a more effective role.

The design challenge is daunting because public R&D institutions have to marry public sector objectives with private sector requirements. They have to extract from basic research what is ready to be applied. And they have to maintain bridges to the very different cultures of both the academy and the corporation. Valuable guidance as to how this can be done was provided by the report of the "Naimark Panel" on "inter-sectoral S&T integration" released last June. The advice of Dr Naimark and his colleagues deserves our concerted attention since Canada needs more high-performing public R&D institutions to fill critical and growing gaps in the innovation system – gaps that business corporations will not fill, and that universities alone should not fill.

Dr Peter Nicholson is president, Council of Canadian Academies.

The views are the author's and should not be ascribed to the Council of Canadian Academies or any of its associated bodies.