Embracing change – the key to transformation

By Glenn Mason

Ken Coates, in his keynote at last year's RE$EARCH MONEY conference stated "The 21st century belongs to those countries — and those parts of countries — where people embrace change". This speaks of commitment, compelling us to explore and incorporate new ideas in how we think, what we think we know and how we act in pursuit of our goals. When we think we have it figured out, we should push ourselves to explore further. I maintain that this is the principle upon which the forest industry has been redefining itself over the past 10 years.

A renewable resource advantage

Forests play a pivotal role in the lives of Canadians. They supply essential resources for the economies of numerous resource-dependent communities all across Canada and contribute 1.9% of Canada's GDP. Forests also provide significant environmental, recreational, spiritual, and social benefits. With 10% of the world's forests, Canada has a unique resource advantage and we are challenged to use this resource responsibly.

We are in a world where adapting to change is the business imperative. Natural Resources Canada's Canadian Forest Service holds a unique position in the forest science and technology/innovation ecosystem, being both funder and performer of S&T. We recognize that we must push our own boundaries and challenge our own thinking to catalyze transformation.

To do this we must work with a diversity of players and encourage innovation in all of its forms. We identify what research needs to be undertaken, explore how it is carried out, realign our own S&T efforts, expand collaborations with academia (both universities and colleges), diversify our programs, explore new markets, and ensure the development of effective policies.

Pressures to change

It was clear in 2004 that a comprehensive examination of the forest R&D agenda in Canada was needed. The forest industry had pointed out that Canadian governments and industries did not support forest research to the extent that other economies with important forest sectors did.

It had become apparent that federal government R&D funding had been directed toward universities and technology-based R&D (such as biotechnology, information and communications technologies) leaving the forest sector at a disadvantage. As the single largest forest R&D institution in the country at the time, the pressure was on for the Canadian Forest Service (CFS) to respond.

Responding to change

Transformation was the goal and innovation was the means. It was no longer enough to think about merely supporting the forest industry — we had to push the boundaries. There was a time when a few factors could contribute to a competitive advantage and ensure prosperity for the forest industry. Proximity to resources and established markets come to mind. However, as new values are created and new norms emerge, the need for diversification increases.

A key catalyst was the creation of FPInnovations (through the merging of Forintek, FERIC and Paprican), making it the largest forest products R&D organization in the world. Add to the mix federal programs focussed in two key areas - supporting product and technology innovation and supporting market expansion. Sustainably increasing fibre supply had to be about more than simply growing more trees. Our new focus was to optimize fibre value along the value chain.

The forest industry has successfully weathered the economic crisis of 2008. We have diversified markets in Asia (140 fold increase in exports to China since 2007), we continue to innovate — building codes and technical guides are being updated to allow for taller wood buildings — and the industry is increasingly commercializing the next wave of innovative higher value products.

Is it enough?

The world has changed to a new normal where we don't use as much paper. Foreign competition is intense and businesses must be able to withstand wide fluctuations in currency and energy prices. The bioeconomy, a growing industrial sector for Canada, encompasses the production and conversion of renewable biological resources. How do we respond? Is what we are doing today sufficient for the sector to meet its challenges and opportunities in the 21st century?

CFS has articulated a vision for an innovative, globally competitive forest sector — rooted in sustainable forests — creating prosperity for Canadians. We recognize that the forest industry is an ecosystem, not a collection of individual companies. We strive to support forest sector competitiveness, optimize forest value and advance environmental leadership.

And when we examine the gaps and opportunities, it is clear we need to diversify our innovation investments beyond new markets. We know that product and process innovation is not enough.

Capital and risk tolerances are still an issue, especially with larger corporations. Entrepreneurs and financial institutions need to be more closely integrated and represented in the forest sector innovation system for the bioeconomy potential to be realized.

No magic solution

R&D work needs to directly link with earlier innovation implementation efforts such as code and regulatory development as well as market acceptance. The industry is moving beyond traditional commodity-oriented forest companies, the role of academia is evolving requiring new forms of engagement with industry, and a new skill set is required for personnel entering the workforce.

Innovation goes beyond R&D — it is a complex process with no one magic solution. A diversification of our strategies is required to investigate and incorporate innovation in all of its forms.

Embracing change means acknowledging that Canada's innovation agenda must encompass this broader context if we hope to be globally competitive and prosperous. The Canadian Forest Service remains committed to working with the diversity of players as we explore and incorporate new ideas in optimizing Canada's natural resource advantage.

Glenn Mason is Assistant Deputy Minister at Natural Resources Canada's Canadian Forest Service in Ottawa.