IRAP Ontario launches novel pilot project to accelerate tech product development

Process could be adopted nation-wide

The Ontario branch of the Industrial Research Assistance Program (IRAP) has launched a pilot project to demonstrate how companies can bolster growth and market penetration, more so than prevailing ad hoc methods for selecting their next product or service. If the pilot is successful and adopted throughout the organization, it could dramatically enhance the way in which the federal government provides direct assistance to promising tech firms as well as leading to faster company growth than possible through incremental innovation.

Entitled Big Ideas to Great Products, the pilot is a collaboration between IRAP and Dr Robert Cooper, the originator of the stage gate process, president of Product Development Institute Inc and professor emeritus at McMaster Univ.

For the pilot, IRAP selected 12 companies to participate in an intensive two-day workshop attended by senior firm executives. They were taken through a structured process of best practices developed by Cooper for engaging their respective customer bases, conducting due diligence and conceiving new ideas for products with the end user in mind.

The firms were asked to implement the process internally as it applies to the "fuzzy front end" of the product development process where idea generation takes place (Ideation). The initial workshop was followed up with one-on-one meetings between company executives, Cooper and IRAP officials with an assessment of progress to date.

"It was stunning. We had a 90% success rate. The (workshop and follow-up) dramatically changed the way companies did projects," says Cooper. "Half of the companies had a radical change in direction and others found out they were dead wrong about what the customer wanted."

The 12 companies come from a variety of industrial sectors including health, manufacturing, information and communications technologies and even traffic management systems. They tend to represent the larger companies IRAP serves with up to 200 people and revenues of up to $30 million annually. All fall within the definition of medium-sized, which have been labelled an endangered species.

The shrinking number of these companies was the focus of a February/13 report from the Business Development Bank of Canada, entitled What's Happened to Canada's Mid-Sized Firms? (www.bdc.ca/EN/ Documents/other/BDC_study_mid_sized_firms.pdf).

The pilot has its genesis in a 2010 meeting between Cooper and Ian McGill, an IRAP industrial technology advisor (ITA) and champion of the pilot.

"It's all based on observation and a sense of urgency. Companies have very precise processes for all things except for the fuzzy front end when they decide what to develop as a new product or service. It's a bit ad hoc in the private sector but this allows them to apply the same precision structures as R&D and operations to the front end piece," says McGill. "In the 1980s and 1990s, technology competence was enough. Now it's not because of globalization and more competition. It's shifted from what tech can be to what tech can be shaped into."

Initial company experience promising

One company participating in the pilot is Nightingale Informatics, Markham ON. Company president and CEO Sam Chebib says the experience was instrumental in helping spread a disciplined, customer-focused entrepreneurial culture throughout the company — a fast-growing software firm in the electronic health records sector.

"Innovation within an organization is often limited to one or two people (and) the ability to scale and allow others in the company to innovate can become an obstacle. The stage gate process gave us a framework to push an innovation culture to the front line," says Chebib. "Direct support programs like this can be laser focused and very effective rather than the shotgun approach ... We also use the SRED (Scientific Research & Experimental Development tax credit program) which provides a good mix between direct and indirect. But SRED doesn't drive behaviour like this program."

Another firm invited to participate in the project is Applanix, a Richmond Hill ON-based developer of mobile mapping and positioning systems for use in a variety of industry sectors. President Steve Woolven says that while the firm has experienced solid growth over the years, the IRAP pilot was key to driving an innovation culture deep into the firm.

"When you go through the stage gate process you develop a better understanding of the market before you begin engineering new products," says Woolven. "The biggest internal challenge is continuing to push back ideas until we understand the business problem and get more input from customers ... Solving business problems earlier on and then modifying technical solutions allows you to get to market faster."

Launched in 1991, Applanix is a subsidiary of Trimble Navigation Ltd, Sunnyvale CA (as of 2003). Woolven says his parent company is watching the IRAP pilot with interest. If it's successful, Trimble — a global conglomerate with $2 billion in annual revenue —may consider adopting the stage gate process company wide.

Cooper contends that direct support is a far more effective method for stimulating business innovation than tax credits — a result of applying his methodology for assisting firms in other countries. The IRAP pilot is the first time he's applied it to Canadian firms..

"Using the tax system doesn't promote much innovation. Look at clinical trials. They're eligible (for tax credits) but it's not really research," says Cooper. "The stage gate process forces companies to do due diligence and market intelligence and it works."

national roll-out?

The federal government's decision to boost direct support for business innovation places the IRAP pilot is good stead if results meet expectations.

"It's still at the early stage but we've had a good start. We'll keep working it to ensure the results are real," says Dave Lisk, executive director of IRAP Ontario. "We came up with the idea in Ontario and shared it with IRAP corporate. They are watching to see how it goes. When it shows positive results they are interested in seeing it expanded across Ontario and beyond."

For McGill, who conceived of the pilot and has nurtured its evolution, he's confident that it can affect significant change in entrepreneurial culture resulting in big gains for companies and benefits for Canada as a whole.

"It's more about culture and mindset in companies that are open and ready to try new things. It's not a start-up focused exercise as it requires resources and talent to execute," says McGill. "This program helps companies innovate in the context of the user experience and the potential for returns are dramatic."

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