How can universities help companies?

By Jeffrey Crelinsten,

With the federal government on the verge of announcing the result of its expert panel on commercialization, it may be useful to point out some myths and truths that relate to this important area of policy and business. Industry minister David Emerson recently noted a disparity between the private and public sectors in terms of R&D performance. While Canada’s private sector performance is “weak by international standards”, he noted that Canada has moved “from 6th place to 1st place among G-7 countries in terms of R&D at universities and public laboratories.” This disparity, Emerson remarked, was his motivation for appointing an expert panel on commercialization.

RE$EARCH MONEY conferences have been bringing business, policy and research practitioners together to engage one another in exploring commercialization and related issues for a number of years. I have been struck by the consistency of views that have been aired at these events, in particular the message that the private sector brings to the discussion: We need to focus on commerce, not research and technology, to crack the nut of how to compete globally and excel in the knowledge economy.

At our most recent event in Moncton, speaker after speaker from the private sector emphasized that the key to commercial success is identifying niches based on local strengths and creating value for the world. Prosperity will only come from external trade with other countries. To do this, we need firms that sell products and services globally, entrepreneurs who can manage and grow these firms, and highly-qualified people with a combination of technical and human skills to do the job.

PARADIGM SHIFT IN MINDSET ESSENTIAL

From a policy perspective, it is clear that a paradigm shift in thinking will be necessary. Our current preoccupation in government is with using our excellent publicly funded research to galvanize our tepid industrial research. We hear phrases such as “moving research ideas from the lab to the market” and “enhancing the receptor capacity for new ideas”. These concepts don’t address commerce at all. They create unnecessary pressure on our publicly funded research and education institutions to be commercial. They neglect the critical area of support for existing businesses and entrepreneurs who have the capability and the mission for commerce.

Paul Mills, ADM, Policy at the Atlantic canada Opportunities Agency (ACOA) put the cat among the pigeons when he asked a Moncton panel of three CEOs of successful technology companies how universities can help companies. Robert Orr, CEO of Ocean Nutrition in Halifax bluntly pointed out that if enhanced commerce is the goal of current policy, then it is counterproductive to sink money into universities to commercialize research. Universities are institutions of learning and basic research, and while there are always a few people in academia who play in the commercial world, the bulk of commercial activity takes place in the private sector.

IT’S ABOUT THE PEOPLE, NOT THE RESEARCH

Academics in the room quickly jumped to the defence of academe, but they missed the point. All they could hear was “don’t put money into the universities.” That is not what Orr, or anyone in the room, said. Orr stated “don’t put money mandated to enhance commercial activity into the universities”. He, and the scores of industry leaders that I’ve talked to in R&D-intensive sectors, never say not to fund universities. In fact, an ad hoc group of business leaders that has developed around work that Doug Barber and I have been doing over the past few years, emphatically stated at its first meeting that government should continue to fund basic research at universities.

In Moncton, Doug Barber articulated most clearly why industry needs governments to continue funding university research. It’s because companies need people who have learned how to keep on the leading edge of research in their field. It’s not just the content of what they learn, but the contacts and ways of keeping abreast of developments that is valuable to industry. Unfortunately, current policies focus on the research itself, not the people and the skills they develop for staying at the forefront of a field of knowledge.

Hence we have Ontario’s new commercialization fund that will only consider applications from publicly funded institutions. Private sector firms need not apply, despite one of the stated goals of the fund being to help firms become market-ready more quickly. The underlying assumption, of course, is that university research is important for industry. The Atlantic Innovation Fund allows companies and public sector institutions to apply, and 53% of the recent applications came from industry. However, money that goes to industry must be repaid if the project yields commercial success, whereas the public sector institution is not subject to the same requirement.

NEW SUCCESS MEASURES FOR COMMERCE

What governments need to focus on is how to mobilize that part of their budgets geared to enhancing commercial activity. We need new success measures that can inform eligibility requirements and selection criteria for such programs. I would suggest the following for starters:

* more global customers and increased profitability for individual firms;

* increased number of profitable companies with global customers;

* increased number of experienced entrepreneurs and managers available to run these firms; and,

* enhanced collaboration between firms and publicly funded research institutions on research areas of interest to specific industry sectors.

As one participant in the Moncton conference suggested to government program managers in the audience, “approach your clients as if you were a venture capital firm.” Governments seeking to use public funds to stimulate commercial activity should apply the same hard-nosed criteria as an investor would. Then, maybe we will start to see some movement in Canada’s economic performance in the knowledge economy.

Jeffrey Crelinsten is President of The Impact Group and co-publisher of RE$EARCH MONEY.