Panel's commercialization initiatives would put business in driver's seat

Matter of national urgency

A select group of Canadian business leaders is urging the federal government to consider spending up to $1.1 billion on a suite of commercialization-related initiatives designed and monitored by an industry-led Commercialization Board (CPB). The Board would direct its advice to the minister of Industry on changes to existing programs, the creation of new ones and the assessment of results.

If accepted and implemented, the CPB would represent a significant intrusion of the private sector into the policy and program domain — an area long dominated by senior bureaucrats and politicians. Such a move would also bring Canada into the mainstream, since many countries have already embraced the business community at the policy level.

The recommendations are contained in the highly anticipated final report from the Expert Panel on Commercialization, chaired by retired businessman Joseph Rotman. The proposed initiatives range from a super fund that addresses know-ledge or skills gaps in areas where Canada is, or can become, a market leader, to fellowships for increasing the pool of talent employed by industry.

Entitled People and Excellence: The Heart of Successful Commercialization, the report is built around the themes of talent, research and capital. It was unveiled in Ottawa on April 24 with several of the task force members in attendance (see chart).

The report was officially presented to Industry minister Maxime Bernier on the same day. His office issued a statement committing to nothing more than reviewing its recommendations. There are concerns that recommendations coming from a Liberal-appointed task force may be viewed by the new Conservative government as somehow tainted — a perception the task force is at pains to avoid. The first sentence of report's preface states that the expert panel is non-partisan. It was a message that Rotman reinforced when officially unveiling its contents. He stressed that the key to overhauling current government policy and introducing new measures will be the industry-led CPB.

"More must be done to ensure that the private sector has a strong voice in the design of public policy to improve commercialization to international levels," says Rotman. "The CPB will be the lead advisory body to the minister of Industry on commercialization issues."

The CPB would have an annual $3-million budget with a full-time, private sector president and an independent secretariat. Its members would be drawn from industry, academia and fourth-pillar organizations. Ex officio, non-voting members would be solicited from government research and commercialization organizations, while DMs would be asked to attend "when it is relevant to their departments".

For the first year, an interim CPB board would be charged with developing an implementation plan for the panel's recommendations, creating the organization's governance structure and establishing collab- orative ties with key public and private organizations. The CPB would operate under an initial four-year mandate before being assessed for renewal by an internationally recognized panel.

Virtually every recommendation made by the expert panel addresses the demand side of commercialization through a series of incentives and programmatic inducements to increase the talent pool and output of industrial research.

SUPERFUND

Central among the proposed programs designed to boost industrial R&D is the creation of a Commercialization Super Fund, with initial funding of $50 million annually and ramping up to $250 million if fully implemented. The fund would match private sector funding and simultaneously support 20 to 30 medium- term, large-scale projects.

"Industry would lead and invest in projects with government support that are private-sector focused and market driven," says Expert Panel member John Risley, chairman of Clearwater Seafoods. "No industry money, no government money."

The Expert Panel also recommends enhancing the federal government's support of smaller firms through a Canadian SME Partnership Fund. With a pricetag of $200 million a year if fully implemented, it is aimed at science-based departments and agencies (SBDAs) that would compete for five-year research funding allotments "above and beyond their existing budgets".

SBDAs would identify scientific and technical problems and use their new funding to contract SMEs to carry out the work. The SME Partnerships Initiative would also provide program support to SMEs, emphasizing "market research, marketing information, guidance and support".

The report cites the programs of Defence R&D Canada and the US Small Business Innovation Research program as inspiration for an initiative that would help to tie SBDAs into the national innovation system after years of neglect.

The SME Partnerships Initiative is also designed to complement the Canada Commercialization Fellowship Program, which addresses the need for highly qualified personnel through exchanges with posts-secondary institutions. The largest proposed program in terms of funding, the Fellowship Program aims at encouraging students to consider an R&D career in industry and companies to hire additional staff related to commercialization. Budgeted at $275 million annually, it would support up to 5,000 fellowships and associated research funding annually. Public funding would initially support the fellowships before the cost is transferred to participating companies.

"The dollar value of the fellowships must be irresistible in order to attract and retain the best and brightest from around the world," states the report.

Also in the area of attracting talent, the expert panel is recommending the creation of a Talent and Research Fund for International Study to bring top-flight talent to Canada and permit Canadians to study at foreign institutions. To be administered by the granting councils with funding of $190 million annually, the fund would include Maple Leaf Graduate Scholarships "to compete with the prestige of the Fullbright and Rhodes scholarships".

The panel's recommendations also extend to the granting councils and the National Research Council (NRC). It calls for increased funding to the granting councils' proof of principle and proof of concept programs and a budget boost for the Industrial Research Assistance Program. It also calls for the creation of a commercialization program serving relevant research funded by the Social Sciences and Humanities Research Council.

ANGEL CO-INVESTMENT FUND

In the area of capital, the panel noted the weak performance of Canada's venture capital industry relative to the US, particularly seed/start-up and expansion-stage financing. For firms at the seed and start-up stage, it is proposing the development of angel investor networks and the creation of an angel co-investment fund. These would be community-based funds "capitalized by the federal government which will invest alongside angel investors". The funds would be subject to peer review "under the auspices of the CPB" and aim to expand the pool of angel capital and build firms for the next stage of financing. They would also serve a "legitimate public policy goal" of strengthening clusters and fostering a culture of commerce.

For expansion-stage financing, the panel argues that more information is required to tackle a complex and vexing issue. It calls for a review of current policies and programs and a national conference to help policy makers formulate fresh approaches.

In addition to its call for new spending initiatives, the panel also recommends that the CPB review the plethora of commercialization programs now in existence, which it estimates at between 150 and 200. Rotman says the lack of integration between programs, compounded by the lack of trust between the private and public sectors, is undermining the effectiveness of current policy. "There are too many silos within and between ministries which undermine efficiency, effectiveness and impacts," he says. "We need a process and a structure to help us overcome this obstacle."

Rotman points to a recent exercise in the UK that reduced more than 200 commercialization programs down to nine centred around four themes. He asserts that a similar process must be undertaken in Canada and that the CPB is the ideal vehicle for such a review.

PANEL STRESSES URGENCY

While it's uncertain how the government will react to the panel's recommendations, its members are adamant that the situation is urgent and action must be taken promptly.

"We have completely missed the point and wasted our time if it's your interpretation that this is just another series of government programs ... This has to become a national policy," says Risley. "This is about a real policy imperative and it's got to become a priority or frankly, the country is going to be in deep trouble over the course of the next 20 years."

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