Peter Josty

The west needs a stronger innovation culture

By Peter Josty

The First Banff Innovation Summit concluded on 1 October 2006. The Summit was called in order to define creative approaches and new principles for addressing the problem of how to ensure a prosperous future for western Canada in an increasingly competitive and rapidly globalizing research and innovation system.

The Summit brought together 35 leaders and thinkers from across western Canada, drawn from business, government, the universities and the not-for-profit sector. The Summit was joined by five internationally recognized experts: David Mowery of the Haas School of Business, University of California at Berkeley; Ian Miles, PREST, University of Manchester; Dan Levinthal, Wharton School, University of Pennsylvania; Richard Hawkins, University of Calgary; and Stuart Kauffman, Institute for Bio-informatics and Complexity, University of Calgary. They challenged participants to question conventional wisdom and to think ‘out-of-the-box' about innovation policy and practice.

The Summit generated a wealth of insight which will be summarized in a position paper entitled Integrating Regional Creative Capabilities into the Global Innovation System: The Banff Plan, to be released on November 28 in Edmonton at InnoWest 2006, the western Canadian Innovation conference.

Some of the key ideas to emerge from the Summit that challenge current conceptions and practices include:

We focus too much on research and development (R&D): R&D is crucial for the economic future of western Canada, and R&D investments must be increased, particularly by business. But R&D by itself cannot produce the new goods and services that will increase prosperity. A much more holistic conception of the process of innovation needs to be adopted that emphasizes market-making, nurturing the entrepreneurial environment, supporting emerging companies at critical financial stages, mentoring management skills and generally creating a culture of experimentation where everyone is encouraged to develop, identify, embrace and apply new ideas and practices at every level of our society and in every walk of life.

Markets cannot do the job alone: Participants all stressed the importance of efficiently functioning markets in diversification and growth, but recognized also that markets alone do not do everything. Nurturing radically new technologies from conception through to commercial success can take decades and require investment periods that often are unfeasible on commercial criteria alone. Significant public sector involvement at appropriate stages has been essential to the successful application of many of the key technologies that have been developed in western Canada and which now drive much of the growth in the region.

The main barriers to global markets are local: The problem is not how to make western Canadian enterprises successful in global markets but how to make more of them successful. The Summit concluded that many western Canadian companies are already very successful in the global innovation system. The export of commodities is complemented substantially by the export of value-added products and services (many related to commodities), by extensive capital in-flows and out-flows, and by technical exchanges.

The major barriers to further benefits for more enterprises are not global but local — lack of regional cooperation, an unwillingness to take risks, lack of high-level vision and leadership and a mindset that does not adequately understand or address evolving customer requirements and attitudes in the global marketplace. Western Canadian enterprises that are successful globally have learned these lessons well and are prospering. The problem is that we have a poor infrastructure for capturing this knowledge and transferring it to western Canadian enterprise as a whole.

The pivotal role of the resource sector: The resource sector is a major factor of the economy in the four western provinces and will remain so for years to come. But all resource commodities exist in volatile and ruthlessly competitive markets with razor-thin margins, where competition is largely based on cost, and prices are set by forces beyond the control of any individual producer. The statistics say that R&D spending by the resource sector is low, but the Summit recognized that innovation occurs in many ways that never appear in R&D statistics. For example, much of the innovation happens in resource industry supplier companies, especially in services. Innovation at these levels is extraordinarily significant, but almost invisible in our national and regional statistics.

Moreover, the resource sector stimulates innovation in its role as a very important customer for many high-technology companies. In a significant number of cases, companies like these have gone on to grow independently and successfully in global markets.

Diversity drives growth: Innovation is not just about creating novel products, services, technologies and organizations, but also about developing novel ways to combine and apply what is already at hand. Rather than novelty as such, the Summit identified diversity as the key requirement for growth.

Diversity drives growth by greatly expanding the number of potential winners around which critical market mass can accumulate. The greater the diversity of opportunity we can create in western Canada, the richer the environment for combination and recombination of all of the product and services elements in which we are strong already.

Diversity extends also to people, many of whom bring invaluable assets to western Canada from outside the region, including the language and cultural translation skills that are vital to understanding the global marketplace. Needless bureaucratic and social barriers remain in place that prevent rapid integration of these perspectives and skills into our social and economic fabric.

THE CORE MESSAGE

We need to build a stronger western Canadian innovation culture. It will take vision, leadership and political will to get us there. Only in this way will we create the level of complexity in our economy that will be required in order to create and sustain a globally competitive advantage.

Peter Josty is executive director of THECIS [The Centre for Innovation Studies] in Calgary. He can be reached at p.josty@thecis.ca.