OCE program positioned to boost economic impact with single corporate structure

The Ontario Centres of Excellence (OCE ) is about to realize a long-held aspir-ation of consolidating its role of serving the R&D needs of provincial businesses while linking into an emerging national system of innovation with international reach and influence. As of March 31st, the OCE’s four Centres will be merged into a single corporate entity with a combined budgetary impact of $70 million. And discussions are underway with private financing sources to boost that economic muscle to $150 million annually.

It’s all part of an ambitious strategic plan that obtained OCE board approval February 19th and positions the 18-year-old program as an engine of R&D assistance and commercialization. Much of the conceptual, and programmatic legwork to prepare for such a move is already in place, and Don Hathaway, OCE Inc’s interim managing director and CEO, says the potential to contribute to Ontario’s productivity and innovative capacity is enormous.

“This is a chance to make a real difference. The OCE program needs to play on both national and international levels. We need to be a lot bigger and speak with a single voice,” says Hathaway, who was hired to engineer the OCE merger process after a career as a merchant banker. “In the area of commercialization, each Centre has had a different approach. We want to integrate those. The good news is, we’ve done a lot of things reasonably well that put us in a nice position to draw heavily on those things as we go forward.”

The underlying rationale for the OCE merger is growth. By consolidating the four Centres, the strategy is clearly to enhance existing activity, attract new investment and expertise and move novel ideas, inventions and concept out into the marketplace. With four separate Centres, the $32 million in provincial government funding and $38 million in private sector contributions were spread too thinly to make a substantive impact.

COMMERCIALIZATION FUND PLANNED

Combining the Centres and their respective budgets is aimed at laying the basis for considerably more investment, with the goal of increasing the overall annual budget to $150 million within three years. Discussions are currently ongoing between OCE officials and various venture capital and institutional investors, but it’s too early to say what form new investment may take or where it will come from.

“In the R&D world, $70 million is nothing, so we have to pick targets and leverage resources. We’re also eliciting information (from potential investors) around the question of whether we can cost construct an operational model for a commercialization fund,” says Hathaway. “So far there’s been cautious agreement. They’re saying ‘show us that risk can be managed, a balanced portfolio and no strong interdependency between investments we make’. We’re looking for a tax incentive mechanism or a similar type of mechanism - some kind of facilitation through legislation to reduce the risk.”

The OCE is not alone amongst Ontario institutions exploring different mechanisms to stimulate commercialization. The Univ of Toronto’s Innovations Foundation, Toronto Research Resource Alliance and even some private venture capital operations are all developing proposals to help bridge the commercialization gap, building on the experience of labour-sponsored venture capital funds and their affiliated community small business investment funds.

Where OCE could distinguish itself is in the area of policy over intellectual property (IP). OCE is currently negotiating a University Collaborative Agreement that for the first time will provide a uniform approach to dealing with universities. Hathaway says the contract between OCE and the Ministry of Economic Development and Trade is being used as a guiding template, replacing the four separate agreements that have operated up to now.

“The OCE shall not own intellectual property from any collaborative agreements. That’s a loaded statement,” he says. “We will respect the rights of the researchers and research organizations funded under triparite agreements.”

A FOURTH PILLAR ORGANIZATION

Hathaway says the fact that the OCE program has no vested interest in the projects it supports places it firmly in the category of fourth pillar organizations. Once the merger is completed by April 1st, Hathaway says he will approach Canada’s national fourth pillar organizations — Canarie, Precarn Inc and the Canadian Microelectronics Corp — to explore common interests and activities.

OCE is also interested in becoming involved in the proposed Innovation Canada (I-Can), should the federal government agree to support it. That initiative is being championed by Dr John McDougall, president/CEO of the Alberta Research Council (R$, December 11/03). It seeks to link provincial research and other infrastructure into a national resource for firms developing products and services for the marketplace.

Hathaway says he has offered to make the OCEs the Ontario node for I-Can and will support it in any way he can. In the coming weeks, he will also be meeting with representatives of applied research organizations in Quebec, in the hopes of establishing formal relationships. He is being assisted in that effort by Gilbert Drouin, president and director general of Valorisation-Recherche Québec.

While the linkages and processes for enhanced commercialization are being put in place, Hathaway says the OCE and other strategically positioned research organizations must work at anticipating trends. That requires a capacity for foresight that has not been developed in Canada, outside of seminal work being conducted by the National Research Council.

“We need to anticipate trends and move in front of them. We need foresight for Canada, North America and the world,” Hathaway told a recent gathering of the Association of Canadian Community Colleges. “That will allow Canada to go up-market for the higher value-added jobs and grow in new areas such as energy, biohealth and nanotechnology.”

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