S&T leaders propose six short-term measures to kick-start national commercialization strategy

A blue-chip group of S&T leaders from all sectors has identified six short-term commercialization initiatives it considers essential for improving Canadian commerce. The so-called ‘quick hits’ are contained in a new report that focuses on four key facets of the innovation chain — people, financing, research and institutions — with the objective of implementing them within the next 12 months while a more comprehensive strategic plan is developed.

The recommendations are clearly intended to jump-start a national commercialization strategy at a time when Industry Canada is struggling to put together its own package of initiatives. The department is aiming for a full strategy by the fall, but a task force organized to fast track the process has yet to materialize (R$, March 9/05).

The 47-member Leaders Roundtable on Commercialization is comprised of CEOs, university presidents and DMs from federal and provincial governments. It was convened for a two-year period by the Conference Board of Canada (CBoC) to propose solutions to what the report calls a “fundamental disconnect between the Canadian commercial marketplace and the country’s research and development communities”.

The Roundtable is co-chaired by David Pecaut (senior partner, Boston Consulting Group) and Don Pether (president & CEO, Dofasco) and supported by a range of organizations including Alberta Innovation and Science, GM Canada, National Research Council and Ontario Ministry of Economic Development and Trade.

The quick hit proposals are not new concepts but they represent a consensus that encompasses the most recent thinking of industry, government and academia. It’s also an attempt to develop momentum and strategic coherence within political and business environments that are currently unfocused on exactly what needs to be done to expand and enhance the knowledge-based economy.

“The energy and cohesion of the group means they’re ready to get on with it and government is a part of it. They’re committed to moving the yard sticks,” says Brian Guthrie, CBoC’s director of innovation and knowledge management. “The Roundtable’s second meeting last week established an ambitious agenda and larger programs. We hope to extend the Roundtable beyond two years to get this big, complex job done.”

RESEARCH NETWORKS

The first quick hit calls for the creation of at least three industry-led collaborative research networks by April/06. Modelled on GM Canada’s Beacon Project (R$, March 9/05), the intent is to establish linkages between business and researchers, led by larger firms and suppliers but encompassing all players in the supply chain of a particular industrial sector. Government would be expected to provide seed funding while new investments would be shared by those in the supply chain.

INTERNSHIP PROGRAM

The second recommendation calls for a regionally-based internship program that would expand on the WestLink Innovation Network concept to increase the number of skilled and experienced Canadian entrepreneurs. WestLink has offered to work with the Roundtable to develop a template and build the necessary regional connections for the program, which will also focus on “the more difficult task of building a culture of commerce based on openness to mentoring, advice and experience”.

ANGEL TAX CREDITS

The Roundtable has also adopted a recommendation from the National Angel Organization to create a 30% innovation and productivity tax credit to increase the supply of seed financing. Dubbed angel tax credits, it would encourage more people to consider angel investing and expand the pool of angel financing. The Roundtable will work with other organizations that have made similar recommendations, including the Canadian Task Force on Early Stage Financing, which briefed Industry minister David Emerson earlier this year.

EXPANDED SR&ED CREDITS

Tax credits are the focus of another Roundtable recommendation to establish a pilot program to expand the eligibility of the science research and experimental development (SR&ED) tax credit to include “expenses related to the broader innovation process”. The report says such a move would help to bridge R&D to marketplace needs while expanding the number of firms performing R&D and increasing the success of those firms. The pilot program would be capped at $10 million and allow a credit for market assessment activities conducted along with R&D.

“We’re calling for a major re-think (of SR&ED), bigger than just R&D,” says Guthrie. “It’s about the engagement of the customer, the Doug Barber view of the world ... Firms that engage the customer in their R&D are much more likely to be successful.”

STRATEGIC PROCUREMENT

The Roundtable also revives the call for governments to do more to support leading-edge Canadian technologies by purchasing from firms with new technology-based products and services. The report notes that the strategic use of the billions of dollars that the federal and provincial governments spend each year on goods, services and construction could enhance innovation and commercialization by giving firms early sales to establish global credibility. Roundtable members will be meeting with the Treasury Board president in the coming weeks with the goal of developing a coherent national view of strategic procurement within 12 months.

FEDERAL SEED CAPITAL

The Roundtable’s final recommendation takes aim at the early-stage funds provided to the Business Development Bank of Canada in the 2004 Budget. The report notes that little of the $100 million earmarked for seed investments has been spent at a time when this level of funding is urgently required. It calls for a greater private-sector voice in how the money is to be spent and plans to meet with government officials to present its own plan. That includes a matching fund to attract the participation and funding of experienced venture capitalists – an essential criteria if the government’s objective of achieving a 4:1 leverage ratio is to be realized.

“The government should be catalyzing action but not taking the lead in providing financing or advice,” states the report. “We are not just seeing a delay of $100 million in investment; we are experiencing a holdback of $400 million in new ideas, products and services.”

GOING FORWARD

While work on implementing the quick hits goes forward, the Roundtable will be working on a second wave of initiatives. They include “longer-term development of collaborations, gateways and innovation exchanges across the country that will foster the infusion of new financial capital, experienced entrepreneurs and actual deal-making”. Also under consideration is a $1-million award for commercialization, a knowledge-mapping exercise and the consolidation of applied R&D facilities across Canada. The latter revives the Innovation Canada initiative, proposed in late 2003 (R$, December 11/03 & June 30/04) by John McDougall, president and CEO of the Alberta Research Council.

“I detect in the Canadian innovation community a change in attitude about picking winners. We need to identify sectors and technologies where Canada can excel. People are ready to make choices,” says Guthrie. “The Conference Board helped to put commercialization on the radar screen four years ago (and) Industry Canada has picked up on some of it. But it’s propagated some fairly perverse policies around university commercialization ... Innovation should be more connected with business.”

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