Fixing Canada's innovation track record

Canada has strong fundamentals but is hampered by funding and tech transfer policies.

Comments Off on Fixing Canada's innovation track record September 21, 2011
by Treena Hein

Why Canada still has an average track record in commercializing innovation is a question that continues to vex. We know we have the talent, so what issues are holding us back and where do we go from here?

Answers to these questions are being provided by Canada’s Science, Technology and Innovation Council (STIC). At the end of June, STIC released its second national report measuring Canada’s science and technology performance against international standards of excellence. The Council draws members from the business, academia and government with a mandate of providing the Government of Canada with external policy advice on science, technology and innovation issues.

This year’s report, entitled ‘State of the Nation 2010: Imagination to Innovation’ charts Canada’s progress from a baseline set in 2008, and also proposes a core list of 20 indicators for future monitoring. STIC found that Canada’s top strengths include a deep talent pool and a robust public research capacity.

For example, Canada ranks number one in the G7 in terms of research and development performed by the higher education sector as a percentage of GDP. In addition, young Canadians excel in science, math and reading; Canada is attracting international talent; and innovative excellence can be found in virtually every region and economic sector.

“Innovation is central to Canada’s future and our biggest advantage lies in our excellent talent,” says STIC Chair Dr. Howard Alper. “The challenge lies in how companies and government can deploy and empower our people. Right now, there are a number of constraints holding us back.”

Government funding is one of those constraints, he says. For example, Canada’s gross domestic expenditure on R&D as a percentage of GDP lags behind the G7 and other leading innovators. STIC also found that 8 out of 16 Canadian industry sectors had lower R&D intensity than the global R&D average, although several sectors are performing far above the OECD average. The answers put forward by STIC therefore include a call for more government investment in the private sector.

“We are number one in the world for tax credits,” Alper says, “but we are near the bottom for direct investment (peer-adjudicated grants etc.) and we need a better balance between the two. In the U.S., they have several programs that directly help companies broaden their perspectives and look for areas of opportunity.”

Dr. Tom Corr, president and CEO of Ontario Centres of Excellence (OCE), agrees that the American system is one to emulate. OCE works with industry by co-investing in the R&D of industrially-relevant technologies at universities and colleges. Over the past year, OCE has assisted in 503 projects (over $30 million) to commercialize ideas, which attracted another $40 million in industry investment.

These projects involved 40 colleges, universities and research hospitals which connected researchers with more than 750 companies, resulting in the creation of 20 new start-up companies. Still, he says setting clear legal guidelines for technology transfer can make all the difference.

“The US passed a law in 1980 so that any technology developed from research at a university or college is open for commercializing by the person who developed it,” notes Corr. “This provides a massive incentive to get intellectual property out into industry.”

He says that after that law was in place, a network of venture capitalists and entrepreneurs began to form around US academics, ready to work with scientists throughout the entire commercialization process. U.S. SBIR (Small Business Innovation Research) funding also provides $30 billion a year for new and established companies to meet research goals of the US government.

“It’s a very effective system,” Corr notes. “Here, we don’t see the same thing happening as Canadian institutions all have their own policies on intellectual property.” He also points to the fiscal reality that Canada does not have anywhere near the budget the U.S. does, but says OCE and others in the innovation space do “very well” with what they have.

Knowledge Transfer
Strengthening knowledge transfer is also identified in the STIC report as critical – although Alper notes that some industries are doing very well at this. More research collaboration between universities, colleges and government scientists is an obvious way forward, but Alper would also like to see the Government of Canada provide internships.

“Co-op programs are valuable, but I am talking here of paying for long-term positions of three to six years for graduates,” he says. He points to the region of Emilio-Romagna in Italy, where the strong use of internships over the past eight years has resulted in the growth of many companies. “Yes, it’s about job creation,” Alper says, “but coupled with that, is the harnessing of these graduates who are keen to make their mark and help the companies grow and succeed.”

OCE has a program called “First Jobs,” which provides a subsidy for companies to hire Masters and PhD students who are already working with these companies as industry partners in their graduate research. “It’s only $25,000 a year, but it makes a big difference,” says Corr. “These graduates would likely remain in academia without it.” In addition, OCE stats show that 76 percent of these workers stay with the company after the subsidy year is over.

There are also immigration and work permit hurdles that need to be removed in Canada – hurdles related to foreign students who graduate from Canadian universities but want to stay and work in industry. “Some of these gems have to go back to their countries of origin and re-apply to come back to Canada,” Corr says. “We lose many of them forever. I recently toured all 52 universities and colleges in Ontario and met with the presidents and they found this a big issue. The Minister of Labour will hopefully be drafting new rules relating to this soon.”

Developing mentorship is another key way to transfer knowledge and foster research collaboration in Alper’s view. However, he says, “These relationships should not just be developed within the country, but on a global basis. Companies that can afford to do so regularly establish these linkages, but it’s the companies that can’t afford to set up mentorships that need the help.”