World-leading Clusters and Partnerships Roundtable

August 30, 2016—Toronto, ON
World-Leading Clusters and Partnerships
Hosted by Ilse Treurnicht and Arvind Gupta

Area of Focus

Understanding the landscape, creating the ecosystem, positioning Canada for global success: How can Canada intelligently respond to a fast-moving landscape, where some technologies are at a clear inflection point, some are beginning to make their way into commercial markets, and others are starting to combine in new and unexpected ways? How can Canada support growth opportunities and mitigate risks, and what playbook could be proposed to policymakers around disruptive technologies?

  • What are the most significant disruptive/breakthrough technologies in Canada and around the world? Where does Canada have a competitive advantage?
  • What can we do as a country to accelerate the development of breakthrough ideas and technologies? How can we create a system that fosters both demand pull and push for new ideas?
  • How can we address structural barriers for the commercialization of new ideas?

Highlights

Canada should be bold and less risk averse, matching opportunities to areas and individuals of strength and potential, as well as looking at funding gaps and the role that governments can play in using tax levers and purchasing power to encourage innovation.

Several areas of technological strength for Canada, within the following application areas:

  • Life Sciences: significant strength in precision medicine and genomics, with world-leading capacity in stem cells and regenerative medicine.
  • Clean Technology: large opportunity for the digitization of electricity, enabling more effective management of the grid and distributed generation.
  • Data Systems: foundational strengths in artificial intelligence, machine learning, visualization and simulations, with opportunities for Canada in data management, distillation, and discoveries from the analysis of data. Application areas exist across industries; inclusion of the Internet of Things important to advanced manufacturing.
  • Strengths in nanomaterials (applications to sensors, diagnostics; scale relatively easily), quantum materials, and advanced materials more generally.

Summary of Discussion

Disruptive technology cuts across areas for action and has very real and tangible potential to disrupt large industry, the public sector, and younger companies. Analysis by McKinsey suggests that up to 40% of workers in Canada could be subject to disruption from breakout technologies.

Need for Canada to take the risks needed to identify and back areas of technology promise and strength, noting the disruptive value of converging skill sets and disciplines (e.g., human health and computer science), as well as the innovative power of interdisciplinary teams. Agreement that Canada has significant strength in generating ideas (both via basic research and innovative companies), but lacks the commercialization pull to bring them to market.

It would be important to give companies engaged in disruptive technologies the ability and tools to succeed, from capital to export exposure to talent. Governments need to build the right kind of ecosystems for these technologies, including platforms for commercialization that would allow technologies to be developed and rolled into companies. Need to look at how to build industrial strategies around technologies of key importance (e.g., quantum materials, regenerative medicine) with the potential for Canada to be a world leader.

Key Implementation Considerations/Challenges

How to distinguish between unique opportunities for Canada, such as those that may exist in medicine and clean tech, and defensive plays, where Canada needs to double down to remain in the innovation game (e.g., digital technologies).

How to move beyond a traditional resource or manufacturing economy, whether by investing in value-added opportunities (e.g., fish oil or crop biostimulants in ocean tech) or by moving strongly into digital sphere.

Need to identify and invest in platforms of broad application and use across industries.

In talking about technologies, need to distinguish between concepts (e.g., precision medicine), the underlying technologies themselves, and their areas of application.

Avenues could be considered to address issues associated with the government acting as first customer—with an acknowledgement of necessary trade considerations—for example, first time product hits the market, could be considered a beta test.

Top Ideas/Outcomes

Build on Canadian Advantages: Canada is a top three leader in material science, but could better apply it to all the areas where it could have benefit--aviation, construction, etc. Canada’s medical system could also be a competitive advantage: offers buying power, could mobilize development of new healthcare technologies. It is incumbent to establish a platform to transform these ideas into commercialized products, especially since this can be a long term process and company receptors do not as yet exist.

Find Innovation Everywhere:Innovation is not limited to "new sectors"—traditional industries like natural resources or agriculture offer Canada a competitive global advantage and can be very disruptive—should leverage innovation in those sectors to compete globally.

Embrace Risk-Taking:Risk aversion contributes to brain drain, short term government funding (including little funding for clinical trials), results reporting (track easy metrics like dollars spent), and allocation of Business Development Canada (BDC) support (viewed as conservative and reluctant to take risks). We need to be comfortable with financial risk, the way that we are around technical and scientific risk.

Think Long-Term:Research networks need sustainable, long-term funding to allow for sustainable, results-driven activities, rather than continuous planning for change.

Consider Tax Instruments: Decoupling tax incentive from gaming/entertainment space would have the effect of attracting worldwide talent to the digital space for application across industries. Government could consider tax credits that taper off rather than stop, creating a tax advantage to creating and growing a business in Canada, creating tax breaks for small and large businesses trying to take a good idea and make it work here in Canada. Tax breaks should also be longer-term, e.g. capital cost allowance is only as long as two business cycles, which is not enough time to develop projects to profitability

Backing Talent: If we were building an Olympic team, we would know which were our top tier 2 and tier 3 players. Consider the notion of identifying and supporting top talent (individuals, not companies), and then building around them. High-impact individuals are already globally connected. Need to build teams around these individuals, and avoid putting up barriers around them and their activities.

Preparing for Disruption: If 40% of jobs are at risk of disruption because of artificial intelligence, the government should invest in it. AI has applications across industries and we have strength and talent, but will need to maximize impact by using several tools (including immigration).

Importance of Big Players: Clusters can create companies that will hopefully become best in class, but we also need big anchor companies to fuel innovation and growth. Short-term incentives to attract them will not necessarily encourage companies to make long-term investments in Canada.

Importance of Sales and Entrepreneurship: Firms need more senior business development and marketing talent. Need to consider how to attract employees with these skills, as well as how to teach sales and persuasion (consider examples of University of New Brunswick(UNB) and Laurier University). UNB and Laurier (as part of Lazaridis Institute) are considering these questions. Canada also needs to start educating people at a very young age—primary school or even earlier—to think like entrepreneurs: encourage problem-solving, risk-taking, big-picture thinking, and a can-do attitude.

Focus on Collaboration: Create collaboration platforms to convene the right players to solve specific challenges.

Buy Canadian: Government should consider how it might be the first buyer for Canadian technologies (creates momentum for the company) or create incentives for other businesses in Canada to buy from innovative Canadian firms.

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