Transcript Canada’s Innovation Strategy: The Innovation Engagement

Canada’s Innovation Strategy:
The Innovation Engagement Process and Follow-on
Actions
Prepared by Lois Stevenson
The Innovation Secretariat
Policy Sector, Industry Canada
Innovation
The process through which new economic and
social benefits are extracted from knowledge
–OECD definition
• Canada’s goal is to be recognized as one of the most
innovative countries in the world.
• Canada’s Innovation Strategy:
– Knowledge Matters: Skills and Learning for Canadians
– Achieving Excellence: Investing in People, Knowledge and
Opportunities
• 2001 Objectives:
– assess the national challenge
– propose national goals, targets and federal priorities for action
– leverage complementary commitments by partners
Canada’s standard of living declining relative
to the U.S.
• Canada’s standard of living
is high in relation to the rest
of the world
• But we have a significant
gap compared to the U.S. –
our major trading partner and
key competitor
• The income gap is mostly
due to Canada’s relatively
weaker productivity
performance
• Innovation is the key to
improving productivity
Standard of Living and Productivity*
Canada Relative to the U.S.
US=100
100
95
90
Productivity in Canada
85
80
Real Income in Canada
75
70
1981 1984
1988
1992
1996
2000
* Productivity is measured as real GDP per hour worked
and real income is measured as real GDP per capita.
Sources: Statistics Canada and U.S. Bureau of Economic Analysis
Canada progressing toward a more innovative
economy
• Canada’s innovation
performance near the
bottom in the G-7
Canada's Innovation Performance
(Average Annual Rate of Growth, 1981-99*))(
Ranking
among G-7
Canada U.S.
1
2
External patent application
• But business, academia
and governments
investing aggressively in
innovation
• On the right track, but
we need to build on our
strengths to realize our
potential
Human capital devoted to R&D
1
6
Business-funded expenditure on R&D
1
4
R&D intensity
1
5
Technology balance of payments
6
5
National patent applications
4
5
Government expenditure on R&D
3
4
-5
0
5
10 15 20
% per year
* Or latest year available; figures adjusted by the size of labour force or economy.
Source: OECD, Main Science and Technology Indicators, 2001/2
Key Innovation Challenge Areas
• A multi-pronged effort will be required to address
Canada’s innovation challenges:
– The knowledge performance challenge (R&D)
– The skills challenge
– The innovation environment challenge
Knowledge Performance Challenge
Canada ranks 14th in R&D performance among OECD
countries. We need to increase investments by all three
sectors. Goal is to be among top five by 2010.
• Private Sector:
– 57% of Canada’s R&D: Fastest pace of growth in G-7
– Challenges: industrial structure, firm size, foreign ownership, concentration
• Universities:
– 31% of Canada’s R&D: Strong ties to private sector
– Challenges: faculty retirements, indirect research costs, small university research
specialization, commercialization, supply of highly qualified people
• Governments:
– 11% of Canada’s R&D
– R&D is key to maintaining modern and effective regulatory and investment
policies
– Challenges: researcher retirements, keeping pace with scientific developments
Commercialization Gaps
• Strong growth in venture capital investments in recent
years; unused supply
– But the Canadian industry needs to tap into new sources of
capital and offer more specialized services.
• 80% of manufacturing companies are introducing new
and improved products & services to the market
- But Canadian firms trail in their ability to capture the economic
benefits of innovation.(innovations have smaller overall impact on sales)
• Canadian firms compare well internationally in
number of strategic alliances formed
– But they need to develop more of the technology alliances that
are key to innovation.
Proposed Targets for R&D
• Promote the creation, adoption, and
commercialization of knowledge
– By 2010, rank among the top five countries in the world in
terms of R&D performance.
– By 2010, at least double the Government of Canada's current
investments in R&D.
– By 2010, rank among world leaders in the share of private
sector sales attributable to new innovations.
– By 2010, raise venture capital investments per capita to
prevailing U.S. levels.
The Skills Challenge
• Ensure an adequate supply of people who create
and use knowledge
• Canada has a highly educated workforce, but skill shortages
are looming (global phenomenon)
• To meet our 5th place R&D target, we need to double the
number of research scientists and engineers in Canada.
• We also need to develop strong managers who can lead
Canada’s economy through a business transformation.
• Three key sources of highly qualified people:
–New graduates
–Immigrants
–Current workforce
Proposed Skills Targets
• Develop the most skilled and talented labour force
in the world
– Through to 2010, increase the admission of Master's and
PhD students at Canadian universities by an average of
5 percent per year.
– By 2002, implement the new Immigration and Refugee
Protection Act and regulations.
– By 2004, significantly improve Canada's performance in
the recruitment of foreign talent
– Over the next five years, increase the number of adults
pursuing learning opportunities by 1 million.
The Innovation Environment Challenge and
Proposed Targets
• Ensure that Canada's stewardship regimes and
marketplace framework policies are world-class
• Improve incentives for innovation
– By 2010, complete systematic expert reviews of
Canada's most important stewardship regimes.
– Ensure Canada's business taxation regime continues to
be competitive with those of other G-7 countries.
– By 2005, substantially improve Canada’s ranking in
international investment intention surveys.
Community-Based Innovation Challenges and
Proposed Targets
• Work together to stimulate the creation of more
clusters of innovation at the community level and
unleash the full innovation potential of
communities across Canada.
– By 2010, develop at least 10 internationally recognized
technology clusters.
– By 2010, significantly improve the innovation
performance of communities across Canada.
– By 2005, ensure that high-speed broadband access is
widely available to Canadian communities.
The Public Engagement Process - 2002
• February 2002: released Innovation Strategy Papers –
set directions to 2010
• May – October: asked Canadians for their views on
targets, priority actions, recommendations
• Two overarching objectives of engagement process
- Mobilize Canadians to make commitments - and turn them
into action - so that Canada becomes one of the most
innovative countries in the world
- Examine Government’s Strategy to accomplish this goal then tell us if we’ve got it right.
http://www.innovationstrategy.gc.ca
The Engagement Process…Outreach
• Established special Innovation Secretariat
• Over 10,000 Canadians participated in:
–
–
–
–
33 regional events
Meetings with over 80 sectoral groups
Over 40 expert, best-practice, and interest group roundtables
Diversity of streams, e.g. sectors, regions, youth, provinces
• Some 600 online responses from individuals and SMEs
• Over 250 formal submissions received from
organizations representing hundreds of thousands of
Canadians (posted on line)
• Several federal government departments involved
What did Canadians say…
• Confirmed major directions set out in Innovation
Strategy papers
• Suggested modifications to certain targets and milestones
– Move faster in certain areas (e.g. regulatory reform)
– Modify performance measures in certain cases (e.g. R&D
intensity)
– Provide more clarity (e.g. cluster strategy)
• Pointed out deficiencies (e.g. insufficient focus on
commercialization efforts; skilled trades)
What did Canadians say…
• Recognition that many stakeholders must collaborate
• Government cannot act alone; innovation is everybody’s
business; role for all key stakeholders
• Sense of ‘readiness’ to move forward – Canadians
mobilized; ready to commit; wanted ‘fast action’
• Views summarized in Canadians Speak on Innovation
and Learning
• Analysis of key issues and recommendations by stream
• Over 2000 recommendations; 5 key horizontal issues
with 93 recommendations for prioritization at National
Summit (National Summit Discussion Guide)
Priorities in five key horizontal areas…
1. Improve R&D and
Commercialization
2. Enhance the Innovation
Environment
-
-
Research capacity
Commercialization outcomes
Access to capital
-
Support innovation in the
tax system
Speed regulatory reform
Modernize the IP system
3. Strengthen Learning Outcomes
-
Access to learning opportunities
‘Innovation’ in the learning system
Careers in skilled trades
Lifelong learning
4. Build an Inclusive & Skilled
WorkForce
-
Increase labour force capacity
Integrate immigrants in the
workforce
Invest in workplace training
5. Strengthening Communities
-
Development and growth of clusters
Build learning communities
Extend broadband access
Strengthen rural and Aboriginal
communities
Going into the National Summit, certain
priorities were clear…
• Have to improve R&D performance of private
sector firms
– How to stimulate a tripling of investment by 2010?
• Have to improve commercialization outcomes
from government-funded and private sector R&D
– Get more R&D ‘off the shelf’ and into the marketplace
• Have to improve the regulatory environment for
innovation
Certain priorities were clear (2)…
• Have to deal with impending skills shortages in
several areas
– HQP; world-class researchers; scientists
– Commercialization experts
– Skilled trades and technical specialists
• Have to help communities of all sizes improve their
‘innovation and learning’ capacity so they can
improve innovation performance
Other imperatives…
• Stronger culture of innovation in all parts of Canadian
society
• Harmonize regulatory regimes and technology
assistance programs across levels of government
• Develop all kinds of collaborative networks (e.g. large
firms-SMEs; sector-sector; universities-SMEs; R&D
institutes-industry)
• New partnership arrangements (e.g. international
consortia; anchor firms-SMEs; public-private sector
R&D)
• Break down ‘silos’ everywhere
The National Summit…
• Objectives of Summit
– To agree on the basis of Canada’s Innovation and
Learning Action Plan
– To set a concrete path for moving forward
• Government ready to take action on key priorities –
Speech from Throne/Budget
– Need advice from leaders on how to do this
– Precisely what, who, how, and when
November 19-20, 2002, Toronto
• Over 520 private sector CEOs, business, industry,
labour and community leaders, senior government
officials, educators, R&D performers, politicians
• Workshops on 5 key horizontal issues to prioritize the
93 recommendations
• Four special panels on environment; biotechnology,
life sciences, health innovation; communities;
immigration
• Plenary feedback session to report on top 3-4
recommendations from each workshop
Summit Outcomes
•
‘Early action’ announcements (e.g. Prime Minister’s
Five-Point Action Plan on Innovation)
1)
2)
3)
4)
5)
•
•
•
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Make Canada a learning society (Learning Institute)
A knowledge society that invests in ideas
Clusters to bring ideas to market
Smart Regulations to spur innovation
Diversity of talent and an urban strategy
List of 18 priority recommendations with proposed
implementation strategies
Minister’s DECK on ‘Priorities for Action’
Ministerial commitment to reconvene in 2 years;
develop benchmarking indicators to measure progress
Results published in Summit Summary Report
18 Priority Recommendations (1-3)
•
R&D and
Commercialization
• 2003 Responses
1. Strengthen receptor
capacity
2. Expand R&D funding to
universities, CFI,
Research Chairs
3. Broaden/deepen mandate
of successful technology
programs
– Establish WG; contract
scoping paper
– $190M BDC innovation fund
– MOU with AUCC; MC on
Indirect Costs
– New research funding in 2003
Budget
– Expanded IRAP funding
– Review of landscape
18 Priority Recommendations (4-7)
• Innovation Environment
• 2003 Responses
4. Reduce/eliminate capital tax
– Eliminate capital tax by 2008
5. Improve SR&ED tax credits
– Review underway
6. Develop tax-based
instruments for seed stage
investments
– Working group on Venture
Financing gaps
7. Accelerate regulatory reform
to 2005
– External Advisory
Committee on Smart
Regulations
– Review of sector specific
regulatory reforms
18 Priority Recommendations (8-11)
•
Learning Culture
8. Establish Canadian
literacy development
system
9. Integrate innovationrelated skills in curriculum
• 2003 Responses
– Canadian Learning Institute
funded
– The Practice of Innovation
project for use in universities
10. Adjust student financial
assistance system
– Additional budget allocated
11. Expand capacity in postsecondary system
– Roundtable on colleges and
SMEs (March)
18 Priority Recommendations (12-14)
• Skilled, Inclusive Workforce
12.Target under-employed groups;
use of PLAR; access to
apprenticeship, coop, and
training programs
13.Incentives to increase in-house
& apprenticeship training in
industry; expand programs
through industry, government,
educational partnerships
14.Plan to recognize foreign
credentials
• 2003 Responses
– HRDC
– Sector action plans
under review
– $41 million program
18 Priority Recommendations (15-18)
•
Strengthen Communities
15. Collaborate to prepare
community innovation
action plans and strategies
16. Support growth of clusters
17. Extend broadband to rural
and remote areas
18. Support enhanced learning
capacity in rural and
Aboriginal communities
• 2003 Responses
– Best Practices Workshop
on Community
Innovation Strategies
– MC on NRC Clusters
– Funding for MaRS
(medical cluster)
– Extension of Broadband
for Rural Development
Program
– HRDC/enhancements to
ABC program
Conclusions from Process
• The importance of innovation was never in question
• Government actions must correspond to advice received
during the engagement process
• Communities and sectors are ready to move, but they are
waiting for government to act as well
• Resources needed for follow-up work
• The approach must be integrated
• Partnerships must be established with enterprises and
communities
• The Summit gave credibility to the Innovation Strategy,
but implementation process just beginning
Moving forward…post-Summit
• Revitalization of the PM Advisory Council on Science
and Technology (ACST) – examine research
landscape
• Working groups in key areas – Risk Capital,
Benchmarking, Receptor Capacity
• Sectors/communities to develop/implement
innovation action plans
• Efforts to benchmark innovation performance
• Annual review of progress
Maintaining Momentum – 2003 +
• Lots of collaborations have to be built
• Stimulating actions of other players?
• Engagement of provincial/territorial/municipal
governments?
• Fostering of partnerships between academia,
government, business/industry?
• Stimulating innovation activity at regional level?
• The role of Innovation Agenda in government’s key
priorities? Top 2 for Industry Canada 2003-04
Supporting SMEs
• Input from Engagement Process
– Support spin-off firms from technology clusters
– Develop entrepreneurial skills at universities and colleges
– Better access to technology commercialization programs
– Make experts available for SMEs (eg. mentoring)
– Make R&D tax credits more accessible to SMEs
– Fill gaps in early stage seed financing for innovative
projects
– Help SMEs collaborate with large firms
– Make more guidance available to manufacturing SMEs
How Innovating Firms See Policy
Constraints
• Government Procurement Policies – as early adopters
• Regulatory and Tax Regimes – need simplification
• Intellectual Property Ownership Challenges – more
awareness; greater consistency
• Access to Government Assistance Programs –
simplification, easier access for SMEs
• Government’s Ability to Assess Areas of New
Technology – knowledge enhancement
• Access to Distribution Channels – competition issues
• Securing Alliances and Partnerships – help broker links
A Closer Look - Lessons Learned from
Seven Innovating Firms
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•
•
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Research, profiles, video vignettes, studio interviews
Put a ‘face’ on innovation
World-first; world-only innovations
Identify stages of innovation journey, priorities at each
stage of the process
• Barriers to innovation
• Strategies for achieving innovation outcomes
• Implications for government and other action
Characteristics of Innovating Firms
• Driven by curiosity, passion of founders
• Seek help from universities, government programs and
key global investors to further the firm’s business strategy
• Bring in needed R&D and/or management expertise
• Straddle stages of the innovation process (4)
• Intense, laser-like focus on solving a particular
technological problem – often customer or market driven
• Use outside consultants to help create an internal
disciplined process or ‘roadmap’ to deliver on objectives
• Have intellectual property/patent strategies
• Work to move science/technology to market application
• Global from the start
Insights About Innovation Journey
• Innovation isn’t easy; takes a long time to get to market
• The journey:
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–
•
•
•
•
•
Costs a lot of money – who pays?
Depends on lots of non-financial resources
Is full of trial and error
Requires discipline and focus/early market validation
Need good patent and IP protection advice
Need skill in developing strategic partnerships
Have to manage transition challenges through stages
Serendipity plays a big role
Timing is critical issue – readiness of technology,
market, company capacity
• Innovation isn’t just about technology development…
Barriers to Innovation
• Costly to educate the market when ‘first in’ – takes time
and cost to build demand, credibility; any positive
efforts to encourage adoption of new technologies are
welcome
• Difficult to find qualified graduates who can work with
technology and apply business management skills
• Gaps in capital for higher risk innovations
• Certain new technologies do not have champions in
Canada, as they do in the US
• Canada lagging US and EU in patent approval process,
environmental standards
Role of Canadian Government in SME
Innovation Success
• Government procurement contracts to early R&D
efforts
• NRC, IRAP, TPC, BDC, Regional Agencies in funding
early stage developments
• Technology transfer offices (IPMP)
• Information about suppliers, complementary
technologies, technical advice, IP
• Profiling firm/technologies on international basis
• SR&ED tax credit system
• Spinning new technologies out from government
research labs (NRC,CRC)
SMEs and Disruptive Technologies Innovative Entrepreneurship
Government labs
Research institutes
Universities
Encourage
Technostarts and
spin-off
firms
Support for clustering and
networks (NRC, HITE, CATA)
Intellectual property policies
/processing of patents/patent
advice
Access to R&D tax credit program
Funding of university incubators,
innovation/tech transfer centers
Pre-seed funds, early stage VC
and angel funds
Role-models; award programs;
innovation BP challenges (U of T)
Entrepreneurship education for
engineers and scientists