Canada

1
Canadas Innovation Strategy The Innovation
Engagement Process and Follow-on Actions

• Prepared by Lois Stevenson
• The Innovation Secretariat
• Policy Sector, Industry Canada

2
Innovation

• Canadas goal is to be recognized as one of the
  most innovative countries in the world.
• Canadas 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

3
Canadas standard of living declining relative to
the U.S.

• Canadas 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 Canadas
  relatively weaker productivity performance
• Innovation is the key to improving productivity

4
Canada progressing toward a more innovative
economy

• Canadas innovation performance near the bottom
  in the G-7
• 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

Canada's Innovation Performance (Average
Annual Rate of Growth, 1981-99))(
Or latest year available figures adjusted by
the size of labour force or economy.
Source OECD, Main Science and Technology
Indicators, 2001/2
5
Key Innovation Challenge Areas

• A multi-pronged effort will be required to
  address Canadas innovation challenges
• The knowledge performance challenge (RD)
• The skills challenge
• The innovation environment challenge

6
Knowledge Performance Challenge
Canada ranks 14th in RD 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 Canadas RD Fastest pace of growth in
  G-7
• Challenges industrial structure, firm size,
  foreign ownership, concentration
• Universities
• 31 of Canadas RD Strong ties to private
  sector
• Challenges faculty retirements, indirect
  research costs, small university research
  specialization, commercialization, supply of
  highly qualified people
• Governments
• 11 of Canadas RD
• RD is key to maintaining modern and effective
  regulatory and investment policies
• Challenges researcher retirements, keeping pace
  with scientific developments

7
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.

8
Proposed Targets for RD

• Promote the creation, adoption, and
  commercialization of knowledge
• By 2010, rank among the top five countries in the
  world in terms of RD performance.
• By 2010, at least double the Government of
  Canada's current investments in RD.
• 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.

9
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 RD target, we need to
  double the number of research scientists and
  engineers in Canada.
• We also need to develop strong managers who can
  lead Canadas economy through a business
  transformation.
• Three key sources of highly qualified people
• New graduates
• Immigrants
• Current workforce

10
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.

11
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 Canadas ranking
  in international investment intention surveys.
  

12
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.

13
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 Governments Strategy to accomplish this
  goal - then tell us if weve got it right.
• http//www.innovationstrategy.gc.ca

14
The Engagement ProcessOutreach

• 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

15
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. RD intensity)
• Provide more clarity (e.g. cluster strategy)
• Pointed out deficiencies (e.g. insufficient focus
  on commercialization efforts skilled trades)

16
What did Canadians say

• Recognition that many stakeholders must
  collaborate
• Government cannot act alone innovation is
  everybodys 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)

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Priorities in five key horizontal areas

• 2. Enhance the Innovation
• Environment
• Support innovation in the
• tax system
• Speed regulatory reform
• Modernize the IP system

• Research capacity
• Commercialization outcomes
• Access to capital

1. Improve RD and Commercialization

• 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

18
Going into the National Summit, certain
priorities were clear

• Have to improve RD 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 RD
• Get more RD off the shelf and into the
  marketplace
• Have to improve the regulatory environment for
  innovation

19
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

20
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 RD institutes-industry)
• New partnership arrangements (e.g. international
  consortia anchor firms-SMEs public-private
  sector RD)
• Break down silos everywhere

21
The National Summit

• Objectives of Summit
• To agree on the basis of Canadas 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

22
November 19-20, 2002, Toronto

• Over 520 private sector CEOs, business, industry,
  labour and community leaders, senior government
  officials, educators, RD 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

23
Summit Outcomes

• Early action announcements (e.g. Prime
  Ministers Five-Point Action Plan on Innovation)
• 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
• Ministers DECK on Priorities for Action
• Ministerial commitment to reconvene in 2 years
  develop benchmarking indicators to measure
  progress
• Results published in Summit Summary Report

24
18 Priority Recommendations (1-3)

• RD and Commercialization
• Strengthen receptor capacity
• Expand RD funding to universities, CFI, Research
  Chairs
• Broaden/deepen mandate of successful technology
  programs

• 2003 Responses
• 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

25
18 Priority Recommendations (4-7)

• Innovation Environment
• Reduce/eliminate capital tax
• Improve SRED tax credits
• Develop tax-based instruments for seed stage
  investments
• Accelerate regulatory reform to 2005

• 2003 Responses
• Eliminate capital tax by 2008
• Review underway
• Working group on Venture Financing gaps
• External Advisory Committee on Smart Regulations
• Review of sector specific regulatory reforms

26
18 Priority Recommendations (8-11)

• Learning Culture
• Establish Canadian literacy development system
• Integrate innovation-related skills in curriculum
• Adjust student financial assistance system
• Expand capacity in post-secondary system

• 2003 Responses
• Canadian Learning Institute funded
• The Practice of Innovation project for use in
  universities
• Additional budget allocated
• Roundtable on colleges and SMEs (March)

27
18 Priority Recommendations (12-14)

• Skilled, Inclusive Workforce
• Target under-employed groups use of PLAR access
  to apprenticeship, coop, and training programs
• Incentives to increase in-house apprenticeship
  training in industry expand programs through
  industry, government, educational partnerships
• Plan to recognize foreign credentials

• 2003 Responses
• HRDC
• Sector action plans under review
• 41 million program

28
18 Priority Recommendations (15-18)

• Strengthen Communities
• Collaborate to prepare community innovation
  action plans and strategies
• Support growth of clusters
• Extend broadband to rural and remote areas
• 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

29
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

30
Moving forwardpost-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

31
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 governments key
  priorities? Top 2 for Industry Canada 2003-04

32
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 RD 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

33
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
• Governments Ability to Assess Areas of New
  Technology knowledge enhancement
• Access to Distribution Channels competition
  issues
• Securing Alliances and Partnerships help broker
  links

34
A Closer Look - Lessons Learned from Seven
Innovating Firms

• 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

35
Characteristics of Innovating Firms

• Driven by curiosity, passion of founders
• Seek help from universities, government programs
  and key global investors to further the firms
  business strategy
• Bring in needed RD 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

36
Insights About Innovation Journey

• Innovation isnt easy takes a long time to get
  to market
• The journey
• 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 isnt just about technology
  development

37
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

38
Role of Canadian Government in SME Innovation
Success

• Government procurement contracts to early RD
  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
• SRED tax credit system
• Spinning new technologies out from government
  research labs (NRC,CRC)

39
SMEs and Disruptive Technologies - Innovative
Entrepreneurship
Intellectual property policies /processing of
patents/patent advice
Government labs
Research institutes
Universities
Access to RD tax credit program
Funding of university incubators, innovation/tech
transfer centers
Encourage Techno-starts and spin-off firms
Pre-seed funds, early stage VC and angel funds
Role-models award programs innovation BP
challenges (U of T)
Support for clustering and networks (NRC, HITE,
CATA)
Entrepreneurship education for engineers and
scientists