Presented at the conference ”Talent and Success in Canada” February 11, 2013 | McGill University
I was asked to deliver a lecture on productivity and innovation. I have learned a thing or two about both these themes in my years of building a company called Research In Motion, now named BlackBerry, from an idea into a $20-billion global enterprise.
As a child in the early 1970s I remember a shortage of Canadians on the air when the CRTC initiated ”Can con” and mandated Canadian content on airwaves. At the time the Canadian content program was considered controversial, but a generation later it resulted in a deep well of global successes by Canadians in entertainment industry that continues today.
No one can argue that the initiative was not successful. It was not about lack of talent in Canada or ”fire in the belly” as pundits like to say. We needed to get the public policy right — and we did.
When it comes to global business excellence, there is something we can learn here: public policy matters. The same is true for productivity and innovation.
During 2012 US election campaign President Barack Obama gave a speech that was misused by his opponents. He remarked ”you didn’t build that” when speaking about the Internet, which was created as a result of a government program, specifically a military research program. He spoke of ways that successful businesses rely on both individual initiatives and public programs and infrastructure.
Why am I telling you about a US presidential candidate’s speech? Because the US government remains deeply and constructively engaged in helping American businesses along their path of productivity and innovation. And guess what: that’s why they are number one in the world on these fronts.
I recently attended a closed high level conference in Toronto, where a former top government official said that — and I quote here — ”we got the public policy right and now the business community needs to step up.”
Quite frankly, I was appalled.
Platitudes and superficial punditry are very dangerous. They perpetuate false myths and hurt those who are building businesses. We’ve had an excess of this kind of thinking in Canada on this file. What we need is leadership in Ottawa, so that we can have more successful global companies here.
I am frequently asked ”where is the next RIM going to come from?”
To which I offer this — RIM was an anomaly.
RIM was an exception to the rule, and there won’t be another like it until we fix the capacity gap, which is a critical public policy issue. This capacity is called global intellectual property rights (IPR) management.
You might ask why the wonderful small companies we have in Canada can’t get big, become another Google, RIM, Apple, Amazon, Samsung.
Because they get blocked by intellectual property rights. They lack a capacity to anticipate and deal with them effectively.
Don’t get me wrong — there are plenty of talented people running promising businesses all over the country, and they are as ambitious as any I have ever met around the world. In my home town, Kitchener-Waterloo, we have a technology hub called Communitech, which currently houses over 700 start-ups. I can assure you that there is as much fire in the belly in our city as there is in any Silicon Valley incubator.
Communitech was ranked 17th on the recent rankings for best places for start-ups. Silicon Valley was first and Tel Aviv was 2nd. But the overriding issue at Communitech is: can and will these companies scale globally? Sophisticated IPR capacity is a precondition to scaling, and if we don’t build this capacity, these entrepreneurial companies are lambs for slaughter in the global competitive marketplace.
How does IPR work? Large and small predators lurk until a start-up gets traction. Trolls and big-company IPR spinoffs also await, severely hampering their competitive viability.
A key Canadian economic question is: why is there so little value added trading? Because it’s challenging and expensive. It’s only worth it if you can protect your intangible value.
High tech entrepreneurship is like an open football field of opportunity. It looks so clear from the stands, but on the field it is full of 6 inch, clear, plexiglass walls. You only see these walls if you’ve been on the field. These walls are called global IPR.
During my tenure at RIM we had over 400 open IPR files and spent over $6 billion on IPR in 2011. Apple and Google spent more on IPR than R&D that year, much of it to purchase patents. When you read in the news that Apple is suing Samsung, or vice versa, the stakes are so high that the court ruling can have an impact on the entire survival of the company.
The land of IPR is manipulative, predatory and vicious. And here is the best part: it’s managed at the state level.
Our public policy on this front is remarkably weak. Canada’s focus has been market access, investment protection, telco ownership, domestic copyright. But here is where the game is being played: in March, the America Innovates Act, a once-in-a-generation reform of patent law, comes into effect. American lawmakers changed and rewrote the rules according to what they thought best and now we — Canadian businesses — have to play by those rules. We have to do so in American courts, because that’s where they are arbitrated. And the European Union has just agreed to establish the Unified Patent Court to give companies transnational protection.
Where is Canada on these initiatives? Who will advance the interests of Canadian companies in this predatory game?
Let me offer a practical example of a business case you all know very well: Nortel Communications.
Nortel’s board and management showed extraordinary weakness and lack of capacity in utilizing their intellectual property assets to strategically advance company’s long term interests. The supreme irony of Nortel’s case is that the company’s IPR — which were actually very good — never got used.
How do I know this? Because RIM was a member of the consortium that purchased Nortel’s IPR, precisely for this reason. My point here is simple: the elements of success, those that contribute to productivity and innovation, are all linked. They are value-added trade, productivity, innovation, and global IPR management.
Canada needs to enhance capacity on all the following levels:
- political and bureaucratic
- within the business community
- in education (start teaching IPR in schools!)
- judicial (create a strategy)
Public policy community participation and leadership is critical. We need an updated commission on productivity and innovation, populated by experts in building global businesses, that look at tangible ways we can improve our capacity on multiple fronts. We do not need another report filled with platitudes and self-congratulations that no one will read — but a real path toward helping Canadian businesses get to worldclass heights.
Jim Balsillie, Former co-CEO of RIM.