Hermann Hauser pointed out in his recent report on the future role of the UK Technology and Innovation Centres that “the leisurely translation of scientific discoveries into new industries has been replaced by a race between nations to take advantage of these discoveries and translate them into economic success stories before others do so.” It is now widely accepted that promoting and facilitating collaboration between the business sector and academia is an effective way to ensure rapid knowledge translation, increase innovation and boost productivity. In fact, most major industrialized nations have made this a central theme of their innovation policies, and Canada is no exception.

After the Government of Canada released Mobilizing Science and Technology to Canada’s Advantage in 2007, it launched a number of programs and initiatives designed to foster inter-sectoral collaborative research, such as the Business-Led Networks of Centres of Excellence (BL-NCEs) and the Centres of Excellence for Commercialization and Research (CECRs). Although these initiatives are just ramping up, policy-makers remain concerned that the current support system is not sufficiently effective in improving the country’s innovation performance. Are there additional measures that can be taken to build on these and similar initiatives, improve their effectiveness and increase the flow of research knowledge between academia and the private sector? We believe the answer is yes, and that research infrastructure can play a key role.

In the September 2011 issue of Policy Options, Kevin Lynch and Munir Sheikh called for “better mechanisms and incentives” to encourage movement of both people and knowledge between the private sector and academia to the benefit of both. The Canadian Council of Academies was more explicit. In 2009, it stated that there is an “unambiguous case” for improving the infrastructure necessary to mobilize university-generated knowledge with commercial potential. Jorge Niosi, in outlining the many means by which academic research is transferred to the private sector, pointed to the potential benefits from simply having the two sectors come together in a shared space. We suggest that these experts have both defined the need and pointed to a solution.

The Canada Foundation for Innovation (CFI) is mandated by the Government of Canada to provide our universities, colleges, research hospitals and nonprofit research institutions with the infrastructure needed to conduct world-class research. While the CFI is committed to supporting the spectrum of research activities, from fundamental discovery-driven research to applied, it has also been directed by the government to support private sector innovation. The questions for the CFI are these: What is the best way to do so through the funding of research infrastructure? What mechanisms would be most effective? And what portion of any future resources should be devoted to such initiatives?

Drawing on lessons learned in other countries, technology and innovation centres that consolidate existing academic and industrial partnerships and take engagement and collaboration to a new, more productive level may be a path worth considering. If designed properly, these centres could act as innovation hubs, drawing together researchers and business leaders, entrepreneurs and intellectual property experts, and technicians and students. They could become dynamic communities of research and commercialization excellence.

Several leading R&D nations have devoted significant resources to developing collaborative university-industry research centres with the specific intention of fostering inter-sectoral engagement. This has been done without compromising investments in fundamental discovery-driven research. Although each country has built intermediary research organizations according to their own institutional traditions and cultures, they all share a number of similar characteristics. And although some of these organizations are too new to fully assess their impacts, there is an emerging consensus that they are successful in helping improve private sector innovation. These initiatives can offer useful examples for a made-in-Canada model.

Drawing on lessons learned in other countries, technology and innovation centres that consolidate existing academic and industrial partnerships and take engagement and collaboration to a new, more productive level may be a path worth considering.

Germany introduced the current Fraunhofer model in the early 1970s. The Fraunhofer-Gesellschaft consists of an integrated network of 80 semiautonomous research institutes — 60 in Germany and 20 in other countries — that develop innovative products and processes to the point of commercial application. The institutes undertake applied research that has direct utility to private and public enterprise and wider benefits for society. Perhaps most importantly, they are a valuable source of innovative know-how for small and medium-sized enterprises, which often cannot afford the R&D capacity necessary to remain competitive.

Of the €1.65 billion (C$2.19 billion) Fraunhofer research budget for 2011, €1.4 billion (C$1.85 billion) comes from research contracts. Federal and state governments also provide base operational funding. The institutes are linked by a single overarching governance structure and are grouped under seven working alliances devoted to specific research areas. The alliances coordinate work on related research fields to pool resources and to present a unified image in the marketplace. The heads of the alliances, as well as the executive board, together form the presidential council of the Fraunhofer-Gesellschaft.

In a submission to the UK Science and Technology Committee, the Work Foundation pointed out a number of reasons for Fraunhofer’s success in Germany: “their focus on national economic strengths; their operation as a single coordinated network; their high reputation and strong brand; their commercial focus; and their independent operation.” The singular devotion to using research for economic benefit and intense customer service orientation are perhaps the defining characteristics of the Fraunhofer institutes — features that could be incorporated in a Canadian model.

Australia launched its Cooperative Research Centres (CRCs) in 1991 with the intention “to deliver significant economic, environmental and social benefits to Australia by supporting medium to long-term partnerships between academic researchers and those public, community and industry ‘end-users’ who would ensure its commercialization.” Participants provide cash and/or in-kind contributions to match or better the investments of the Australian government. Since launching the program, the government has invested more than AU$3.4 billion (C$3.6 billion) while partner organizations have contributed a further AU$10.9 billion (C$11.6 billion). Approximately one-quarter of the funding has come from industry. In 2010-11, the Australian government invested approximately AU$170 million (C$180.7 million) in 42 CRCs, and the program is now running its 14th competition. The CRCs focus on the practical benefits of research and create conditions whereby individual companies with specific needs can instigate research as readily as developing innovative technologies. The lesson for Canada is to focus on the micro level — the knowledge needs of individual companies — rather than attempting to produce sector-wide benefits.

In 2000, the State of California launched its Governor Gray Davis Institutes for Science and Innovation to support research in fields critical to the economic growth of the state. They are conceived as catalysts for partnerships between universities and the private sector as a means to “speed the movement of innovation from the laboratory into people’s daily lives.” Each of the four institutes is hosted by at least two University of California campuses — one acting as the lead and providing the institutional site. The institutes use multidisciplinary research approaches to develop cutting-edge technologies and offer companies a competitive advantage through leveraged funding. The state provided an initial US$400 million for capital investments and required universities to raise $2 for every $1 in state funding — a requirement they greatly exceeded. While California has a population, industrial and competitive intensity that Canada cannot match, the decision to establish institutes in areas of both research strength and significant industrial capacity could be a useful approach in the Canadian context. Finland’s Strategic Centres for Science, Technology and Innovation (SHOKs) program was launched in 2006 to add momentum to the innovation process and encourage radical invention. In contrast to the Canadian situation, where the majority of funded research projects are initiated by university-based academics, business personnel and researchers collaborate within the SHOKs to define the research agenda and carry out the work. The centres are expected to bring benefits to Finnish industry and society within five to 10 years. They are nonprofit entities jointly owned by shareholders from private companies, universities and non-profit research institutions, and although state funding is provided, the goal is for at least 40 percent of total funding to come from the private sector. Currently, each of the six centres in operation secures €40 to €60 million (C$53 to $79.5 million) annually through a mix of contracts and grants. While the program is relatively new, most stakeholders believe the centres are having a positive impact. At the first SHOK summit in 2010, for example, one of the centre CEOs stated: “There is no question that the SHOK model is highly successful. Dialogue between companies and research institutions has increased significantly. Furthermore, we have already seen the first results…we are moving in the right direction.”

As part of the United Kingdom’s 2010 spending review, the government set aside £200 million (C$313.5 million) to launch its Technology and Innovation Centres. Responding to concerns about the fragmented nature of the UK innovation system and the limited flow of knowledge between academia and industry, the centres aim “to accelerate the translation of research into profitable products and services, and [allow] UK businesses of all sizes to reduce the risk of product and service development.”

One centre is now operational and two more should be up and running by 2013. The centres are nonprofit entities and each is required to have a business-led governance board. Core public funding of £5 to £10 million (C$7.8 to $15.7 million) per year provides infrastructure, business and technical expertise and supports skills development. Additional revenue is generated through private sector R&D contracts and collaborative applied R&D projects funded jointly by the public and private sectors.

Charged with selecting the centres, the UK Technology and Strategy Board combines a mix of research and business-oriented factors in considering proposals developed by universities and groups of companies. These factors include the global markets potential for technology advances; world-leading capacity in the research area; the ability of business to exploit the technology, capture increased investment and embed the resulting commercial activity domestically; the ability of the centre to attract and anchor the commercial activities of globally mobile companies and secure sustainable wealth creation for the country; and the alignment of the centre with national strategic priorities. The board also works with experts in the business and research communities to assess additional factors such as timeliness, receptor capacity and the likelihood of alternative methods of support producing better results. In this way, the selection process is transparent, comprehensive and inclusive.

Canada has not yet taken the step of intentionally establishing physical sites for technology and innovation centres. This is where the Canada Foundation for Innovation could step in to provide the research infrastructure required to bridge the gap between research and technology commercialization activities.

All of these global initiatives share at least two important characteristics. First, the research agenda for the centres is determined through a collaborative process between academic researchers and private sector companies. Secondly, each centre has, at its core, a physical presence that serves as the focal point for dynamic interaction and collaboration.

Canada has integrated the first characteristic in the Centres of Excellence for Commercialization and Research (CECR) program. The key to its emerging success, and the success of the international examples, is a governance model that ensures a balanced approach to tapping into the research expertise of the academic participants and incorporating and focusing research activity on the knowledge needs of the individual companies. The interests of the companies — either as customers for new knowledge or as participants in governance — and the abilities and capacity of the researchers, determine the scope and relevance of the research activities.

But Canada has not yet taken the step of intentionally establishing physical sites for technology and innovation centres. This is where the Canada Foundation for Innovation could step in to provide the research infrastructure required to bridge the gap between research and technology commercialization activities. By bringing research infrastructure and participants together in a single location, the centres could provide a focal point, where companies have access to the talent and specialized equipment that is often beyond their reach, and where researchers and graduate students are exposed to the entrepreneurial culture of business. These centres would also facilitate the exchange of tacit knowledge that is crucial to collaborative success.

Developing Canadian technology and innovation centres would involve building on existing research capacity, as well as existing industrial expertise. And there is much to work with. Considering the potential already demonstrated in marine technologies and resource management in Atlantic Canada, aerospace in Quebec, digital technologies and new media in the Waterloo region, automotive technologies in southern Ontario, the biochemical industry in Sarnia, uranium mining in Saskatchewan, oil extraction in Alberta and green energy and building systems in British Columbia, Canada need only coordinate and structure its enormous inventive capacity to increase productivity.

The 2011 Review of Federal Support to Research and Development expert panel, chaired by Tom Jenkins of OpenText, stated that “Canada needs a fundamentally new approach to building public-private research collaborations in areas of strategic importance and opportunity for the economy.” Yet new approaches are being developed, particularly through the CECR and BLNCE programs. A recent report by the Private Sector Advisory Board (PSAB) on the activities and impacts of these initiatives points to their early success. In particular, the ability of the CECRs to shift from a technology push model, where the emphasis is on the research institution, to demand pull models, where the emphasis is on responding to the knowledge needs of industry and society, is proving particularly valuable.

It remains, however, that these are relatively new initiatives of limited scope. And although, in the words of the PSAB, the CECR program “is doing many things right,” its as-yet modest impact could be boosted by drawing on key features of similar initiatives in other countries — and by capitalizing on the research capacity already established across Canada through investments by the CFI. The CFI could be instrumental in taking the CECRs to the next level since, as we have learned here in Canada, the success of research and technology development initiatives, regardless of whether they have a commercialization orientation or not, depends on an appropriate level of research infrastructure support.

By building research and innovation centres that foster engagement between specific companies and leading-edge researchers, Canada can effectively use tax expenditures to directly support innovation; create jobs by providing business leaders access to talent, equipment and infrastructure that they could not otherwise afford; mitigate risks involved in developing commercially unproven technologies; and plant anchors for community economic development.

Photo: Shutterstock

Gilles G. Patry
Gilles G. Patry is president and CEO of the Canada Foundation for Innovation.
David Moorman
David Moorman is senior programs planning officer at the Canada Foundation for Innovation.

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