Improving Innovation System for Startups
Guest Contributor, Lynn Sutherland – @Groklam
Entrepreneur in Calgary, Innovation Consultant, Canadian Cloud Council
There’s been a lot of discussion recently about the “Inn
ovation System” in Canada. There is debate about whether it is weak or strong, what needs to be improved, and how. Some reports suggest that Canada compares very positively with other countries, for example the March 2012 Global Innovation Policy Index by the Kauffman Foundation for Entrepreneurship, and others that show relatively poor results for Canada, for example March 2012 The Boston Group report The Internet Economy in the G-20.
Innovation is now widely recognized as important to world-wide competitiveness and maintaining a high quality of life.
“The last decade has seen an increasing realization among economists and policymakers that innovation has become the central economic growth driver and a key to improved standards of living.”
[Kauffman report, page 4]
This brief article looks at the Canadian Innovation System, identifies how can we get better information so we can ensure that Canada’s Innovation System is world-competitive, and explores how does all this relate to Startups?
There are a variety of models of the Innovation System. I’ll use the above diagram that was created a number of years ago. It shows a system consisting of many interconnected and influencing parts. A healthy Innovation System needs strength across the board in Fundamental Research, Applied Research and Development, Pre-Commercial Demonstrations, Startups and Growth of Firms.
Let’s focus on the right hand side. Startups and growth firms face primarily market and financing risks. How is Canada doing in these areas and what do we need to improve? The current general consensus, despite good reports on the overall health of our Innovation System, is that we are we doing poorly on the commercialization side of the system.
A lot of our debates about what works and doesn’t work may be because information is scattered and not easily available. We need more timely, consistent and accessible information about our Innovation System in order to inform better decisions.
Two jurisdictions that have excellent reports are: Massachusetts, who has produced their annual Index of the Massachusetts Innovation Economy since 1997 and Silicon Valley Index that has been reporting since 1995. Also, the OECD collects information from their member countries and publishes excellent data and reports, many of which are free or available for a minimal cost. For example there is a very rich data warehouse of economic and innovation statistics over time and between countries openly available at OECD.Stats Extracts.
Before commenting on some of the recent recommendations on how better government programs can help improve the “Commercialization System” for startups, I want to make the following recommendation:
Canada, the provinces and the major commercial centres must start collecting and analyzing fact-based data about the entire spectrum of the Innovation System and use it to ensure a balance of programs for Research through to Startup to Growth of Firms.
From the perspective of startups, what’s missing from the recent report on improving Canada’s Innovation System, officially titled, “Innovation Canada: A Call to Action”, but widely known as the “Jenkins Report”?
Recommendations:
- Create Industrial Research and Innovation Council
- Simplify Scientific Research and Experimental Development (SR&ED) program
- Use Procurement to Make Business Innovation a Core Objective
- Transform NRC to do more Collaborative R&D and increase the IRAP program
- Help high-growth innovative firms access Risk Capital
- Establish a clear voice and coordination for Innovation in Canada and the Provinces
We could map these recommendations onto the Innovation System Map shown in the diagram. The most critical factor for startup companies, access to risk capital, is the essence of recommendation 5, but it is not given a lot of emphasis. New technology market risk is important and better assistance with market intelligence and penetration strategies could help startup companies. But access to financial capital is key. Without it, we continue to fill the innovation pipeline with great people and ideas, but not the necessary financial fuel to help them take off.
The cost savings from some of the program changes suggested by the Jenkins report should be reallocated to de-risking investment capital for startups and growth high tech companies. It is needed now and should not wait until the established programs are changed.
What do you think? What is the critical part of the Innovation System that if improved now would accelerate Canada’s pent-up innovation capital to be realized?
Biography
Lynn Sutherland consults on cloud, open data, and innovation policy, strategy and implementation. She has worked in Information and Communications Technology in Canada for over 25 years involved with research, development and leading successful innovation. She is on the boards of CANARIE, Alberta Science and Technology Leadership Foundation, the Canadian Cloud Council, has had leadership positions at Cybera, iCORE, and Alberta Research Council and has founded two startup companies.
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Guest Contributor, Lynn Sutherland – @Groklam
Entrepreneur in Calgary, Innovation Consultant, Canadian Cloud Council
There’s been a lot of discussion recently about the “Innovation System” in Canada. There is debate about whether it is weak or strong, what needs to be improved, and how. Some reports suggest that Canada compares very positively with other countries, for example the March 2012 Global Innovation Policy Index by the Kauffman Foundation for Entrepreneurship, and others that show relatively poor results for Canada, for example March 2012 The Boston Group report The Internet Economy in the G-20.
Innovation is now widely recognized as important to world-wide competitiveness and maintaining a high quality of life.
“The last decade has seen an increasing realization among economists and policymakers that innovation has become the central economic growth driver and a key to improved standards of living.”
[Kauffman report, page 4]
This brief article looks at the Canadian Innovation System, identifies how can we get better information so we can ensure that Canada’s Innovation System is world-competitive, and explores how does all this relate to Startups?
There are a variety of models of the Innovation System. I’ll use the above diagram that was created a number of years ago. It shows a system consisting of many interconnected and influencing parts. A healthy Innovation System needs strength across the board in Fundamental Research, Applied Research and Development, Pre-Commercial Demonstrations, Startups and Growth of Firms.
Let’s focus on the right hand side. Startups and growth firms face primarily market and financing risks. How is Canada doing in these areas and what do we need to improve? The current general consensus, despite good reports on the overall health of our Innovation System, is that we are we doing poorly on the commercialization side of the system.
A lot of our debates about what works and doesn’t work may be because information is scattered and not easily available. We need more timely, consistent and accessible information about our Innovation System in order to inform better decisions.
Two jurisdictions that have excellent reports are: Massachusetts, who has produced their annual Index of the Massachusetts Innovation Economy since 1997 and Silicon Valley Index that has been reporting since 1995. Also, the OECD collects information from their member countries and publishes excellent data and reports, many of which are free or available for a minimal cost. For example there is a very rich data warehouse of economic and innovation statistics over time and between countries openly available at OECD.Stats Extracts.
Before commenting on some of the recent recommendations on how better government programs can help improve the “Commercialization System” for startups, I want to make the following recommendation:
Canada, the provinces and the major commercial centres must start collecting and analyzing fact-based data about the entire spectrum of the Innovation System and use it to ensure a balance of programs for Research through to Startup to Growth of Firms.
From the perspective of startups, what’s missing from the recent report on improving Canada’s Innovation System, officially titled, “Innovation Canada: A Call to Action”, but widely known as the “Jenkins Report”?
Recommendations:
Create Industrial Research and Innovation Council
Simplify Scientific Research and Experimental Development (SR&ED) program
Use Procurement to Make Business Innovation a Core Objective
Transform NRC to do more Collaborative R&D and increase the IRAP program
Help high-growth innovative firms access Risk Capital
Establish a clear voice and coordination for Innovation in Canada and the Provinces
We could map these recommendations onto the Innovation System Map shown in the diagram. The most critical factor for startup companies, access to risk capital, is the essence of recommendation 5, but it is not given a lot of emphasis. New technology market risk is important and better assistance with market intelligence and penetration strategies could help startup companies. But access to financial capital is key. Without it, we continue to fill the innovation pipeline with great people and ideas, but not the necessary financial fuel to help them take off.
The cost savings from some of the program changes suggested by the Jenkins report should be reallocated to de-risking investment capital for startups and growth high tech companies. It is needed now and should not wait until the established programs are changed.
What do you think? What is the critical part of the Innovation System that if improved now would accelerate Canada’s pent-up innovation capital to be realized?
Biography
Lynn Sutherland consults on cloud, open data, and innovation policy, strategy and implementation. She has worked in Information and Communications Technology in Canada for over 25 years involved with research, development and leading successful innovation. She is on the boards of CANARIE, Alberta Science and Technology Leadership Foundation, the Canadian Cloud Council, has had leadership positions at Cybera, iCORE, and Alberta Research Council and has founded two startup companies.
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