Canada needs some visionary corporate leaders

TORONTO—These cautionary words from a visionary corporate executive, written almost 50 years ago, are worth reading as we struggle to build a more innovative business sector today. The concern of the CEO of one of Canada’s largest corporations was that Canada was at a serious disadvantage in a world of change because of our over-dependence on foreign-owned companies operating in Canada or over-reliance by Canadian-owned companies on importing foreign technology instead of developing our own. As a result, “the growth of systematic, broad-based, indigenous innovative, and technological capability has been severely inhibited.” His own company was nearly driven out of business when it lost access to U.S. technology. “The fact remains,” he wrote, “that many, if not most Canadian corporations, and especially those in science-based industries, are still ill-equipped to face the pressures of severe competition, because they have not been conditioned to develop appropriate responses to a demanding environment.” But while government can help support corporate innovation, the process, he argued, has to start with entrepreneurship by corporations themselves. “Technology is not a prime mover; entrepreneurship is.” These words are highly relevant today, but they were actually written in 1972, by V.O. Marquez, chair and CEO of Northern Electric Co. (it became Nortel). Yet little has changed. There remains a dearth of serious business leadership and a continuing expectation on the part of business that it is up to government to pay companies to be entrepreneurial and innovative. A recent example is the pre-budget letter from the Business Council of Canada to Finance Minister Chrystia Freeland, urging her to “embrace a demand-side, mission-driven approach to innovation policy” by creating an agency similar to the U.S. Defense Advanced Research Projects Agency. It funds, with a US$3.6-billion annual budget, defence-oriented projects, many of them classified, but some of which have led to civilian spin-offs. Examples include the internet and GPS systems, drone technology and, more recently, technology for autonomous vehicles. But its mission is military, not civilian. The Business Council argues the Canadian equivalent to DARPA should focus on areas in which it claims Canada has an alleged competitive advantage, naming advanced manufacturing, the biosciences and clean-tech as examples. The end result it argues would be “public-private partnerships to help scale up and commercialize research.” Public-private partnerships can be valuable and industry-university-government collaboration can deliver great results. Where there is committed and sustained business leadership, real accomplishments are possible. But where is that leadership today? Simply asking for more money isn’t leadership. One of the best partnership examples in Canada is C2MI (MiQro Innovation Collaborative Centre), located in Bromont, Que., which is Canada’s largest and most successful centre for research and innovation in microelectronics. But without the early and sustained commitment by DALSA Corp. and IBM Canada it would never have happened. It took six years of hard slogging, starting in 2002, by senior executives from both companies, bringing in Université de Sherbrooke as a partner, to define the centre and persuade the Quebec and federal governments to provide a share of the funding. In 2008, the Quebec government announced $94.9-million in funding, the federal government $82.3-million and industry $40.6-million. Since then, the centre has flourished. What is now Teledyne-DALSA, for example, has been able to prototype new chip designs, Université de Sherbrooke professors have been able to pursue new research projects either on their own or with researchers in other universities, a new generation of talent has emerged with some now working for industry and others launching their own start-ups, while the region has attracted investment. In 2009, the Quebec and federal governments put up another $178-million to create the MiQro centre of excellence to push commercialization. Industry has continued, as well, to support the centre. For example, last October, Teledyne-DALSA announced the establishment, with NSERC, a $4.5-million chair in next generation MEMS and micro photonics at the Université de Sherbrooke. It is an excellent example of how an industry-academia-government partnership can work. But the key point is that its creation and success depended on sustained business commitment and leadership. So a DARPA-style agency in Canada with the power to write cheques would not likely deliver the promised results without a much greater readiness by business to put up its own money and time over a sustained period to make things happen. Innovation Minister François-Philippe Champagne, pictured with his then press secretary Syrine Khoury on Sept. 14, 2020, at a cabinet retreat in Ottawa. The Hill Times photograph by Andrew Meade When he unveiled the government’s “innovation strategy” several years ago, the then industry minister Navdeep Bains proclaimed that no more studies were needed. He knew what had to be done and he was going to make Canada a “global superstar," one of the world’s most innovative nations. So we got money to fund university-based artificial intelligence, superclusters, strategy tables, the Strategic Investment Fund and an assortment of other programs, all designed to promote innovation. No doubt some of the money, running into billions of dollars, can’t help but achieve some positive results. But we are still far from being one of the world’s most innovative nations. Bains was wrong. We do need more analysis. We also need more serious business leadership. We still don’t understand why our businesses are, in the aggregate, innovation laggards, notwithstanding some exceptions. For example, why have they pulled back on research and development spending over much of the past decade while companies in other countries have been boosting such spending? Why do we find it so hard to scale up our best tech companies so that they can achieve $1-billion in sales, not speculative $1-billion stock market valuations? Why do we make it so easy for foreign multinationals to buy up so many of our best tech companies? Why are we encouraging foreign-owned R&D branch plants in Canada using our talent to create valuable IP for wealth creation elsewhere? These are just some of the pressing questions. We need 21st century successors to V.O. Marquez to help answer these questions. But who might they be? David Crane can be reached at crane@interlog.com. The Hill Times