Innovation collaboration and commercialization

View from the Top: Arcus Innovation Leaders Series. How business leaders use innovative approaches to shape their strategies.

An interview with Jac van Beek, Vice-President, Programs and Planning, The Canada Foundation for Innovation. Mr. van Beek is responsible for the planning, development, implementation, and management of CFI’s research infrastructure funding programs.


Read the Arcus Innovation Leaders Report.
Mr. van Beek says innovation is not something that you can plan from the top. It is something that has to happen at the grass roots level. The Canada Foundation for Innovation (CFI) is an independent corporation created by the Government of Canada to fund research infrastructure.


Innovation collaboration and commercialization


The CFI’s mandate is to strengthen the capacity of Canadian universities, colleges, research hospitals, and non-profit research institutions to carry out world-class research and technology development that benefits Canadians. Since its creation in 1997, the CFI has committed almost $4.5 billion in support of 6,200 projects at 129 research institutions in 64 municipalities across Canada.


What does it take to innovate? The majority of executives say it involves achieving technological leadership, global presence and a comprehensive portfolio of patents that will enable the company to help define major trends regarding products, systems and services, and to offering its customers important added value. They say such steps reduce costs, increase sales and achieve higher earnings. But how does one come up with new solutions, and can innovations really be part of a strategy plan? Arcus’ multi-industry survey of senior executives found that of all the challenges companies face in this area, the biggest challenge is finding ways to create a “climate for innovation”.


As Arcus research indicates, doing so means that you need to be surrounded by highly talented people.  It also means finding a way to transmit your passion to them, so they will buy into your vision of the future, perform at the highest possible levels, and come up with innovative solutions to the challenges of achieving the vision. No surprise, then, that the topic of innovation has been gaining ground as CEOs seek to incorporate concepts like “a culture of innovation” into their assessments of a company’s long-term value.


Arcus:  What is your perspective on innovation in Canada/North America?


Mr. van Beek: Historically, innovation has been an ongoing policy concern in Canada, with different emphases. About twenty years ago, innovation was associated with economic development giving rise to government investments in companies or provision of funding to attract and retain companies. Then we evolved to an era, where as a country we focused on “productivity” followed by “innovation” and now we have “strategy”.


More recently, we have focused on industry or technology clusters where agglomeration economics seemed to drive the agenda and the basic logic was to bring key players in close proximity to each other to enable them to contribute to the innovation continuum.


Today, that is manifest in very innovative real estate configurations that result in many sectors intersecting and converging. The MaRS district in Toronto is probably the most visible example of this philosophy.


“Innovation is not something that you can plan from the top it’s something that has to happen at the bottom.”


Globally, competition has historically led to a need for greater productivity, which in turn spurred innovation, which then generated significant funds that allowed investment in research. It was and logically continues to be all connected, contributing to a recognition of how basic research could tie into innovation. Now in Canada, we have had a comparatively weak dollar for a long time, so productivity has not been a significant issue.


It has only been in the recent past when our dollar broke parity with the US dollar and the manufacturing sector began to lose competitive advantage that Canada realized that as a country we had not been making sufficient investments in greater productivity. If we still had a sixty-five cent [U.S.] dollar, we’d still be competitive. Meanwhile, the U.S. had a focus on productivity as the critical driver of their competitive position because of their strong dollar. They could not compete on low labour rates or other special endowments, so they were under the correct assumption that if you can solve the productivity issue, you can actually be more competitive. Building on this legacy, we seem to be evolving to a systems view of value creation that includes knowledge generation and its translation.


Arcus: Please provide your perspective on the role of cities in fostering innovation.


Mr. van Beek: Toronto and Calgary, for example, seem to have taken the original idea of clusters that was around fifteen years ago and have married it with the idea of research technology parks and that was being clustered inside urban spaces. I am looking at examples such as the MaRS district. The city is promoting new business initiatives in centres where innovation can flourish in a clustered environment. Bringing together government, investment, knowledge translation and creative people where research is concentrated is anticipated to create an environment where serendipity – the spark for disruptive technologies – happens. Most importantly, through the work of recent American transplant, Richard Florida, a growing ‘creativity and space design’ philosophy is emerging to complement or perhaps guide investment decisions.


Ten years ago, Canada started a shift where science migrated into the innovation continuum with the realization that without excellent basic and applied science, you cannot really develop a stream of new technologies. In addition, policy makers in government came to the realization that you had to make investments in science capacity and the country embarked on the experiment of investing more in universities at the expense of federal laboratories. The federal laboratories, for their part have become more focused on policy and regulatory support with the exception of the National Research Council which continues to play an important role in filling industrial research and commercialization gaps.


Arcus: Have the role of arts, culture and design communities changed?


Mr. van Beek: The arts, culture and design communities have now weighed in on the innovation discussion, saying “The basis of innovation is people who do innovative things. That’s what we train people to do.” So, that’s an interesting shift that is taking place. Instead of viewing arts councils and arts funding as separate from innovation funding, the arts communities are making fairly strident and convincing arguments that you can’t really have innovation without arts, culture and design.



“The arts, culture and design communities have now weighed in on the innovation discussion.”


Investments in infrastructure are relatively straight forward when you discuss buildings or space where people can create. On the people side, I think we’re still looking for a way to make those investments because the current arts investments that are being made are granted through granting agencies such as the Social Sciences and Humanities Research Council or they’ve been made through arts grants. But that’s not what they’re talking about in terms of tangible industries now.


The film industry, the graphic design, the graphic arts community – those are real industries. They generate significant economic activity as parts of the arts continuum. There is more of this integration or convergence starting to take place. It took a while for Canadians to understand that, for example, investments in theatre can strengthen the innovation continuum.


Now the arguments are starting to come up that the reason you need a new theatre is to give people a space to do creative things and to think creatively and innovatively. That kind of work in turn may be something that inspires a scientist or an engineer or a business person to think about everyday problems in more creative, different ways.


Arcus: Please share your thoughts on the role of competitive markets in innovation.


Mr. van Beek: To me, markets are a naturally occurring phenomenon. I consider a kind of a Darwinist approach to how markets work and yet historically, governments have invested in companies – to protect them, to grow them or to perpetuate them. The focus was on preserving short term jobs. We have taken that thinking into the present recession and now we are investing in uncompetitive industries to stimulate short term job creation and hope for the multiplier effects of such investments. While there are short term benefits, in the longer term, it is the wrong thing to do. It’s not going to save them. It could very well perpetuate a bad thing. Yet I see that some companies in these industries do not expect funding for investment, they seek incentives for consumers to induce spending. They seem to have learned lessons from past economic downturns when investing in some companies, rather than an industry, haven’t been overly beneficial to the country.


Jane Jacobs and her thinking about cities suggests that the economy works no differently than an ecological system works. A lot of it is serendipity and chance meetings that lead to new ideas. It’s not something that you can plan from the top it’s something that has to happen at the bottom.


Innovation is not a top-down process; it’s a bottom-up process. Ecological systems aren’t engineered from the top with benefits trickling down economic activity originates at the bottom. Innovation, in response to competitive pressures, is triggered by interactions between people in industry and their current or potential customers or critics. All these special combinations of people generate technical problems that need attention and this is taking place at the bottom. Once an idea or possible solution starts to emerge, it floats up and gets bigger and other things begin to stick to it.


To develop economic policy or industrial development policy or innovation, without something coming up from the bottom first, is not effective, it’ll never happen. Local level economic activity often gives rise to novel or disruptive technologies or business disruptions that


features high levels of experimentation leading to, combinations of people, ideas, and a little bit of funding to congeal into a configuration that makes sense for the marketplace.


“The country is focused on re-invigorating the economy, getting

Canadians back to work and countering the effects of tight credit.”


Of course, you cannot let things come up strictly from the bottom without any kind of direction or influence. You have to also take into account the wishes of the greater society that these industries work in. If you leave a company to make all its own decisions, it will do whatever it takes to maximize profits, which we are finding out the hard way in emerging economies. Therefore, you have to have those sorts of constraints on business activity. But some of the things that we impose on industry don’t make sense so why put them on?


Arcus: Is the necessity for innovation different in Canada from in other parts of the world?


Mr. van Beek: For every issue, whether it is water, sustainable energy, preserving natural resources or connecting our communities, generally Canadians believe they have fewer challenges compared to other countries. We do not have the challenges with water that Middle Eastern countries have, etc. If you ask someone from the Middle East, their requirement is finding affordable water so that people can meet their basic living requirements. If you ask a Dutch person, they will tell you their problem lies in keeping water away and out of their country. In Canada, we have about twenty percent of the world’s drinking water and we say, “well it’s not a problem for us”. Then you get to sustainable energy and well, we’ve got the oil sands. Therefore, on most fronts we feel that we are in a better position. It is hard to mobilize a country’s talent when they don’t believe there is a pressing problem or major opportunity that will preserve or advance the nation.


Arcus: What are the three pillars currently driving Canadian innovations?


Mr. van Beek: At present, clearly, the country is focused on re-invigorating the economy, getting Canadians back to work and countering the effects of tight credit and changing preferences as boomer preferences shift from consumer goods to senior lifestyle priorities. The underlying bet is that there will be a major re-structuring of our economies as Asian countries continue to focus on technological innovation as a driver of value and thus growth.


Not surprisingly, in Canada, health is number one based on investment levels, our aging population and the fact that every province has made it a priority. Last year, for example, over a billion dollars was committed to medical research facilities and specialized equipment, in addition to the significant research dollars flowing to those who work in such facilities.


Of interest, Canadians are demanding translation of our investments into new clinical applications, new therapies and more efficient health care systems. After health, I would think that number two is probably sustainable energy, which is encouraging because it has moved away from the environment. The environment, to many business people, is simply viewed as overhead. It’s an additional cost of doing business. The environment only becomes an issue during times of prosperity. Sustainable energy, however, is a cost factor, is concerned with reducing the environmental footprint and it is about long-term survival.


As it turns out, I do think the country has a strong reputation as a leader in alternative energy. If you go outside of Canada and talk to people who attend conferences on these things, they assume that Canada is a leader in this field. An example is the development of ethanol and a variety of biofuels from agricultural and waste feedstocks. Therefore, it is encouraging how it has starting to converge and you’re seeing tangible business enterprises that are involved in these initiatives.


I think the third pillar would be our infrastructure. Historically, some of the biggest investments ever made by the Canadian government have been in connecting ourselves to one another, whether that is through railways, highways, telecommunications or the internet. In the university sector, infrastructure has been a growing problem for a while. While investing in new infrastructure is important, there needs to be an increase in investments to maintain the existing infrastructure. In this sector and many others, Canadians are seeking to renew or strengthen transportation, roads, information systems, etc. The City of Ottawa alone has unveiled a wish list of $600 million for infrastructure projects in recent requests by federal officials for stimulus spending proposals. Helping us work, connect and generate economic outputs more efficiently remains our preoccupation as a country with a vast land mass.


Arcus: How do you feel about the recent Canadian and U.S. budget decisions/stimulus packages?


Mr. van Beek: For some reason we are in the era of bailouts now instead of any kind of planned development of our economy. My concern is that when you read the literature on stimulus and what stimulus means, I’d say the majority of the investments are not going to be made into what most would consider to be contributors to innovation. The Canadian government is focused on keeping financial institutions and major industries solvent. We also need to improve our industries’ ability to compete on the world stage. Careful investment with longer term benefits and with plenty of safeguards against ineffective spending that fixes past mistakes is probably the right thing to do.


Arcus: What would be the top challenges you think we face in Canada in context of the current economic climate?


Mr. van Beek: One of the dynamics that will be important to watch will be the trade-off between creating jobs and investing in the future and it is challenging to do both in equal measure. When a government is running surpluses, it is easier to invest in the future. One of challenges today is to decide between continuing investments (in research, development and innovation) that will drive future prosperity versus investing in immediate needs of the economy. Can we maintain a balance where some of those future investments are still going to be made in the next couple of years?


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