Partnerships and resilient regional economies

For some time I've maintained that partnerships are a key unit of analysis for the development of a robust innovation economy. More to the point, we need to foster and encourage public+private partnerships for research and development - or P3RD. The P3RD Participatory Innovation model provides a mechanism to understand and support the innovation carrying capacity of national economies: the ability to proactively create value from public investments in basic research by fostering private sector receptivity and engagement to the public science and technology (S&T) and private research and development (R&D) systems.

The function of innovation intermediaries are core to Public+Private Partnerships for Research and Development (P3RD). We can best understand this function by looking at how national governments measure R&D and innovation activities. For this we can turn to the OECD Frascati Manual, which outlines Basic research, Applied research, and Experimental development as the continuum of R&D – from idea to invoice.

Basic research

“…is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view.”

Applied research

“…is original investigation undertaken in order to acquire new knowledge . . . directed primarily towards a specific practical aim or objective.”

Experimental development

“… is systematic work, drawing on existing knowledge gained from research and/or practical experience, which is directed to producing new materials, products or devices, to installing new processes, systems and services, or to improving substantially those already produced or installed.” 


(OECD Frascati Manual 2.1.64)

This continuum matters, and the goal in standing up P3RD is to locate the activities undertaken within this context. The continuum from basic and applied research through to experimental development constitutes the types of activities that make up the innovation carrying capacity of national economies: the ability to proactively create value from public investments in basic research by fostering private sector receptivity and engagement to the public S&T systems. 

Here is a useful article on the value of partnerships, and the author's perspective on this uniquely Canadian approach. I've called this barn raising the innovation economy. P3RD enacts a participatory innovation and creates resilient regional economies and clusters. More on this in the months to come.

The #PivotEconomy: Capacity and Contribution for Intentional Innovation

A short while ago I wrote about Public+Private Partnerships for R&D, or P3RD, and how these are key to creating resilient regional economies. I’ve been thinking a lot about Capacity and Contribution in Science and Technology and Innovation, having had a couple of recent opportunities to speak with audiences about this at two conferences, the CARA Ontario event a few weeks ago and today at the Conference Board of Canada’s Summit on Post Secondary Education.

My premise is that increasing the capacity of Canada to innovate is predicated on realizing the value of public investment in science and technology and private investment in research and development. Often missing from this discussion is how to empower people to participate in the innovation economy. Understanding this requires us to unpack who does what to produce the research that in turn produces innovation. A review of the public and private actors that conduct these activities and how these activities are structured will reveal gaps in how we prepare people to innovate.

I have put together a Capacity and Contribution logic model for understanding the performer and funder of research, the type of research (as per the Frascati Manual) and the use of TRLs to enable a view to how the activities of R&D lead to outputs, and which outcomes each sector/actor seeks (Figure 1). This is one model for enacting what I call an Intentional Innovation; I have written about this previously as essential for enacting a full spectrum innovation.

Figure 1: Capacity and Contribution: A Logic Model for the relationship between research and innovation actors, activities, outputs and outcomes 

Figure 2 shows the typical path for invention by performer. In the higher education sector inventions will generally get to about TRL 3; the same is true for government research. While some commercialization does occur, on average this is difficult for a variety of reasons which I will unpack in a later column. The private sector will typically pick something up when it has been derisked (a point made very well by Marianna Mazzucato in The Entrepreneurial State).
What is lacking is a focus on the full spectrum of performers that addresses the full range of activities, often leading to the “valley of death” in the idea to invoice continuum (see Figure 2).

Figure 2: Capacity and Contribution: Performer and "Valley of Death" in commercialization 

In Figure 3 we see a model whereby P3RD is enacted. Public and private sector actors participate in activities designed to address this valley. This model helps to commercialize public science investments where appropriate, and to foster partnerships to support both market push (invention from lab to markets) and market pull (where industry accesses support from the public sector. This is, in my estimation, the supercluster model.

Figure 3: A collaborative Capacity and Contribution model 

Some issues to account for in this model, to be examined and explored later:

• Collaboration Affinity/Intensity: Public+Public; Public+Private (P3RD)
• Regulatory Environment/Framework
• Data segregation by Filed/SubField; Geography; Institution 
• Alignment of S&T and IR&D
• Not a linear process
• Funder vs Performer
• Push vs Pull translation models
• Industry-Academic porosity and aggregate performance
• Social and Economic Outcomes
• Time lines differ by discipline (c.f. engineering vis-à-vis arts and humanities)
• Projects and Programs of research
• How and with what supports does a project move from stage to stage
• Dispensation of Intellectual Property

Individual Skills and Competencies

This collaborative Capacity and Contribution model means many people working together. This assumes a multiplicity of skills, competencies, performers and partners can be oriented toward a common goal. The multiple individual skills and competencies as operationalized within Technology Readiness Levels can be understood as having three dimensions at each TRL:

• X Axis|Horizontal: Different disciplines; 
• Y Axis|Vertical: Depth of skill or competency in a specific discipline;
• Z Axis| Diagonal: personal communication style or competency (cognitive, affective, psychomotor) required and capacity of individual to deploy skills.

Each TRL requires a complementarity of depth of skills (from a PhD to a technician), which roughly corresponds to type of credential earned through tertiary education. A multidisciplinary approach is key to enacting a full spectrum innovation: the integration of Science, Technology, Engineering, Arts, Math and Design (STEAM+D) skills. Taken together, the horizontal and vertical aspects of each TRL creates a multiplier effect on the innovation capacity of firms and regions. See Figures 4 and 5 below.

Figure 4: Horizontal and Vertical Skills/Competencies Matrix for TRLs 

Figure 5: A model for TRL skills/competencies matrix

Key to exercising the potential for a full spectrum innovation capacity is ensuring that the entire workforce is equipped innovation literacy that understands this and puts complementary skills to work on common innovation issues. A multidisciplinary collaborative problem solving at each TRL enhances the ability of teams to work together, which has a corresponding effect on downstream innovation capacity. The Diagonal or Z axis represents the communicative competence of an individual to deploy the skills and competencies they possess, to learn additional ones, and to effectively participate in the management of innovation processes as it pertains to the particular TRL in which an individual is engaged.

Budget 2018 delivers smart science policy

The federal government's Budget 2018 is an advance for the science, research and innovation communities. The overall approach to gender equity, diversity and decolonization is important and timely.

The government has clearly heard the call from the Fundamental Science Review to increase our investment in research. There is a strong focus on supporting interdisciplinary and international collaborative research, which is essential for not only uncovering new areas of knowledge, but for realizing the value of ideas as they are translated into application, products, services and other innovation. This underscores the importance of design disciplines as crucial to Canada's innovation carrying capacity.

And here's the big news: "Budget 2018 proposes an investment of nearly $4 billion in Canada’s research system to support the work of researchers and to provide them access to the state-of-the-art tools and facilities they need" (p 82).

This is smart policy. Linking investments in science and technology ($3.2B investment in "research" writ large) to national priorities and, importantly, diversity and decolonization, is imperative for inclusive innovation. It is also in line with other leading OECD countries that set national priorities and focus on the spectrum of research - from idea to invoice - in order to realize the benefits of public investment in the production of public knowledge.

The most important aspect of this budget for innovation policy is the section on Leveraging the Full Potential of Business-Academia Collaboration. Changes and investment here to NSERC and CIHR promise to make public+private partnerships for R&D (P3RD), and additional funding for colleges continues the growth of capacity in the college sector to perform an important innovation intermediary function that links skills development to product and service development. The special focus on the Technology Access Centres is important as these are exemplary organizations adept at enabling private sector innovation.

The focus on the spectrum of research - from Basic Research, Applied Research to Experimental Development - is picked up in the re-imagining of the National Research Council (NRC). New investments in the NRC are absolutely necessary and essential to enable the NRC to start to really expand a focus on translating the world leading ideas uncovered in Basic Research into real innovation in the world. Among the $1.1Bn in funding that provides important inputs to capacity, the NRC gets a DARPA-like entity "to fund its scientists to work with innovators from post-secondary institutions and businesses on multi-party research and development programs." This is long overdue.

But things get really interesting in the Innovation Canada – Accelerated Growth Service section and "the creation of four flagship platforms" to deliver business innovation programs. I have elsewhere outlined the importance of focusing on the full spectrum of research activities and the lack of investment in Experimental Development (see my Capacity and Contribution Logic Model). This is a significant development that promises to help get more ideas turned into invoices by helping manage the process of research through to experimental development through a simplification of business innovation programs (a result of the Horizontal Review that Budget 2017 called for).

The Women Entrepreneurship Strategy is welcome news. This will help us focus on those outputs of innovation that are not typically valued, as outlined in this excellent article  from last week. This adds to "the Government’s coming reform to federal innovation programs [that] will include a universal goal to improve the participation of underrepresented groups, including women entrepreneurs, in the innovation economy." I also read with note the Intellectual Property Strategy. The launch of a Patent Collective is long overdue - all publicly-funded R&D performers should enter such a patent pool to mobilize stranded IP.

This is good science and innovation policy that provides new funding support for Basic Research, and support and services for Applied Research and Experimental Development, notably within the purview of public+private partnerships for R&D (P3RD). The diversity lens is essential and will result in a more inclusive Canada.

This is #smartsciencepolicy.

A Capacity and Contribution Logic Model incorporating TRLs and Frascati research definitions

Creating gravitational pull in the innovation space

Yesterday the federal government announced the winners of the supercluster competition, with five winning bids spanning the regions of Canada in important industrial sectors: AI, proteins, ocean research, digital technology and advanced manufacturing. OCAD University is very pleased to be part of the advanced manufacturing group.

The supercluster narrative is of course based on the work of Porter et al that sees public and private actors working together in support of promoting discovery through basic research, applied research and realizing market value of these via experimental development.

There is significant potential here for Canada to amplify our move into the innovation economy. These investments will help transform the economy from simple resource extraction into one that focuses more on product and service design and adding value to the raw materials we have in abundance (and here I include the ideas that emerge from basic research in our world leading universities). Translating basic research into market success - moving from idea to invoice - is essential in the global economy. The supercluster initiative will create gravitational pull, fostering public+private research and development partnerships (P3RD) in support of resilient regional economies.

Definition of supercluster: noun; astronomy: a cluster of galaxies which themselves occur as clusters.

From Idea to Invoice: Permeability and Public + Private R&D

Today I attended an excellent panel discussion hosted by Universities Canada and the Economic Club of Canada.

Research, Innovation & the New Economy featured Martha Crago, Vice-Principal, Research & Innovation at McGill University, Molly Shoichet, Tier 1 Canada Research Chair in Tissue Engineering, University of Toronto, Paul Davidson, President of Universities Canada, and was moderated by Globe and Mail Science Reporter Ivan Semeniuk.

The discussion is an important one and focused on the value of basic research as a pipeline feeding applied research and experimental development, all the way through to innovation.

I've written a fair bit on the value of what I call P3RD - Public+Private Research and Development partnerships, so there is of course some confirmation bias here. But the panelists did an excellent job of articulating the value of the R&D enterprise writ large to the economy of Canada. This includes the development of ideas, knowledge and technologies - the intellectual property assets that arise from R&D. This reinforces the value of public + private partnerships for R&D. 

Molly Shoichet talked about the development of a technology to help enable drug delivery to the brain - an output of her research that is now being commercialized. In discussing the problem - the lack of permeability in the blood-brain barrier - it occurred to me that this is a good metaphor for public+private R&D partnerships. 

There has been historically little permeability between the public and private R&D worlds: this has been like the blood-brain barrier. Getting better at making this boundary more permeable is a positive way to leverage the excellent assets Canada has in its world leading basic research. 

The need to continue to enhance this connective tissue was one recommendation of the Council of Canadian Academies Expert Panel report Competing in a Global Innovation Economy: The Current State of R&D in Canada. And thing are getting better. Public sector organizations - universities, colleges, Technology Access Centres - are increasingly working with the private sector not only to push ideas into markets, but to enable the private sector to pull ideas, talent and support from the public sector. Martha spoke about the value of NSERC Engage grants in supporting partnerships at Dalhousie and McGill, and used Germany as an example where there is high permeability between public and private R&D performers. 

Germany is also a model for the linkages between public education and private sector engagement. Germany is heralded for its approach to apprenticeships, though it is important to note (as Alex Usher did some time ago - this should be required reading for anyone interested in this subject BTW) that the types of apprenticeships in Germany are much more diverse than ours. The point here is that there is real educational value in R&D apprenticeships being conducted right now in university research labs across the country. 

"Students are the motors of the research world," said Martha, meaning they conduct the work under what I would call an R&D apprenticeship. This fosters not only deep research expertise in a given field, but also innovation literacy, crucial to enabling career success and social and economic productivity widely across the economy. The recent (much needed) focus on work integrated learning is one example of a 21st Century apprenticeship platform. The panel's discussion of the educational value of R&D participation as one form of work integrated learning is an apprenticeship in innovation. 

There was good discussion about the different roles needed throughout various stages of R&D and innovation. This is essential to ensuring that we have the needed capacity and complementarity of skills and competencies to make the kinds of social, economic and cultural contributions we should expect from public investments in science and research. 

Quoting former Governor General David Johnston, Paul said "the best technology transfer is a pair of sneakers." That is, the value of R&D engagement comes in creating new products, services and what-not, but also in the incidental knowledge transfer that happens when our students graduate with innovation literacy. Our approach to research excellence and our focus on equity, diversity and inclusion makes Canada an excellent and enviable platform for going from idea to invoice. 

Some missing links in the discussion on innovation

Much digital ink has been spilt over the nascent Canadian version of the storied DARPA, including a good overview by Alex Usher today. Usher rightfully points out some dissonance in the focus on disruptive versus incremental innovation; this incidentally confuses the difference between invention (new to the world) and innovation (new to a market). He also questions the focus on product innovation over process innovation, but misses marketing and organizational innovation. But his point is sound: “simply adopting big-country solutions is unlikely to help us overcome them.” 

In thinking this through there are two key points that are missed here and elsewhere (see for example this piece in the Logic). The first is the importance of private+public partnerships for R&D, and the second is a focus on demand-driven innovation. I would add a third here, which is the turn (finally) in Canada to a focus on the entire spectrum of R&D, and here I mean TRLs 1-9. More on this below.

Private+public partnerships for R&D (what I’ve elsewhere called P3RD) are essential for ensuring intellectual property (IP) generated in our world leading public research universities gets to markets. These partnerships are also essential for helping businesses to perform R&D and to innovate more broadly. Not only do research partnerships with higher education institutions helps companies to conduct R&D they might not otherwise do, they also give students valuable work integrated learning opportunities. This results in innovation literacy: “the ability to think creatively, evaluate, and apply problem-solving skills to diverse and intangible issues within industrial problems and multidisciplinary contexts.”

Demand-driven innovation is the opposite of what Canada has focused on in terms of Science and Technology policy. That is, we invest more per capita than most every other OECD country in publicly funded research, but we lag on business investment in research and commercialization. Read the CCA Report on Science and Technology – it is a comprehensive overview of the particular values, strengths and weaknesses of the Canadian research to innovation ecosystem. 

According to the Horizontal Review on business innovation and clean technology (2018) – which while 4 years old is still a good barometer of S&T policy – most business facing R&D support is for early stage effort (what the OECD Frascati Manual calls Basic Research). The Horizontal Review further outlines the following:

• Only 78% of support is focused on traditional product and process innovation and formal R&D
• Less than half of funding is directed to firms that are in a growth stage, and
• Only 8% support goes towards productivity enhancing technology adoption.

A focus on technology only (product innovation) disadvantages inclusive innovation, especially in the world of intangibles, a point made very clear by Ontario’s Expert Panel on Intellectual Property. 

As Alex Usher points out, according to Mazzucato the private sector does not generally invest in early stage research. And the public sector is not historically motivated to carry forward commercialization, preferring to publish results rather than commercializing them (though this is changing).

Most academic research is basic research – very little is applied research and hardly any is experimental development. This continuum matters. A lot:

The continuum from basic and applied research through to experimental development constitutes the types of activities that make up the innovation carrying capacity of national economies: the ability to proactively create value from public investments in basic research by fostering private sector receptivity and engagement to the public S&T systems.

Only 20,000 – 2% - of Canadian companies file SR&ED claims, the most reliable indicator we have for firms that conduct R&D activities, which are essential for innovating products and services for global markets. This is down from 25,000 a half decade ago. This may be only .5% of companies overall, but it represents a 20% drop in SR&ED filers. SR&ED is also down from 4 billion to 3 billion annually. This is not a good indicator for Canadian innovation. We can take from this the stark reality that not enough companies do R&D, and those who may be unsure if they want to conduct R&D have little or no incentive to start.

And this gets me back to the point missed by Usher and others. The discussion around a Canadian DARPA is worthwhile as it gets us into the mindset of developing challenge-based research capabilities. It socializes the idea that private+public partnerships for R&D is a good thing (this is the key DARPA model, along with limited time and funding). It puts us into the mindset that demand-driven research and innovation challenges are the right thing to do – to orient the best and brightest capabilities we have in our higher education institutions to address key challenges, be these health, environmental, social, or economic. 

The good news is that there are many working in this space. Check out OCI and Mitacs, who fund excellent programs that engage colleges and universities in all forms of research. Check out the good work happening at Communitech and their focus on “True North - solving Canadian problems with Canadian Innovation.” And check out how eCampusOntario is helping our 50 member institutions create research partnerships through a unique demand-driven innovation platform piloted with the City of Toronto. 

Working together we can mobilize the latent R&D capacity in our higher education institutions to increase the numbers of firms doing R&D with explicit reach out to those firms currently not innovating. Together we can aid the economic recovery and growth with Ontario-made innovation. Research partnerships have broad application and net benefits to our social and economic prosperity, supporting:

• Commercial Innovation via industry-sponsored R&D and commercialization of University research 
• Career opportunities for post-secondary graduates by providing relevant work experience and building their professional networks
• IP and Innovation Literacy by integrating student experiential learning and issuing micro-credentials for project work with partners 
• Employment and economic development by enhancing overall effectiveness of adjacent R&D for programs by providing a common entry point for Ontario businesses.

CARPA or no, the discussion around demand-driven innovation and research partnerships is right-headed. Not only that, but these are essential for competing in the global innovation economy. 

Post-Script: The Continuum of Research

I’ve written many times about this and why it matters. Developing the capacity and contribution for the span of R&D – from basic to applied research through to experimental development – is key to enacting intentional innovation. 

An excellent graphic from the CCA Report Competing in a Global Innovation Economy that describes the links between R&D, Innovation and Wealth Creation.