HESA

Higher Education Strategy Associates

Category Archives: Innovation

December 08

Cluster Theory

Unless you’ve been under a rock for the last twelve months, you’ll have noted that the Government of Canada has become enamoured of “innovation clusters” as a means of raising national productivity levels.  What should we make of this?

For some annoying reason, the Liberals act as if cluster theory is something new rather than something which dates back to the mid-1980s (Michael Porter’s The Wealth of Nations gave the idea its first mass-market outing in 1990; six years later, Saskia Sassen gave us what is probably still the most engaging short book description of cluster formation in Regional Advantage.  In fact what is actually new – in Canada at least – is the idea that the federal government should encourage cluster formation/densification with great huge wads of cash.  $800 million over four years, in fact, according to Liberal manifesto and the 2016 Budget.

There are three reasons to be skeptical about this set of developments.  One is political, the second administrative, and the third is empirical.

The political problem is this: we live in Canada.  There is no way on God’s green earth that doling out money for what amount to economic development (or, say it softly, “industrial policy”) isn’t going to get 100% enmeshed in regional pork-barrelling.  Initially, the Government’s plan was for five clusters (I’ve heard it may now be for as many as eight).  Well, isn’t that convenient – five clusters, five regions.  I mean put away all your crystal balls about what’s going to get funded: It’ll be something Ocean-y in the Atlantic, something aerospace-y in Quebec, ICT-y in Ontario, Energy-y in the Prairies and (probably) life sciences-y in BC.  Whether each of these clusters is equally deserving of, or has the capacity to absorb, public dollars is irrelevant once regional politics comes into play.   Inevitable result is sub-optimal investments

The second issue is an administrative one.  Say you want to spend $150 million (or so) on “a cluster” in a variety of ways which increases research productivity, corporate partnerships, etc., etc.  It’s not just a question of deciding among hundreds of worthy micro-projects within a $150 million budget.  Who actually manages the project?  It’s not like giving money to a university or a hospital – a cluster has no corporate entity.  Occasionally, you get a trade organization that might conceivably act as a co-ordinator of a cluster, like say Communitech in Waterloo, and you could use them to distribute money in a way that made sense regionally.  But i) not every cluster has one of those and ii) even if they do, they’re going to tend to be biased towards established players rather than new ones.  The only alternative is to manage it all from Ottawa, but that’s a frightening prospect for a project that’s meant to improve industry flexibility.

Which brings us to the third, empirical, problem.  I’ve said this before but it bears repeating: a lot of the research on innovation is American, and assumes things like having DARPA around, and being at the technological frontier and having access to lots of venture capital and all that good stuff.  Most countries in the world don’t have that.  In fact, when most countries in the world (including us) think about “clusters” they are thinking about something fundamentally different than what Americans think of when they use that term, because our cluster thinking is designed as much around attracting established foreign companies as it is around developing native entrepreneurial talent.

And here’s a little secret: there are almost no good examples anywhere of clusters having been built on government money.  In fact, to the extent that anyone can work out what it is that makes a great cluster, it’s the presence of one or two industry-leading companies plus one heck of a lot of spin-offs related by disgruntled former employees who want to do their own thing (see especially Steven Klepper’s recent posthumously-published book Experimental Capitalism).  This is actually something most Canadian clusters are really bad at: the OECD Cluster rankings, although now a bit dated, show Canadian clusters generally in the bottom half of clusters across the OECD for new company formation.  Government can do something about this, but it’s not by spending money, it’s about using law and regulation to make sure non-competes are unenforceable.  Surprisingly, given that this is supposed to be a government devoted to evidence-based policy, that issue doesn’t appear to show up at all in our government’s thinking on clusters.

So what are we spending money on, exactly?  And why?  To what end?  Although the government’s had over a year to work on this, it’s really hard to get a sense of what the plan is.  I suspect that a lot of this money will end up in the hands of universities because they know the “apply for government money” game really well and can play to the Minister’s predilection to be photographed in front of a lot of shiny hi-tech gadgetry.

But will any of it have the slightest effect on national productivity?  I have my doubts.

November 10

Measuring Innovation

Yesterday, I described how the key sources of institutional prestige were beginning to shift away from pure research & publication towards research & collaboration with industry.  Or, to put it another way, the kudos now come not from solely doing research, but rather in participating in the process of turning discoveries into meaningful and commercially viable products.  Innovation, in other words (though that term is not unproblematic).  But while we all have a pretty good grasp on the various ways to measure research output, figuring out how to measure an institutions’ performance in terms of innovation is a bit trickier.  So today I want to look at a couple of emerging attempts to do just that.

First out of the gate in this area is Reuters, which has already published two editions of a “top 100 innovative universities” list.  The top three won’t surprise anyone (Stanford, MIT, Harvard) but the next three – Texas, Washington and the Korea Advanced Institute of Science and Technology – might:  it’s a sign at least that some non-traditional indicators are being put in the mix. (Obligatory CanCon section: UBC 50th, Toronto 57th and that’s all she wrote.)

So what is Reuters actually measuring?  Mostly, it’s patents.  Patents filed, Success rates of patents filed, percentage of patents for which coverage was sought in all three of the main patent offices (US, Europe, japan), patent citations, patent citation impact…you get the idea.  It’s a pretty one-dimensional view of innovation.  The bibliometric bits are slightly more interesting – percent of articles co-written with industry partners, citations in articles originating in industry – but that maybe gets you to one and a half dimensions, tops.

Meanwhile, the THE may be inching towards an innovation ranking.  Last year, it released a set of four “innovation indicators”, but only published the top 15 in each indicator (and included some institutions not usually thought of as universities in the list, such as “Wright-Patterson Airforce Base”, the Scripps Research Institute” and the “Danish Cancer Society”) which suggests this was a pretty quick rip-and-grab from the Scopus database rather than a long, thoughtful detailed inquiry into the subject.  Two of the four indicators, “resources from industry” and “industry contribution” (i.e. resources from industry as a percentage of total research budget), are based on data from the THE’s annual survey of institutions and while they may be reasonable indicators of innovation, for reasons I pointed out back here, you should intensely distrust the data.  The other two indicators are both bibliometric:  “patent citations” and “industry collaboration” (i.e. co-authorships).  On the whole, THE’s effort is slightly better than Reuters’, but is still quite narrow.

The problem is that the ways in which universities support innovation in an economic sense are really tough to measure.  One might think that counting spin-offs would be possible, but the definition of a spin-off might vary quite a bit from place to place (and it’s tough to know if you’ve caught 100% of said activity).  Co-working space (that is space where firms and institutions interact) would be another way to measure things, but it’s also very difficult to capture.  Economic activity in university tech parks is another, but not all economic activity in tech parks are necessarily university- or even science-based (this is an issue in China and many developing countries as well).  The number of students engaged in firm-based work-integrated learning (WIL) activities would be great but a) there is no common international definition of WIL and b) almost no one measures this anyway.  Income from patent licensing is easily obtainable in some countries but not others.

What you’d really want, frankly, is a summary of unvarnished opinions about the quality of industry partnerships with the businesses themselves, perhaps weighted by the size of the businesses involved (an 8 out of 10 at Yale probably means more than a 9 out of 10 at Bowling Green State).  We can get these at a national level through the World Economic Forum’s annual competitiveness survey, but not at an institutional level, which is presumably more important.  And that’s to say nothing of the value of finding ways to measure the various ways in which institutions support innovation in ways other than through industry collaboration.

Anyways, these problems are not insoluble.  They just take imagination and work.  If I were in charge of metrics in Ontario, say, I could think of many ways – some quantitative, some qualitative – that we might use to evaluate this.  Not many of them would translate easily into international comparisons.  For that to happen would require a genuine international common data set to emerge.  That’s unlikely to happen any time soon, but that’s no reason to throw up our hands.  It would be unimaginably bad if, at the outset of an era where institutions are judged on their ability to be economic collaborators, we allow patent counts to become the standard way of measuring success.  It’s vitally important that thoughtful people in higher education put some thought into this topic.

November 09

Shifting Sources of Prestige

The currency of academia is prestige.  Professors try to increase theirs by publishing better and better papers, giving talks at conferences and so on.  Becoming more prestigious means offers to co-author with a more illustrious class of academics, increasing the chance of book deals at better university presses, etc.  And at the institutional level, universities become more prestigious by being able to attract and nurture a more prestigious group of professors, something which is done by lavishing them with higher salaries, more research funds, better equipment, better graduate students (and to a lesser degree undergraduate students too).  All this has been clear for a long time.

In any given field, we might know which ten or twenty people are at the top globally – Nobel Prize winners for instance (speaking of which, this Freakonomics podcast on How to Win a Nobel Prize is hugely informative and entertaining on the how the Swedish committees decide who really is “top of the field”).  But after that it is pretty hazy: one’s list of the top twenty health researchers who have yet to win the Nobel for Medicine probably depends a lot on what sub-field you’re in and how you evaluate the last decade’s relative progress in various other subfields.  Same with universities before rankings came along.  It doesn’t take a genius to work out that Toronto, McGill and UBC are the top three in Canada.  But after that it gets fuzzy.  If you were in Medicine, you might think number four was McMaster; in Engineering Waterloo and in Arts Montreal or Alberta.

Then along came large bibliometric databases, and shortly thereafter, rankings.  And then we knew how to measure prestige.  We did it by measuring publications, citations, and whatnot: the more, the better.  Universities began managing towards this metric, which built on longstanding trends in most disciplines towards more demanding publication requirements for tenure (the first known use of the phrase “publish or perish” dates from 1942).  Want prestige?  Research. Publish.  Repeat.

But I get the real sense that this starting to change, for universities if not individual professors.  I can’t provide much strong evidence here: you won’t see the change in the usual rankings because they are hardwired for old definitions of prestige.  Nevertheless, if you look around at which universities are “hot”, and receive the acclaim, it’s not necessarily the ones who are doing the publishing; rather, it’s the ones that are actively contributing to the dynamism of their local economies.  MIT’s gradual overtaking of Harvard is one example of this.  But so too is the fuss over institutions like SUNY Albany and its associated nanotech cluster, Akron and its Advanced materials cluster.  In Canada, the obvious example is Waterloo but even here in Toronto, Ryerson has become a “hot” university in part because of its focus on interacting with business in a couple of key areas such as tech (albeit in quite a different way from Waterloo).

To be clear, it’s not a case of publishing v. working with industry.  Generally speaking, companies like to know that the people they are working with are in fact at the front of their fields; no publishing, no partnership.  But it’s more of a general orientation: increasingly, the prestigious universities are the ones who not only have a concentration of science and engineering talent, but also have a sufficiently outward focus to act as an anchoring institution to one or more industrial clusters.

What’s interesting about this trend is that it has some clear winners and losers.   To even have a hope of working in an industrial centre, you need to be in a mid-size city which already has some industry (even if, as in Akron’s case, it’s down in the dumps).  That works for Canada, because (Queen’s excepted) nearly all our big and prestigious universities are in mid-sized or large cities.  In the US, however, it’s more difficult.  Their universities are often older, built in a time where people believed universities were better-off situated away from the “sinful” cities.  And so you have big, huge research institutions in places like Champaign, Illinois or Columbia Missouri which are going to struggle in this new environment (even places like Madison and Ann Arbour are far enough away from big cities to make thing problematic).  Basically, the Morrill Act is now imposing some pretty serious legacy costs on American higher education.

Part of the reason this shift hasn’t been more widely acknowledged is that bibliometrics are a whole lot easier to measure than economic value (and are valued more in tenure discussions).  But some people are starting to have a go at this problem, too.  More on this tomorrow.

September 15

Innovation Policy: Are Universities Part of the Problem?

We’re talking a lot about Innovation in Canada these days. Especially in universities, where innovation policy is seen as a new cash funnel. I would like to suggest that this attitude on the part of universities is precisely part of Canada’s problem when it comes to Innovation.

Here’s the basic issue: innovation – the kind that expands the economy – is something that firms do. They take ideas from here and there and put them together to create new processes or services that fill a market need in a way that creates value (there’s public sector innovation too but the “creating value” thing is a bit trickier, so we’ll leave that aside for now while acknowledging it exists and matters a lot).

Among the many places the ideas come from are higher education institutions (HEIs). Not necessarily local HEIs: ideas travel, so Toronto firms can grab ideas from universities in Texas, Tromso or Tianjin as well as U of T. The extent to which they will focus on ideas generated locally has to do not only with the quality of the local ideas, but also with the way the ideas get propagated locally. Institutions whose faculty are active and involved in local innovation networks will tend to see their ideas picked up more often that those who do not, partly because contact with local firms generates “better” scientific questions and partly because they will have more people paying attention to their work.

But ideas are really only a part of what matters in innovation. Does the business climate encourage firms to innovate? What’s the structure of business taxation? What kind of management and worker skill base exists? What regulations impede or encourage innovation? What barriers to competition and new entrants exist? What kind of venture capital is available? Does government procurement work in favour of or against new products or services? All of this matters in terms of helping to set firms’ priorities and set it on a more-innovative or less-innovative path.

The problem is, all this stuff is boring to politicians and in some cases, requires directly attacking entrenched interests (in Canada, this specifically has to do with protectionism in agriculture telecoms and banking). It requires years of discipline and trade-offs and politicians hate discipline and trade-offs. If only there were some other way of talking about innovation that didn’t require such sacrifice.

And here’s where universities step in to enable bad policies. They write about how innovation is “really” about the scientific process. How it’s “really” about high tech industries of the future and hey, look at all these shiny labs we have in Canada, wouldn’t it be great if we had more? And then all of a sudden “innovation” isn’t about “innovation” anymore, it’s about spending money on STEM research at universities and writing cheques to tech companies (or possibly to real estate companies to mediate a lot of co-working spaces for startups). Which as far as I can tell seems to be how Innovation Minister Navdeep Bains genuinely approaches his file.

Think I’m exaggerating? Check out this article from Universities Canada’s Paul Davidson about innovation in which the role of firms is not mentioned at all except insofar as they are not handing enough money to universities. Now, I get it: Paul’s a lobbyist and he’s arguing his members’ case for public support, which is what he is paid to do. But what comes across from that article is a sense that for Universities , l’Innovation c’est nous. Which, as statements of innovation policy go, is almost Nickelbackian in its levels of wrongness.

I don’t think this is a universal view among universities, by the way. I note SFU President Andrew Petter’s recent article in the same issue of Policy magazine which I think is much clearer in noting that universities are only part of the solution and even then, universities have to get better at integrating with local innovation networks. And of courses colleges, by putting themselves at the more applied end of the spectrum, are inherently aware that their role is as an adjunct to firms.

Universities are a part – a crucial part, even – of innovation systems. But they are a small crucial part. Innovation Policy is not (or should not be, anyway) code for “industrial policy in sci/tech things universities are good at”. It is (or should be) about firms, not universities. And we all need to remember that.

September 06

Announcements

Guys!  I’ve got it solved!  This whole funding thing!

You know how Liberal MPs are taking up the entire back-to-school season with on-campus announcements of Strategic Investment Fund (SIF) money?  It’s annoying, right?  I mean this is money isn’t some “favour” delivered through hard work and pork-barrelling by the local MP.  It’s technocratically-determined funding decided upon by a professional public service.  And yet all the universities and colleges have to go through this rigamarole, saying “thank you” to the local MP, and having pictures taken that can be used ad nauseam in local media.

OK, I get it.  Politicians need to get “credit”, and it’s not just about personal political advantage (though I suppose that never goes amiss).  It’s important that the public knows how their money is spent and media “events” help with that process.  To that extent, it’s perfectly legitimate.   But why is it legitimate for some types of spending and not others?  Why do the feds get these heaps of publicity for a few hundred million dollars when provinces hand out over a billion dollars a month every year?

That’s not a novel observation on my part, or anything.  Everyone has had this discussion of course.  It hasn’t exactly passed unnoticed that announcements of capital projects (especially ribbon-cuttings) get more fanfare than announcements of operating grants. And there’s a too-smug, too-certain line that everyone knows about how “if only we could do ribbon-cuttings for operating grants” then politicians would give money for that, too.

Now, there’s at least some truth to this.  Relative to operating grants, universities and colleges have been getting more money for capital these past fifteen years or so.  And presumably the ability to get good press out of announcing such funding has at least some small role to play in it.

But do we really know that we can’t hold media events for operating grant announcements?  Or have we just never tried?

I mean, clearly, the fact that the money has already been announced is no barrier to getting media out to events.  Every last dime of SIF has already been announced weeks ago.  Hell, last week the Science Minister showed up at Humber College to re-announce changes to the Canada Student Loans Plan that had not only been announced five months ago but which had actually gone into effect four weeks previously.  Timeliness and novelty are clearly not the issue.

Some people might say: “ah, well, you can’t announce operating grants because they aren’t new.”  But this is small-time thinking.  There’s almost always a part of the funding that is new, even if it’s only 1 or 2%.  And what that money is funding changes quite a bit every year.  One year it might be buying RECORD LEVELS OF ENROLLMENT, and in another SIXTY NEW PROFESSORS AND A NEW CENTER FOR STUDENTS WITH DISABILITIES.  Tie it in with some kind of re-announcement about new goals, multi-year agreements, whatever, and you’ve got yourself a bona fide news event.

Not a ribbon cutting, maybe, but a reason for provincial politicians and institutional officials to be pleasant to one another in public, to explain to the electorate what their money is buying, and have some photos taken.  And who knows?  If people are right that positive media is what begets more capital funding announcements, maybe it’ll help bring operating grants back up a bit too.

So come on, institutional government-relations types and provincial media-flack types.  It can’t be beyond your wit to organize some media for all that massive public investment.  Give it a try.  It can’t be any less legitimate than this interminable parade of SIF announcements to which we’re currently being subjected.

September 02

New Thoughts on Innovation Policy

A new book on innovation policy came out this summer from a guy by the name of Mark Zachary Taylor, who teaches at Georgia State.  The book is called The Politics of Innovation: Why Some Countries are Better Than Others at Science and Technology and to my mind it should be required reading for anyone interested in following Canada’s innovation debate.

First, things first: how does Taylor measure how “good” a country is at Science & Technology?  After all, there are lots of ways of measuring inputs to tech, but not many on the outputs side.  The measure Taylor selects is patents.  And yes, this is highly imperfect (though it does correlate reasonably well with other possible measures like multi-factor productivity), but Taylor doesn’t over-egg the data.  For most of the book, his interest is less in scoring countries and then using various types of regression analyses to come up with explanations for the scores; rather, he tends to group countries into fairly wide buckets (“Most innovative”, “mid-level innovative“, and “rapid innovators” showing rapid progress like Korea and Taiwan).  Canada – probably to the surprise of anyone who follows innovation policy in our country – comes up as one of the “most innovative” along with Japan, Germany, Sweden and Switzerland. This may either be a sign of us being too tough on ourselves, or Taylor being out to lunch (I’m a bit unsure which, to be honest).

But put that aside: what’s important about this book is that it provides a good, critical tour d’horizon of the kinds of institutions that support innovation (research universities, patent protection, etc.) and explicitly rejects the idea that “good institutions” are enough to drive innovation forward.  This seems to me to be quite important.  Much of the innovation commentariat loves playing the game of “look-at-that-institution-in-a-country-I-think-does-better-than-us-we-should-really-have-one-of-those” (think Israel’s government-sponsored venture capital funds, for instance).  The riposte to this is usually “yeah, but that’s sui generis, the product of a very special set of political/institutional factors and would never work here”.  And that’s true as it goes, but Taylor goes a bit further than that.

First, he focuses on how open a country is to both inward and outward flows of knowledge and human capital.  Obviously, higher education plays some role here, but on an economy-wide basis, the real question is: are firms sufficiently well-networked that they can effectively hire abroad or learn about market opportunities in other countries?  Taiwan and Israel have worked this angle very effectively, cultivating ties with targeted groups in the United States and elsewhere (my impression is that Canada does not do this in anything near the same level – one wonders why not).

Second, Taylor doesn’t just stop at asking the question of how nations innovate (answer: they design domestic institutions and policies to lower transaction & information costs, distribute and reduce risk, and reduce market failures in innovation).  He also tries to get at the much more interesting question of why countries innovate.  Why do Finns innovate like mad and Norwegians not?  Why Taiwan not Philippines?  Or, for that matter, why the US and not us?  Institutions play some role here, but it’s not the whole story.  Culture matters.

Or, in Taylor’s telling: perceptions of internal and external threat matter.  His argument is that everywhere, the urge to innovate is countered by the wailings of bereavement from those who lose from technological innovation.  In many countries, the political power of losers is sufficient to create a drag on innovation.  Only in places where the country feels an existential threat (e.g. Israel, Taiwan) do political cultures feel they have the necessary social license to ignore the losers and give the innovators free rein.   Taylor calls this “creative insecurity”.

I have to say I don’t find this last bit entirely persuasive.  The bit about losers having too much power is warmed-over Mancur Olson with a tech-specific focus (Taylor goes to some length to say it’s not, but really it is). and while the second part is a plausible explanation for  some places -Singapore, say – his attempt at formalization requires some serious torquing of the data (Finland cannot credibly be described as being under external threat) and/or some very odd historical interpretations (Taylor’s view that Israel was under greater external threat after 1967 than before it would probably not be accepted by many mid-east specialists).

That said, it arguably does explain Canada.  Our resource base gives us an undeniable cushion that other advanced countries lack.  We lack external threats (and since the late-90s we lack internal ones too).  Frankly, we’re just not hungry enough to be top-of-the-pack.  Even in parts of the country that should be hungry – Nova Scotia, for example – there’s simply not that much appetite to sacrifice dollars spent on social policy to make investments in innovation. See, for instance, the carping over Dalhousie’s participation in the MIT’s Regional Entrepreneurship Acceleration Program.

Say it softly: as a country, we might not be cut out for this innovation stuff.  Sure, we like spending money on gee-whizzy tech things and pretending we’re at the cutting edge of this, that or the other, but it’s a long way from that to actually being innovative.  Innovation is tough.  Innovation causes pain and requires sacrifice.  But Canadians prefer comfort to sacrifice:  we can’t get rid of harmful dairy monopolies, our national dress is fleece, etc.

Anyways, read the book.  And have a great weekend.

August 29

Welcome Back

Morning everyone.

We’re back for another term.  I hope everyone’s summer went well.  Let’s get started.

First, a quick round-up of the major events since I was last in the Daily blog business: on August 1, the new Canada Student Grants program came into effect, with all grants now 50% larger than they used to be (the offsetting bad news, the loss of a whole bunch of tax credits, kicks in on January 1).   The big Ontario scheme doesn’t kick in this year, but the New Brunswick Tuition Assistance Bursary (TAB) started at the same time as the federal program.  There’s a new Minister for Advanced Education in New Brunswick who has been given a mandate to re-engineer the TAB so that it’s design isn’t quite so cockamamie; that’s great news, but no word yet on if/when/how such a re-engineering might take place.

The new government in Ottawa hasn’t quite left its hyperactive phase, and so the government has been conducting two big consultations of note this summer, one on innovation policy and one on science policy.  The Innovation policy increasingly looks to me like a go-nowhere exercise, mainly because the Minister himself seems to have a very difficult time distinguishing “innovation” from “glitzy tech things”. Universities, of course, won’t mind this policy confusion (and may indeed be actively abetting it) because, if the government is going to be handing out money for glitzy tech things they’re going to be pretty close to the front of the line, regardless of what happens to actual innovation.

(An aside: I don’t have time to get into this now, but absolutely everyone interested in innovation policy  – especially our esteemed Minister – needs to go out and buy Mark Zachary Taylor’s The Politics of Innovation.  I’ll come back to this book later this week but suffice to say it’s a fantastic and important read.).

The other big issue in Ottawa this summer has been the increasingly weird and disturbing management flame-out at the Canadian Institute of Health Research.  Other granting councils are also dealing with stable-ish budgets (last year’s budget boost was welcome but in real dollars budgets are still below where they were in 2009) and increasing application rates, which are leading to ever-decreasing project success rates.  But only CIHR has chosen to deal with these challenges by simultaneously changing the criteria of its main funding programs AND pilotinga whole new adjudication system whose raison d’etre appears to be to avoid every piece of known good practice in terms of evaluating scientific proposals.  I’m not an expert on this stuff, so I urge you to read someone who is: Jim Woodgett, the Director of Research for the Lunenfeld-Tanenbaum Institute (for instance, this piece  and this one too).  How CIHR President Alain Beaudet has kept his job through all this nonsense is frankly a bit of a mystery; but the Minister’s office now seems to be aware of the scale of the catastrophe and so a trip to the high jump may not be far off.

Overseas the big news is mostly in the UK (Brexit and the implementation of the Teaching Excellence Framework, subjects to which I’ll return over the next couple of weeks).  Hillary Clinton made a campaign promise to ensure that 85% of American students can attend a public university tuition-free, but it isn’t getting lot of press because almost nobody believes it’ll ever happen.  Still, we seem to be in a moment where governments (Ontario, Chile, the US) are increasingly interested in making higher education explicitly free for low and middle-income students.  We’ll see who else follows that trend in the next few months.

Finally, I have one small announcement to make with respect to this blog.  As y’all know, providing the reading public with expert commentary (well, commentary anyway) is a bit of a time sink.  But also, thanks to Statistics Canada’s cost-recovery policies, it’s a money sink as well.  I know many if not most of you dig this blog primarily for the data analyses – and I prefer writing data-pieces to think pieces – but the costs of obtaining that data are getting higher all the time. 

I’ve never really tried to monetize this blog the way Academica’s Top Ten does with its job posting thing; it seems like a hassle and it annoys some readers.  But equally, I can’t really justify blowing money on the blog either, and I need about $2500/year to get the data necessary to keep the interesting stats pieces coming.  So at some point in the next few weeks, I am going to launch a crowdfunding effort to raise that amount.  If you like the data work I do and think it’s valuable for policy discussions in Canadian higher education, please consider donating.   There will be tchotchkes.

That’s it.  Have a great term everyone.

 

May 24

Innovation Policy: Beyond Digital and Cleantech

So, earlier this month, federal Innovation Minister Navdeep Bains wrote an op-ed in the Toronto Star which lays out, as clearly as possible, where the current government’s thinking is with respect to Innovation policy.  Some of it is good, but some of it is dreck.

Let’s start with the good stuff :

“Innovation is fundamental to our continued growth and job creation, and it’s impossible to predict where and how disruption will happen. It can be in a start-up garage in Vancouver, a mine in Saskatoon, or a fishery in Saint John.”

Ok, so the mining in Saskatoon reference is a little odd (there’s exactly one mine in the city, a salt mine which straddles the city limits) , but that aside the Minister seems to understand that innovation (that is, the act of creating new business processes so as to add value) is something that needs to happen economy-wide.  And it’s something that needs to be bred into companies’ DNA.  So far, so good.

What’s a bit disturbing, though, is how quickly Bains goes from “this is something everybody needs to do” to “we’re going to be great in digital! We’re going to invest in cleantech!” and other forms of highly sector-specific boosterism.  Now, I get that governments want to be seen as leading us all towards the industries of the future and reaping the political rewards of said leadership, but man there is some serious cognitive dissonance at work here.  You can’t simultaneously believe that innovation policy is an economy-wide thing and then start babbling about how you plan to plough money into specific sectors.

Bains seems to have difficulty distinguishing between “innovation policy” and “innovation sectors”.  There is a difference.  Innovation policy, as Dan Breznitz underlines here, should focus on helping new technologies and business models flourish.  By definition, this policy has to be economy-wide, because these new technologies and models don’t exist yet.   “Innovation sectors” is a jargon-y term (used much more in Canada than elsewhere if Google is any guide) meaning roughly “sectors which attract a lot of venture capital”, or in practical terms: ICT, cleantech and biotech.

To be fair, Bains isn’t alone: most governments in Canada have this problem.  This is why so many of their innovation policies are scarcely more than “Digital! Cleantech! Woo!”  And there’s nothing wrong (in principle) with in trying to promote digital or cleantech sectors.  But we have to come clean that doing so is industrial policy, not innovation policy.  Similarly, Science policy is not innovation policy.  Neither is growth policy, and neither are policies promoting entrepreneurship.  They all feed on one another. They all (in theory) can complement one another, but they are different.  And if you confuse them the result will be bad policy.

Like I said, pretty much everyone starts their innovation policy with “Digital! Cleantech! Woo!”  And universities and colleges are complicit in this because that’s the easiest way for them to get their hooks into whatever flood of money is going to come out of government when innovation talk gets going.  But the mark of good innovation policy is the extent to which it transcends this kind of simplistic formula.  Here’s hoping the Liberals figure out how to do this in the next few months.

May 18

Canadian B-Schools and Economic Growth

If there is one thing university Presidents desire, it is to be useful to society – and preferably to the government of the day, too.  After all, post-Humboldt, universities exist to strengthen the state.  The better a university does that, the more it will be appreciated and, hopefully, the better funded it will be.  So it has always struck me as a bit odd how little universities (an business schools in particular) have really done in order to help work on the causes of Canada’s perennially sluggish economy.

Canada’s fundamental economic problem is that outside the resource sector, companies struggle to reach scale.  Outside the oligopolistic telecoms and banking sectors, we are a nation of small and medium businesses.  Judging by the party manifestos in last year’s elections, many people like things that way.  Small businesses are good and deserving of lower tax rates, big businesses are bad and deserve to be taxed more heavily. 

The problem with this little story is that it is simply wrong.  Big businesses are crucial to innovation and hence to economic growth.  Big businesses are the ones that have the money to invest in R & D.  They are the ones that can make long-terms commitments to training employees (if you don’t think firm size plays a role in Germany’s ability to sustain its apprenticeship system, you aren’t paying attention). People may be rightly cautious about the power of capital and its influence on the political process; but that doesn’t mean we shouldn’t encourage the formation of large companies in the first place.  Ask the Swedes: their social democracy would never have existed without very large companies like Volvo, Saab and Ikea.

And so the key question is: why don’t we have bigger domestic companies in Canada?  Oh sure, we have the occasional behemoth (i.e., Nortel, RIM) but we don’t seem to do it in a non-ephemeral way, or do it across the board.  And when our companies do start getting big, they often sell out to foreign companies.

We can point fingers in a whole bunch of directions – one favorite is a lack of appropriate venture capital.  But to a considerable degree, it’s a question of management.  Universities like to talk about how they are teaching entrepreneurship but getting people to start businesses and getting those businesses to grow are two very different propositions.  We seem not to have a lot of managers who can take companies from their first million in sales to their first ten million in sales, or to take our businesses out of the Canadian context and into a global one (if you haven’t yet read Andrea Mandel-Campbell’s Why Mexicans Don’t Drink Molson, on this subject, do – it’s revealing).   And for that matter, how is it that our venture capital industry still seems more comfortable with mining projects than life science or biotech?

Can it be – say it softly – a question of education?

We pretend that success in innovation is a function of prowess in tech.  But to a large degree, it’s a function of management prowess: how can staff be better motivated, how can processes be changed to add value, how well can business or investment opportunities be spotted.  Might it be that the education of our business elite doesn’t include the right training to do these things? 

To be clear here, I don’t really have any evidence about this one way or the other.  No one does.  But if I were a university president, or a business dean, it’s a question I’d be asking myself.  Because if there’s an economic conundrum that needs solving its this one, and if there’s any way in which universities can contribute, they should.

May 03

Disturbing Portents for the Liberal Innovation Policy

Allow me to draw everyone’s attention to a piece last week in the Huffington Post called “How the Liberal Party Plans to Innovate the Way We Innovate”.  The piece was written by a Liberal-connected PR/GR flack named Greg MacNeil who works at “public affairs” (read: lobbying) firm Ensight Canada.

MacNeil starts by asserting that “following Budget 2016, it is clear that when it comes to the innovation agenda, the government’s intentions are substantive”, which is nonsense: the budget simply introduced a price-tag ($800 million for some tech clusters) and some placeholders.  He goes on to state: “the challenge in the past has always been that the various funding and program buckets have been siloed across government. The Liberals are changing that. This new one-window approach will make it easier for organizations to navigate the system and access the information and funding they need. The government believes that this approach can help expand the pre-existing innovation sector in Canada and subsequently grow jobs and investment.”

Question: Does anyone actually believe that the problem with innovation in Canada is that there is no one-stop shop for federal funding?  That the reason firms don’t spend their own money to innovate is because it’s not easy enough to suck money out of the federal bureaucracy?

Question: Does the phrase “innovation sector”, and the implication that innovation isn’t something that happens right across the economy, give you the screaming heebie-jeebies?  Could there possibly be a stronger signal that the government thinks of innovation only in terms of new product innovation?

More from MacNeil: “This innovation strategy will also play a major role in Canada’s multilateral and bilateral relations. Until now, Canada has been one of only a few G7 countries without a specific innovation strategy in place. Many other western countries not only have innovation strategies, but are regularly updating them on an annual basis”

Question: “one of only a few”…out of seven.  Doesn’t sound particularly out of the ordinary to me.  And why on earth does this matter to our foreign relations?  If we’d at any point wanted to put more money and effort into international scientific collaborations, we’d have done so by changing rules on council funding, not developing strategic plans.

MacNeil: “By coordinating these efforts, the government hopes that it will be better positioned to take on serious global issues impacting Canada and our allies in areas like climate change, the arctic and cancer research. Further, it could afford us an opportunity to invest in areas where we would be true pioneers, like quantum computing, as opposed to competing in areas that are already dominated by foreign countries.”

Wait – allies?  Are we only collaborating with NATO countries now?  “Invest in areas where we could be true pioneers as opposed to competing in areas already dominated by foreign countries”?  Interesting approach to industrial policy I suppose – but how does collaborating with other countries give us an advantage in blue ocean sectors?  By definition, wouldn’t our partners get a leg up in these areas, too? 

There is so much to question in this little tract: like, why is an external GR flack trial-ballooning innovation policy ideas on behalf of Liberal Ministers?  Why would anyone think a little bureaucratic rationalization would have an effect on innovation levels in the economy?  Do the Liberals really think that Canadians cannot successfully innovate and compete in areas where companies in foreign countries already work – that we can only “win” if no one is competing against us?  Do they have even the slightest sense that innovation is about more than new inventions?  And why – oh dear God why – does anyone think it is acceptable to write an entire article about innovation policy without ever using the words “firm” or “company” once?

If this really is the basis for the new Liberal innovation plan, we all ought to be very worried indeed.

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