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Higher Education Strategy Associates

Tag Archives: innovation

May 08

Naylor Report, Part II

Morning all.  Sorry about the service interruption.  Nice to be back.

So, I promised you some more thoughts about the Fundamental Science Review.  Now that I’ve lot of time to think about it, I think I’m actually surprised by what it doesn’t say, says and how many questions remain open.

What’s best about the report?  The history and most of the analysis are pretty good.  I think a few specific recommendations (if adopted) might actually be a pretty big deal – in particular the one saying that the granting councils should stop any programs forcing researchers to come up with matching funding, mainly because it’s a waste of everyone’s time.

What’s so-so about it?  The money stuff for a start.  As I noted in my last blog post, I don’t really think you can justify a claim to more money based on “proportion of higher ed investment research coming from federal government”.  I’m more sympathetic to the argument that there needs to be more funds, especially for early career researchers, but as noted back here it’s hard to argue simultaneously that institutions should have unfettered rights to hire researchers but that the federal government should be pick up responsibility for their career progression.

The report doesn’t even bother, really, to make the case that more money on basic research means more innovation and economic growth.  Rather, it simply states it, as if it were a fact (it’s not).  This is the research community trying to annex the term “innovation” rather than co-exist with it.  Maybe that works in today’s political environment; I’m not sure it improves overall policy-making.  In some ways, I think it would have been preferable to just say: we need so many millions because that’s what it takes to do the kind of first-class science we’re capable of.  It might not have been politic, but it would have had the advantage of clarity.

…and the Governance stuff?  The report backs two big changes in governance.  One is a Four Agency Co-ordinating Board for the three councils plus the Canada Foundation for Innovation (which we might as well now call the fourth council, provided it gets an annual budget as recommended here), to ensure greater cross-council coherence in policy and programs.  The second is the creation of a National Advisory Committee on Research and Innovation (NACRI) to replace the current Science, Technology and Innovation Council and do a great deal else besides.

The Co-ordinating committee idea makes sense: there are some areas where there would be clear benefits to greater policy coherence.  But setting up a forum to reconcile interests is not the same thing as actually bridging differences.  There are reasons – not very good ones, perhaps, but reasons nonetheless – why councils don’t spontaneously co-ordinate their actions; setting up a committee is a step towards getting them to do so, but success in this endeavour requires sustained good will which will not necessarily be forthcoming.

NACRI is a different story.  Two points here.  The first is that it is pretty clear that NACRI is designed to try to insulate the councils and the investigator-driven research they fund from politicians’ bright ideas about how to run scientific research.  Inshallah, but if politicians want to meddle – and the last two decades seem to show they want to do it a lot – then they’re going to meddle, NACRI or no.  Second, the NACRI as designed here is somewhat heavier on the “R” than on the “I”.  My impression is that as with some of the funding arguments, this is an attempt to hijack the Innovation agenda in Research’s favour.  I think a lot of people are OK with this because they’d prefer the emphasis to be on science and research rather than innovation but I’m not sure we’re doing long-term policy-making in the area any favours by not being explicit about this rationale.

What’s missing?  The report somewhat surprisingly punted what I expected to be a major issue: namely, the government’s increasing tendency over time to fund science outside the framework of the councils in such programs as the Canada Excellence Research Chairs (CERC) and the Canada First Research Excellence Fund (CFREF).  While the text of the report makes clear the authors’ have some reservations about these programs, the recommendations are limited to a “you should review that, sometime soon”.  This is too bad, because phasing out these kinds of programs would be an obvious way to pay for increase investigator-driven funding (though as Nassif Ghoussoub points out here  it’s not necessarily a quick solution because funds are already committed for several years in advance).  The report therefore seems to suggest that though it deplores past trends away from investigator-driven funding, it doesn’t want to see these recent initiatives defunded, which might be seen in government as “having your cake and eating it too”.

What will the long-term impact of the report be? Hard to say: much depends on how much of this the government actually takes up, and it will be some months before we know that.  But I think the way the report was commissioned may have some unintended adverse consequences.  Specifically, I think the fact that this review was set up in such a way as to exclude consideration of applied research – while perfectly understandable – is going to contribute to the latter being something of a political orphan for the foreseeable future.  Similarly, the fact that the report was done in isolation from the broader development of Innovation policy might seem like a blessing given the general ham-fistedness surrounding the Innovation file, in the end I wonder if the end result won’t be an effective division of policy, with research being something the feds pay universities do and innovation something they pay firms to do.  That’s basically the right division, of course, but what goes missing are vital questions about how to make the two mutually reinforcing.

Bottom line: it’s a good report.  But even if the government fully embraces the recommendations, there are still years of messy but important work ahead.

March 20

There is no Fourth Industrial Revolution

I am seeing an increasing number of otherwise thoughtful people in Canadian university and research circles going around talking about the “Fourth Industrial Revolution”.  They need to stop.

There is no such thing as the Fourth Industrial Revolution.  It is a catch-phrase made us by Klaus Schwab, head of the World Economic Forum (the Davos folks), which he developed in an eponymous book released in late 2015.  I read it.  It’s dreadful.  Seriously, seriously awful.  No redeeming characteristics whatsoever.

The argument lies in the same kind of shallow “Digital! Clean Tech!  Woo!” analysis that seems to animate Navdeep Bains, our Minister for pro-IT Industrial Policy.  Essentially what it comes down to is that after a long China-driven commodities super-cycle, everyone is interested in more knowledge-intensive industries.  And a bunch of these seem to be (emphasis on seem) to be on the tipping point of some interesting transformations that might have deep economic ramifications: autonomous vehicles, AI, nanotech, quantum computing, materials science, energy storage, etc.  But all of this does not a revolution make.

Generally, economic historians posit that there was one starting in Northern England built around textiles in the eighteenth century, one around mechanical mass production starting in and around Detroit in the early 20th century, and – maybe, this is still disputed – one based around computers and information technology starting in the 1960s/70s/80s (depending on who is telling the story).    The question is really whether all these new technologies that Schwab is so excited about are really new or just extensions of the It revolution of the late twentieth century.  Schwab claims it is because of three factors: “velocity” (change is happening more quickly), “breadth and depth” (some handwaving about “unprecedented paradigm shifts”) and “systems impact” (something about transformation across industries that also looks like a lot of handwaving).  But as several articles noted at the time (see here, here and here), this is fundamentally unconvincing.  All of these new showy technologies are children of the information revolution, and there’s no sign of any radical break in the economy or the pace of technological change that would make us think that there’s been some “revolutionary” break.  Is change occurring?  Of course.  But change has been occurring for decades, even centuries, sometimes at a much faster pace than today.

Now, sure, some might point to the huge amounts of money now being poured into alleged growth industries, like “Clean Tech” (or the “Green Economy” as its sometimes called).  Our Minster for Shaking Hands with Tech Executives, for instance, likes to talk about Clean Tech being a “$3 trillion industry”.  But a lot of that has to do with creative re-labelling of existing economic activities.  So, for instance, one major study which hyped the value of this economy includes in its definition of green tech large swathes of the construction industry (energy efficiency!), the automobile industry (lower emissions!), sewage collection (it’s about waste!)….you get the picture.  Important?  Yes.  But improvements in these areas are mostly about slow transformation of the economy, not some kind of big break with the past. Not, in other words, revolutionary.

And of course, a lot of the hype about these new technologies is just that: hype.  Everyone is talking about driverless automobiles, but there’s no certainty that the legal issues surrounding them will allow them on the road in major numbers for at least a decade (who is at fault if a driverless car gets into an accident?  Who will insure cars if there is ambiguity about this?)  AI sounds like a huge market, but a lot of it has to do with re-classifying what used to be called “software” as AI.  Nanotechnology has been the tech of the future for at least 15 years; biotech for 30.  Etc, etc.  There’s lots of groovy science out there, but turning it into industrial or consumer products at scale is tricky and doesn’t come quickly.  And because modern capitalism isn’t patient, that means a lot of money for product development is going into things which fundamentally don’t raise productivity.  As Peter Thiel once said, “we dreamed of flying cars, we got 140 characters”.

And even if some of these do manage to make it to market, there are some real questions about how much they will change living standards.  If you’re in any way inclined to call yourself a techno-optimist, I really urge you to read Robert Gordon’s The Rise and fall of American Growth, which painstakingly reconstructs the last 150 years of American economic history (it works equally well for Canada, though), and suggests both that a) the high growth rates of the mid-twentieth century were a one-off, never to return and b) that most of the major changes to the workplace due to the It revolution have already happened.

So in any case, if you’re tempted to try to join the Davos buzzword crowd and throw the term “Fourth Industrial Revolution” into a conversation, just don’t.  In a few years, when that term has been properly consigned to the dustbin of history, you’ll thank me

March 15

What Is Innovation/Innovation Policy, Anyway?

I write and tweet a lot about innovation policy, mainly with respect to my frustration with our current government’s two-dimensional views on the subject.  I’ve been meaning to write a piece on how to do innovation policy right, but based on a number of conversations I’ve had with folks, I think it’s important first to deal with the question of: “what is innovation” and “what is innovation policy”? Because frankly these terms are getting slung around with such abandon that they appear to have lost all meaning and many people are simply dismissing the policy area as a large waste of time.

Sometimes, it’s hard not to sympathize with this point of view.  This week in a Vancouver Sun op-ed, UBC President Santa Ono described innovation as “a never-ending exchange between the realities of today and the potential of tomorrow.”  To which I think most people would respond with a heathy “you what, mate?”

More helpfully, Ono also included in his article the OECD definition of Innovation: “the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.”  Even apart from any methodological difficulties in tracking this, it is still a bit tricky as a definition.  For instance, not everything which is new is beneficial or adds value. Crystal Pepsi comes to mind here.

But more broadly, the best way to think of innovation as a policy goal is: can a country/province/whatever become a place where people can put new ideas into practice easily and quickly.  It doesn’t have to be a “new product” (although Canadian governments sometimes act like this is what it means); it can also be a new process.  And it need not be strictly in the commercial sphere; innovation in the public sector is important, too.

Or, at a broader level, how can we be more like Estonia and less like Greece?

Now, as you can imagine, this is tricky because no one actually knows how to be more like Estonia (or Denmark, or Finland – pick a Nordic-ish country).  We can sort of describe what makes them the way they are, but there is no road map to getting from here to there.  But basically the critical questions are:

  1. How do we get ideas to generate and circulate faster?  (This goes back to the Paul Romer question I posed back here).
  2. How do we get people to turn ideas into practical ideas to create new/improved products and processes?
  3. How do we ensure that new products and processes do not get stamped down simply for reasons of inertia or protecting vested interests?

Some of these issues lend themselves to direct government spending.  Some of them are about regulations and incentives, which governments can also change.  And finally, some of them are issues of culture (institutional and otherwise) which is an altogether trickier terrain.

Governments can address the skills part of this through education.  Funding more doctoral students, attracting more top profs, etc. leads to more Highly Qualified Personnel and hence generating more ideas at the frontier of science.  Funding of basic science also plays a role here.  Governments can change the nature of secondary and undergraduate of education in ways that might make workers more likely to be problem-solvers, idea generators and early adopters of other people’s new ideas/technology.  It can incentivize entrepreneurialism through tax policy and to some extent through grants and – maybe, the jury’s still out – education as well.  But culture plays a big role here and credible ideas for how to shift this are thin on the ground (though I think we can all probably agree that a strategy of having Ministers go around encouraging people to “take risks” and “think outside the box” has, to put it politely, a low probability of success).

As for the third part, not squashing new products…obviously regulatory and competition policy really plays a role.  But again, part of it is cultural, and takes place inside firms and other institutions, areas where policy does not easily reach.  Take the medical products industry: how do you combine a culture of looking after patient safety with a culture of encouraging innovation (which by definition means making mistakes on the way to success)?  Or how do you get companies to pursue innovations which may make existing profitable product lines less profitable?

Evidently, this is complicated stuff.  In some ways it is easier to step back and say what Innovation Policy is not.  It is not Science Policy, which is about deciding how to invest in basic research – though Science Policy affects Innovation Policy for obvious reasons.  It is not Growth Policy, which is about finding the highest rates of economic growth in the short term, because Innovation Policy is in the end much more concerned with developing ideas which will matter 10-20 years out than what will boost growth right now.  It is definitely not Industrial Policy, because it is about economy-wide pre-conditions for industry, not about picking winning industries because they seem to be “hot”.

(I have recently been informed that the Ministry of Innovation actually includes my daily blog posts in its media monitoring.  If whoever is in charge of this operation could mark up that last section IN HUGE RED INK before slipping a copy to Minister Bains, that’d be awesome.  Thanks.)

So that’s my take on the meaning of innovation and innovation policy.  Tomorrow: what an ideal policy looks like.

February 28

The “Not Enough Engineers” Canard

Yesterday I suggested that Ottawa might be as much of the problem in innovation policy as it is the solution.  Today I want to make a much stronger policy claim: that Canada has a uniquely stupid policy discourse on innovation.   And as Exhibit A in this argument I want to present a piece posted over at Policy Options last week.

The article was written by Kat Nejatian, a former staffer to Jason Kenney and now CEO of a payment technology company (OVERCONFIDENT TECH DUDE KLAXON ALERT).  Basically the piece suggests that the whole innovation problem is a function of inputs: not enough venture capital and not enough engineers.  Let me take those two pieces separately.

First comes a claim that Canada’s Venture Capital funding is following further and further behind the United States.  He quotes a blog post from Wellington Financial saying: American venture-capital-backed companies raised US$93.37 per capita in 2006, while in Canada we raised US$45.76 per capita. Nearly a decade later, in 2015, US companies had doubled their performance, raising an average of US$186.23 per capita, while Canadian companies had only inched up to US$49.42.

There are two problems here.  First, these figures are in USD at current exchange rates.  You may remember that 2006 was an extraordinarily good year for the Canadian dollar, and 2015 less so, so this isn’t the best comparison in the world.  Second, they in no way match up with other published data on venture capital as a percentage of GDP.  The reference years are different, but the Conference Board noted that the VC funding as a percentage of GDP grew in Canada from .06 to .1% of GDP between 2009 and 2013, and now stands second in the world only to the US (the US grew from .13% to .18% while all of Europe fell back sharply).  And Richard Florida noted in The Atlantic that in terms of VC funding per capita, Toronto is the only non-American city which cracks the world’s top 20.  I am not sure what to make of these differences; I expect some of it has to do with definitions of venture capital (early-stage vs. late-stage for example).  But looking at more than one data point throws Nejatian’s hypothesis into doubt.

But the bigger whopper in this article has to do with the claim that Canada does not educate enough engineers.  Now forget the fact that the number of engineering graduates has very little to do with success in innovation, even if you define innovation a narrowly as Nejatian does (i.e. as tech and nothing else).  His numbers are simply and outrageously wrong.  He claims Canada produced only 12,000 new Engineering grads; in fact, the number of undergraduate degrees awarded in Architecture & Engineering in 2014 was 18,000, and that’s excluding math and computer science (another 5,400), not to mention new graduate degrees in both those areas (another 11,700).  He claims the UK produces 3.5 times the number of engineers per capita that Canada does.  It doesn’t; there is a gap, but it’s not very big – 9% of their degrees go to engineers compared to 8% of ours (see figure below).  He repeats the scare claim – demolished long ago by Vivek Wadhwa among others – that India is going to eat our lunch because it graduates 1.5 million engineers per year.  This argument needs to go back to 2006 where it belongs: only a tiny percentage of these engineers are of the calibre of North American E-schools, and one recent Times of India  piece suggested that 93% of them were not actually employable (which sounds like an exaggeration but still points to a significant underlying problem).

Figure 1: Science & Engineering Degrees as % of Total Degrees Awarded, Selected OECD Countries

OTTSYD 2017-02-27-1

(See what I mean?  The US has the smallest percentage of undergraduate degrees in engineering and yet it leads everyone else in tech…yet apparently that doesn’t matter to Nejatian – all that matters is MOAR ENGINEERS.  I mean, if we increase our proportion of degrees in engineering by about 60% we could be as innovative as…Italy?)

I could go on, but you get the picture.  This is a terrible argument using catastrophically inaccurate data and yet it gets a place in what is supposed to be our country’s premier publication on public policy.  It’s appalling.  But it fits with the way we talk about innovation in this country.  We focus on inputs rather than processes and relationships.  We see a lack of inputs and immediately try to work out how to increase them rather than asking i) do these inputs actually matter or ii) why are they low in the first place (actually, the only redeeming feature about this article is that it doesn’t make any recommendations, which given the quality of the analysis is really a blessing for all concerned).

Could Canada do with a few more engineers?  Probably.  It’s the one field of study where incomes of new graduates are still rising in real terms, which suggests the demand could support a greater supply.  But the causal link between Engineers and innovation is a vast oversimplification.  If we want better policy in this country, we need to start by improving the quality of the discourse and analysis.  Policy Options has done us all a disservice by letting this piece go out under their name.

February 27

Can Ottawa Do Innovation?

The National Post’s David Akin had a useful article last week entitled Canada Has Failed at Innovation for 100 years: Can The Trudeau Government Change That?  Read it, it’s good.  It’s based around a new-ish Peter Nicholson article in Canadian Public Policy which is unfortunately not available without a subscription.  But Nicholson’s argument appears to be: we’ve done pretty well our entire history as a country copying or importing technology from Americans: what exactly is it that Ottawa is going to do to “shock” us into becoming a massive innovator?

Good question.  But I have a better question: does it make any sense that the federal government is leading on these kinds of policies?  Wouldn’t provinces bet better suited to the job?  Knee-jerk centralists (my guess: probably half my subscribers) probably find that suggestion pretty horrific.  But hear me out.  There are a number of really good reasons why Ottawa probably isn’t best placed to lead on this file.

First: innovation policy is to a large extent is about people and skills.  And skills policy has been fully in the hands of provincial governments for over twenty years now.  We accept that provincial governments are closer to local labour markets and local business for skills purposes.  Surely the same is also true for innovation?

Second: Canada is huge.  We’re not like Singapore or Israel or Taiwan, where industries are essentially homogenous across the entire country.  We are more like China or the US, where a single industry might look completely different in one part of the country than another.  If you haven’t already read Run of the Red Queen: Government, Innovation, Globalization and Economic Growth in China by Dan Breznitz and Michael Murphree, I recommend it.  Besides showing how innovation can be profitable even when it is not of the “new product”/”blue sky” (a truth to which our current government seems utterly oblivious), it shows how the structure of a single industry (in this case, IT) can be utterly different in different parts of a single country.  That’s also true in Canada.  And it’s why it’s tough to draw up decent national policies on a sectoral level.

(A corollary to that second point, which I made back here: because the country is so big, any government attempt to play the “cluster” game in the name of improved innovation is bound to get wrapped up in regional politics pretty quickly.  Anyone who’s watched Montreal and Toronto’s unseemly jockeying for a single big federal investment in Artificial Intelligence will know what I mean.)

Over the course of the past twenty years, of course, many provinces have set up their own innovation ministries or agencies.  But apart from the partial exceptions of Ontario and Quebec, they tend to be poor cousins of the federal ministry: understaffed and not especially well-resourced.  As a result, they’re not at present any more effective than Ottawa in driving innovation.  But that could change with more effective investment.  And of course, Ottawa would always have a role to play: if nothing else, its authority over competition policy means it will always have levers which it can and should use to promote innovation (even if at present it seems extremely reluctant to use this particular lever).

In short, it’s worth considering the hypothesis that it’s not “Canada” which has failed at innovation, but Ottawa.

February 07

Innovation and Skills Redux

So, yesterday Federal Finance Minister Bill Morneau’s Advisory Council on Economic Growth released five (!) papers on innovation, skills, and a bunch of other things.  I’m sure there’s a lot of ink on these in today’s papers, mainly around proposals to raise the retirement age (which we actually did two years ago, except the Trudeau government reversed it, but now evidence-based policy FTW, as the kids say).  I’ll restrict myself to some brief thoughts about two areas in particular: innovation and skills

On Innovation:   I must admit I got a bit of a thrill reading page 9 of the report, in which the Council body-slams the innovation Minister’s ideas about geographically-based innovation “clusters”.  They’re polite about it, “applauding” the Minister for coming up with such a great idea, but then go on to say that they’ve actually read the literature and know what works, and it ain’t clusters.  Hilarious.

What do they propose instead?  Well, it’s something called “innovation marketplaces”.  What are those you ask?  Well, to quote the report they’re “centers of technology and industry activity that are developed and driven by the private sector. An innovation marketplace brings together researchers and entrepreneurs with public and private customers around a common business challenge. These marketplaces match innovation demand from corporations and governments with innovation supply from researchers and entrepreneurs. This matchmaking strengthens supply-chain relationships and the flow of information, thereby fueling further innovation.”

If you think that sounds super hand-wavy, you are not alone.  In practice, there’s some overlap with the ideas Minister Bains has been peddling for months (Artificial Intelligence!  Cleantech!) but these idea are more focussed on industry and less geographically-based, both of which are Good Things.  However, it still equates innovation with new product development, specifically in gee-whizzy tech areas, which is a Bad Thing.  (Non-gee-whizzy sectors get their due in a separate paper on growth; a Good Thing to the extent that at least the Council conceptually understands the difference between Growth Policy and Innovation Policy.  I’m yet to be convinced the Minister has such an understanding.)  So there’s some overlap in ideas but considerable differences in the kinds of programs that are supposed to get us there.

But the budget’s only a couple of weeks away.  How does this circle get squared?   Messily, I suspect.  But we’ll have to wait and see.

On Skills:  According to the report, everything is going to be solved by a new agency going by the godawful name “Futureskills Lab”.  As near as I can tell, this agency is going to be a lot like the Canadian Council on Learning was, only: i) more focused on skills than education (by “skills” they seem to mean tech skills – eight of the ten examples of skills used in the report are tech), ii) more focused on (industry-led) experimentation and dissemination and “what works” and iii) it’s also going to be handed the prize of finally sorting out all that Labour Market Information stuff that Don Drummond has been yelling about for years and no one trusts Statscan to get right.  (I kid….Don Drummond would never raise his voice).

OK, so…there’s nothing wrong with funding lots of experimentation on skills and training.  In fact, it’s a great idea.  Fantastic.  The over-focus on tech skills is <headdesk> inducing, but my guess is that reality will kick in after a year or two and we’ll get a broader and more sensible set of skills priorities.  And there’s nothing wrong with better Labour Market Information, though I’m not particularly convinced that adopting all of Drummond’s recommendations will bring us to some kind of Labour Market Nirvana. (Short version, which maybe I should elaborate in a future blog: what Drummond mostly wants is backward-looking, which is great for economic analysis, not especially helpful for job-seekers or students looking to specialize).

But why do we need a new institution to do all this?  ESDC could fund experiments and analyses thereof.  Statscan could do the LMI stuff.  What advantage does a new institution necessarily have?  I’m not saying there are no advantages: the Millennium Scholarship Foundation is an example of an arguably unnecessary institution which nonetheless was responsible for some pretty interesting policy and delivery innovations.  But the advantages are uncertain and not well-argued in the report.

And there’s another issue.  The Council is keen that FutureSkills Lab be collaborative.  Super collaborative.  Especially with the provinces.  They really like the whole Canada Institute for Health Information (CIHI) model.  Well, the thing is, the federal government did try something similar a decade ago.  It was called the Canadian Council on Learning (CCL) – remember that? It was well-intentioned, but a political disaster because the feds set it up before actually talking to the provinces, leading the latter to essentially boycott it.  More to the point, CIHI works because it is responsible (in part) to the provinces, not just the feds.  If the Council recognizes the importance of this point, it is not evident in the report, which dances back and forth between saying it should “collaborate with” the Forum of Labour Market Ministers (i.e. with provincial governments) and saying it should be “accountable” to them.

I’ll stick my neck out on this one: “accountable to” will fly, “collaborate with” will not.  If the federal government is going to take up this idea from the council, it needs to make clear to the provinces within the next few days if not hours that this is going to be 100% CIHI clone, accountable to provinces and feds and not a federal creature collaborating with provinces.  If that doesn’t happen, regardless of the merits of more experimentation and better LMI data, this idea is going to be an expensive repeat of the CCL failure.  Federalism still matters.

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.

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.

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