Peter Nicholson occupies a very odd place in Canadian policy circles. There are not many people as smart as him who are as little known outside Ottawa as they are influential within the capital. So, when he speaks it is always worth listening because you know the senior folks in Ottawa are doing so.
Last week, Nicholson wrote a stem-winder of a piece for IRPP. You should read it in full, but let me give you the Coles notes version: Canada is not very good at innovation (defined here as: “new or better ways of creating value”). One result of this is that Canadian productivity growth has been below the OECD average for most of the last 20 years. Canadians do not often realize this because our economic performance overall has been better than the OECD average. How is that possible? Because our employment growth has been solid (resource economies get to coast that way). Unfortunately, with a now-declining labour force, that avenue for growth is now over and we must rely more and more on productivity and innovation for growth.
But, Nicholson says, Canada is caught in a low-innovation equilibrium. And why not? The US is right next door, so it’s easy for us to buy what we need rather than develop our own technologies. This is now deeply imbued in our business culture and that, above all else, is what needs to change. For decades, we have been trying to jump-start innovation through supply-side solutions, including university research. These have reached their limit, Nicholson says. What is needed now are demand-side strategies: procurement policies that promote innovation, more export facilitation, competition policy, Intellectual property policy and smarter regulation.
Note what’s *not* in Nicholson’s book of innovation solutions: more funding for university research.
This is incredibly important both because people in Ottawa listen to Nicholson but also because Nicholson was arguably one of the architects of Ottawa’s big investment in research infrastructure back in the late 1990s – particularly the Canada Foundation for Innovation and the post-99 reinvestments in the granting councils. You can’t dismiss him as an enemy of universities. And yet there he is, saying quite clearly: the pathways to improved productivity for Canada do not lie in producing more university research. The problem is not the supply of innovative ideas: it is the demand for them. Pouring more money into universities for the purpose of “innovation” is like pushing on string.
For extra clarity: I am not at all saying – and nor do I think Nicholson is saying – that there is no reason to fund university research. There are a ton of reasons to do it, many of which are related to the economy and growth. What Nicholson is saying – and what I agree with – is that pouring more money into universities and hoping for some kind of innovation and productivity miracle, because reasons, is simply a non-starter. We’ve long since reached the limits of that as an innovation strategy.
The problem is, this has been the go-to argument for universities for the last decade if not longer. I cannot recall a U15 or Universities Canada budget ask that wasn’t somehow based on the formula of “Money for shiny research-y things at universities -> a miracle occurs -> Innovation-palooza!” And now, Ottawa’s Dean of Innovation is saying that ain’t true.
As I’ve been saying for awhile now, the sector needs a new narrative on fundamental research. And that’s now more urgent than ever because Peter Nicholson just did everyone a favour and killed its old, tired one stone dead. Without some significant message re-tooling in the big Ottawa Government Relations shops, this next budget season could be unexpectedly lean.
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Maybe (and Gilles Patry is gonna kill me) the problem is not that the university research shouldn’t be expanded but that it should be done in a way that doesn’t directly benefit the universities first. By that, I mean we’ve built an insatiable machine that measures success by how much money is captured, not by what is produced (by whatever metric one chooses). In other words, instead of chasing money, we should be focused on creating unique niches and teams that create their own momentum. The scientists are more important than their institutions. And I say this knowing that institutional support of research in Canada is remarkably fragile.
Good post. I liked Peter’s recommendations as he is trying to move Canada from supply-push to demand-pull and it doesn’t involve lots of spending. We need more evidence-based policy making and the first step is to recognize, as Peter does, that we have failed for the last 50 years to keep up with the rest of the developed world at harnessing the power of science to create innovative products and services.
There are whole academic organizations that work on these problems and the research is extensive, interesting, and worthwhile. For instance, papers have argued that university based incubators work well at science and technology oriented universities, and not so well, but well enough at medical universities. Similarly, there is innovation coming out of the liberal arts at a lower rate than some sciences (but not all sciences), but that is generally more innovation than from business oriented schools. Triple Helix is one such academic group with hundreds of research papers on the topic. Granted throwing money at the problem of innovation in universities does not work, but we do have evidence that using structured grants to motivate both basic research and applied research/innovation tends to work, though not so much if those grants require corporate or business engagement. I tend to think that he narrative for fundamental research in universities is that it is foundational, it provides the knowledge and most importantly the skilled people that are the foundation for innovation, especially at the masters and doctoral levels, which is where fundamental research is generally best pursued. But that is a traditional mode 1 vs mode 2 research justification. I should read more Helga Nowotny.
Thanks for highlighting Nicholson’s report on this. (Sorry to respond so late…) Peter has excellent perspective and wisdom (he was part of the mid-term review of Ontario’s Research Development Challenge Fund, which I ran way back when).
Nicholson’s thesis is as true now as it was when he shared it with us in 2002. Most Canadian industry does not feel innovation is important — just look at BERD vs. GERD ratios here and a dozen competitive jurisdictions. Laughable!
The recent Oshawa episode highlights this — much hand-wringing over the loss of, essentially, dead end manufacturing jobs, with very little attention to what it will take to make GM’s Markham research facility the centre of a “new auto” innovation ecosystem.
Companies like NVIDIA, which make the GPU chips that power the biggest supercomputers AND the biggest AI initiatives around the world, are targeting transportation as the killer app for their products. Canada has taken some steps to support its currently strong AI ecosystem, but imagine what could be done if the kind of money the Feds and the province would normally dump on a new assembly plant were invested in the new economy.