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Closing the commercialization gap is critical if we want to catch up to the highly successful innovation economies such as the United States, Germany, Israel, South Korea and Sweden. Just as other innovation nations, our schools and incubators need to teach and value commercialization better. (Peter Power/The Globe and Mail)
Closing the commercialization gap is critical if we want to catch up to the highly successful innovation economies such as the United States, Germany, Israel, South Korea and Sweden. Just as other innovation nations, our schools and incubators need to teach and value commercialization better. (Peter Power/The Globe and Mail)

A tale of two economies and two headlines Add to ...

Warren Buffet once said “when the tide goes out, you get to see who’s been swimming naked.” The sudden drop in oil and mineral prices along with the ensuing lowering of the Canadian dollar exposes our economy and seriously threatens our high standard of living. In this period of cheap oil, and reduced government revenue as a result, we urgently need to balance the prosperity created from our natural resources with more from commercializing our innovative ideas.

Last week, The Globe carried two very different headlines that speak volumes about the future of Canadian prosperity. One headline was about British Columbia’s Ballard Technologies, whose “deal with Volkswagen sent shares soaring” some 60 per cent. The other headline read: “Oil firms cut jobs, budgets as crude drop hits earnings.”

This is a tale of two economies: high margins driven by valuable patent licensing versus the adverse effects of plummeting oil prices. To put this into context, a hundred more technology licensing deals similar to what Ballard inked equals Alberta’s looming budget deficit. If we want to maintain Canadians’ quality of life, we need more headlines about Canadian companies driving profits and job creation from the successful commercialization of their technologies.

I’m bullish on Canada’s prospects for the future. We have strong fundamentals such as low corporate taxes, generous granting programs, and the highest per capita government research-and-development spending among Organization for Economic Co-operation and Development countries. More important, we have highly educated, creative and ambitious entrepreneurs. Yet in the past 32 years, growth in Canada’s commercialization of our ideas, often measured by “multi-factor productivity,” has been virtually zero. During that same time, U.S. multi-factor productivity has soared. We have a commercialization gap in Canada, and we need to fix it before this tide leaves Canada standing naked in the sea of advanced industrialized countries.

Bridging this gap starts with building the ecosystem that enables promising entrepreneurs to scale their companies globally. We don’t need more “innovation incubators” where our promising startups become a low-cost feeder system for large multinational companies to inexpensively acquire their ideas. We need universities and hubs that teach Canadian entrepreneurs how to protect their ideas, commercialize them and then maximize the ensuing profit.

Building a sophisticated innovation economy in Canada requires us to develop infrastructure that is vastly different from the infrastructure needed for our resource or manufacturing sectors. That’s because the ownership and commercialization of intangible ideas is very different than for tangible natural resources or for our traditional manufacturing sector. Getting the ecosystem right for the tangible economy (stable banking, monetary and government fiscal systems, foreign market access and investment protection, physical roads, dams and pipelines) has been integral to our prosperity.

For Canada to maintain or increase its competitiveness, we need the next generation of entrepreneurs to succeed in prospering from their ideas. To do so, they too need a properly tailored ecosystem that nurtures and protects them through their infancy so that we can benefit from the upsides of their innovation that we are so heavily invested in. We shouldn’t be satisfied with our innovative businesses selling their ideas into big companies outside Canada for pennies on the dollar and contributing to someone else’s prosperity at Canadians’ expense.

Closing the commercialization gap is critical if we want to catch up to the highly successful innovation economies such as the United States, Germany, Israel, South Korea and Sweden. Their companies shrewdly prey on our creative talent, and more important, our valuable ideas. They also use these valuable ideas to craft a value-added production economy that moves beyond competing on lowest labour cost with countries such as Mexico and China, and instead ensure that their companies sell their products globally to countries such as Canada. It should be of no surprise that their governments are also heavily invested in their innovation and commercialization infrastructure.

Just as other innovation nations, our schools and incubators need to teach and value commercialization better. Our public institutions need a policy plan for Canadian ideas commercialization. Existing federal and provincial industrial programs need to invest in it, and public-private sector collaboration structures need to begin addressing it on a priority basis. If we do this, I am certain our commercialization performance will start rising.

The commercialization of innovation is where wealth is being generated in today’s global economy. The critical challenge and opportunity for Canadian policy-makers and business leaders is to acutely understand the differences between the ecosystem for a resource economy or a traditional manufacturing economy and that of an innovation economy. The creation of a uniquely Canadian commercialization-of-innovation approach would lay the groundwork for sustainable economic growth, the next generation of high-paying Canadian jobs and maintaining, if not increasing, our standard of living.

Jim Balsillie is chair of Sustainable Development Technologies Canada and co-founder of Research In Motion

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