This piece is one of a series of high-profile Canadians commenting on the Canadian Chamber of Commerce's Top 10 reasons Canadian competitiveness is dropping.
Indira Samarasekera is a lady of steel, in more ways than one. In 1974, she became the first female mechanical engineer in her native Sri Lanka, then went on to do a master’s in materials engineering in California and a PhD at the University of British Columbia. Using mathematical models to find defects in steel led her to consulting gigs with steel makers around the globe and, in 2000, the role of vice-president of research at UBC. Five years later, the University of Alberta lured her to Edmonton. Since taking over as president, Dr. Samarasekera has focused relentlessly on research and development, raising $1.4-billion in funding for world-class research facilities like the National Institute for Nanotechnology and the Li Ka Shing Institute of Virology, and enticing world-renowned researchers to Edmonton, a town better known for its massive mall than its elite academics. We talked to Dr. Samarasekera about how to spur research and innovation in her adopted country.
How does Canada lag other nations when it comes to research and development?
If you look at how much Canada invests in R&D as a percentage of GDP, we are below middling. Leading countries like Sweden and Israel are investing 3 or 4 per cent. And we are around 2 per cent. A particular problem is business expenditures on R&D – they’re below 1 per cent. Many countries that are successful are in the 2-per-cent region, and their businesses do more of the R&D than the public sector. The Canadian government has invested over the past two years in universities, and the universities have been very successful in generating knowledge. Unfortunately, the translation of that knowledge into industry has been less than stellar, and that is partly due to a lack of venture capital and a lack of management to make these start-ups successful. So our innovation ecosystem is not functioning well, and I think we have to address that at a systemic level.
How do we do that?
Canada produces an insufficient number of science and engineering graduates, as a percentage of our overall graduation rates, compared to other, more successful countries. We do not produce enough Canadian PhDs in engineering or science relative to other countries. So we need to address the education gap. Second, I think we need to further invest in extremely high-quality basic research. Canada does not have enough of the top 1 per cent of breakthroughs in the world, and for that you need to provide competitive funding to the very best researchers. I don’t think ours are competitively funded. And then you have to create systems to allow these breakthrough ideas to be commercialized by industry. It’s not researchers who commercialize these ideas – it’s got to be business. We simply don’t have that bridge between universities and industry to take advantage of these ideas, and we don’t have the entrepreneurial capacity we need.
Tell me a bit about what you’re doing at the University of Alberta to drive R&D.
For the past 30 or 40 years, the University of Alberta has not only educated the engineers, the scientists and the business majors who go to work in the oil-and-gas industry, but we’ve also partnered with industry to uncover technologies and knowledge that would improve the sector. We have researchers who’ve been at the frontier of understanding the fundamental science behind how bitumen is removed from sand, how you can reduce the environmental impact, how you can reduce the energy required for extraction. So the faculty of engineering has 16 or so industry research chairs, where individuals are working in partnership with industry. On the other hand, we have also been very active in areas where we can create new industries. For example, we have a computer science department that’s one of the leaders in machine learning. In the medical sciences field, we have Lorne Tyrrell, who worked with [drug company] GlaxoWellcome to develop a hepatitis B drug that’s now used around the world. More recently, we recruited Michael Houghton, who discovered the hepatitis C virus while he was working for a big biotech company in the U.S. We attracted him to Canada through the Canada Excellence in Research Chair program, and he and his colleagues are working on a human vaccine for hep C that hopefully will be in clinical trials in 2017.
So how do you commercialize basic research coming out of universities like U of A?
I think we need to allow the people who have come up with the ideas to commercialize them, if they have the capability. That’s where the University of Waterloo has been successful – they have allowed the inventors to own the intellectual property. That has worked very well for the information technology area, because you can start with a single discovery and create a software program or an app. In the biomedical field, it’s a lot more difficult. At U of A, we own the IP [intellectual property] but will license it to a company – either one started by the inventor or by others – because there is no way a university can develop a drug. You have to recognize the difficulties inherent in different technologies and create the kind of vehicles that are appropriate for that particular business.
What do the inventors get out of it, if U of A owns the intellectual property?
The ownership is really not the issue, it’s about the revenue. So you share royalties or equity stake. I think it’s a third/a third/a third kind of arrangement: a third to the university, a third to the faculty, a third to the inventor.
How do we get larger companies to do more R&D?
Many countries – the U.S. and Israel, for example – give direct grants or credits for R&D. So they can write off their R&D expenses against the total cost, which means they get the benefit upfront. The problem with tax credits is that it’s after-the-fact. It would cost Canada several billion dollars to do this, but one of the ways we can become more competitive is to attract multinational companies to do R&D here. And we are more likely to attract more R&D if we give them direct recognition for the R&D performed in this country. If you create a cluster anchored by larger R&D companies, you can create a vibrant ecosystem that would be enormously competitive.
What else could the federal government be doing to promote R&D in the private sector?
If you look at major clusters in the U.S. or Singapore or Israel, they are built around their leading universities. We need many more of our universities to be among the Top 50 in the world in terms of knowledge creation, in terms of having the top 1 or 2 per cent of researchers, in terms of having Nobel laureates, the kind of people whose research is so frontier that companies want to relocate around these knowledge clusters. The second step is to create incentives for businesses and universities to work more closely together to get that knowledge out. And we have to look at how we license patents and inventions in universities to these companies and help them grow. Very often, start-ups can’t attract enough capital in that critical early stage to improve new inventions so they have market potential.
How do we fix that?
Early-stage tech companies can work with universities to improve that commercial potential, because the universities have the research infrastructure. The National Institute of Nanotechnology is a wonderful example of a hybrid model. We have a researcher who’s doing some work in hybrid molecular electronics, and he’s working with Hitachi in Japan to look at transferring some of his discoveries to build better microscopes.
Give me some examples of organizations doing great things in terms of R&D.
The Perimeter Institute in Waterloo is an enormous success, because it created a completely new model of building an independent research institute adjacent to a university. I think Mike Lazaridis should be commended for doing something in the area of theoretical physics, which is really a blue-sky frontier that ultimately will lead to discoveries that we can’t even imagine.
If you could make a pitch to larger companies that are skimping on R&D, what would you say?
Hire the brightest and best coming out of our universities. And learn to be patient. Look at Bell Labs. The transistor came out of Bell Labs, and that’s because, going back many, many years, it was conducting absolutely incredible basic research that led to that discovery. But companies got lost in this notion of quarterly profits, and they lost sight of the need to invest for the longer term. And let me tell you, India, China, Brazil and other emerging economies are doing exactly that. The other thing companies need to do is to invest in frontier research at universities that may not be immediately relevant to the products they’re making, but that are in the general field. Because in the long-term, they will likely benefit. Enlightened companies like Microsoft and Intel stay at the cutting edge by being close to where the frontiers of research are.
What about the role of nations such as India, China and Brazil?
China is the one to watch right now because they have the capacity to invest. China has identified a group of universities they want to be among the top 100 in the world, and they’re investing in those universities, and in key research laboratories, to build their intellectual power. If you look at patents, at one time, the world was at about 400,000 patents per year. Today, it is almost a million per year, and a large portion of those are coming from new and emerging economies. It’s only a matter of time before these patentable ideas are converted to products.
Why is Canada so complacent?
That’s a good question. We have high standard of living. We’ve lived off our natural resources and we have a vast amount of land. We have incredible social programs. All of that has been a benefit to our competitiveness, but it’s becoming a source of our complacency. We have had a lot of advantages because of our natural resources and because of the great talent that has immigrated to this country – people who are highly entrepreneurial and have survived in very difficult circumstance. That spirit of survival and competition exists in this country. We simply have to reignite it. We have to give all Canadians the ability and drive and reasons to strive and to fail and to succeed. That’s the success of the United States: Failure is celebrated, and out of failure comes success. We as a culture are always looking for that quick fix, that big win. But it takes some degree of risk tolerance and the ability to allow people to fail and to learn from those failures to become successful.
This interview has been edited and condensed.
Top 10 business R&D spenders in Canada
Research In Motion
Pratt & Whitney Canada
Atomic Energy of Canada Ltd.
Source: Research Infosource Inc.
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