Ottawa’s ‘superclusters’ can offer much more than just job creation

Catherine Beaudry, professor of economics of innovation, Canada research chair (Tier 1) in creation, development and commercialization of innovation, Polytechnique Montréal

Laurence Solar-Pelletier, project manager and analyst, Polytechnique Montréal

Earlier this week, the Parliamentary Budget Officer released a report that questions the current and expected employment, innovation and growth impacts of the federal government’s Innovation Superclusters Initiative. Although premature in its conclusions, the report highlights the considerable challenge entailed in measuring innovation and the need to rely on a variety of indicators to fully grasp its potential and impact.

The federal government announced the $950-million program in 2017, as part of its efforts to reverse a decades-long downward spiral in innovation performance. The goal was to create “a made-in-Canada Silicon Valley” that would add billions of dollars to the GDP, get businesses to invest heavily in research and development and create high-paying jobs. Five “superclusters,” selected from more than 50 applications from across the country and each comprising dozens of companies of all sizes, research institutions and business associations, were announced in February, 2018.

At the time, no one in Canada had any experience building, organizing and running such large superstructures. To be operational, a number of things had to be in place first. The groups involved in these projects had to develop the necessary governance structures and partnership agreements. They had to come to a consensus on sharing developed intellectual property.

Setting up these complex mega-collaborations properly took some time – and there was still an element of “building the plane as we fly” – but it was the right thing to do. So, it’s not surprising that the superclusters appear to be behind schedule in fulfilling their promises. Given the potential they show, however, we believe they deserve the chance to prove themselves.

In a new study published by the Institute for Research on Public Policy, titled The superclusters initiative: An opportunity to reinforce innovation ecosystems, we argue that the superclusters are quite different than the industrial clusters of the 1990s, a somewhat global trend of grouping interconnected firms from the same industry located in the same region. First, while they may appear to be geographically based, with superclusters in Atlantic Canada, Quebec, Ontario, the Prairies and British Columbia, their links outside their regions are much greater than what most critics argued when they were first announced, and so is their reach. Scale AI, for instance, though headquartered in Montreal, spans the Quebec-Windsor corridor and includes companies such as Intel Corp., CGI Inc., Canadian National Railway Co. and Air Canada.

Second, these superclusters are anchored in technology, not in sectors. Indeed, it is because they span a multitude of sectors and disciplines that they are more likely to be innovative. For instance, the Digital Technology Supercluster will create digital solutions to improve service delivery in the natural resources, health care and manufacturing sectors. The Ocean Supercluster is involved in energy generation, autonomous marine vehicles and marine biotechnology.

This presents a challenge for Canada’s regulatory system, which in many ways remains siloed by sector. But it also presents an opportunity for governments and stakeholders to develop in consultation new regulations that are more conducive to innovation. For instance, bringing about needed regulatory change related to food, feed and environmental safety is a key element of the Protein Industries Supercluster’s strategic plan.

But the biggest challenge is to fully capture how these ecosystems can help boost Canada’s innovation capacity and better assess their impact on all spheres of society. In view of the public investment in the superclusters, it is justified to ask questions about their outcomes. Will they help energize our small and medium enterprises? Will they accelerate the adoption of advanced technologies? Will they make Canada more innovative and competitive? The scrutiny should go beyond the superclusters' economic benefits and include their environmental or societal impact.

Focusing too narrowly on the number of jobs created by the initiative in the short term would be counterproductive, short-sighted and beside the point. The jobs eventually created will be a function of the innovation and growth performance of the superclusters and their members. That said, we found that the performance indicators proposed by the government to track the progress of the superclusters overemphasize basic metrics such as the number of participating organizations, new products and processes developed and jobs created.

These may be relatively easy to measure and to explain, but they overlook elements that are key in understanding the innovation process and its outcomes, such as the quality of linkages among constituents; the skills, expertise and experience of the people involved; and the extent of knowledge sharing and technology adoption taking place.

The reality is we are currently ill-equipped to assess the real impact of innovation ecosystems. The superclusters initiative should be viewed as a Canadian experiment, which provides us with a unique opportunity to identify the factors that contribute most to their success and obtain a real-time portrait of the innovation process.

Such information would allow all stakeholders to adjust their practices accordingly and enable policy makers to better design and fine-tune innovation policies and regulations to meet their objectives. In order for this to happen, however, the government and the superclusters need to develop more sophisticated indicators that truly measure the potential and the impact of these ecosystems.

The degree of co-ordination and insight required to ensure the success of the superclusters, or to propose how to change tack in real time if need be, is unprecedented. So, too, is the task entailed in accurately measuring that success. After decades of failed attempts to boost Canada’s innovation performance, promoting the growth of innovation ecosystems is the best way to leverage the combination of factors most likely to produce real results.

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