Southern Ontario should be an innovation cluster, not a farm team

Patrick Deane is president and vice-chancellor of McMaster University. Meric Gertler is president of the University of Toronto. Feridun Hamdullahpur is president and vice-chancellor of the University of Waterloo.

December 28, 2015

As published in the Globe and Mail

A Silicon Valley serial entrepreneur recently asked a stark question whose answer holds major implications for our future prosperity.

At the Waterloo Innovation Summit in September, Steve Blank pointedly wondered whether we should be content to let Southern Ontario be a farm team, continuing to leak talent, ideas and companies south to the United States. Instead, shouldn’t we try to build an unique ecosystem that generates, attracts and retains talent, and stands tall on the world stage?

We’re already a world player with a strong higher education system, an enviable immigration record and generous research and development provisions, all conducive to nurturing innovation. And with a lower Canadian dollar and accelerating U.S. growth, it would appear we’re on the right path.

But Canada’s economy is structurally volatile, with natural resources providing both huge advantages in the good times and major displacement when global energy markets decline. Add in the turbulent nature of the disruption economy and we find that our economic foundations are shaking under our feet.

In his path-breaking 1990 book The Competitive Advantage of Nations,Michael Porter wrote, “The nature of economic competition is not equilibrium but a perpetual state of change.” This has never been more apt for Canada. To succeed in this turbulent environment, we need to embrace its inherent volatility. That’s where innovation clusters come in.

Truly innovative economies and ecosystems are anti-fragile. They aren’t just resilient in the face of change – they thrive on it. This is the economy we envision for a Southern Ontario innovation supercluster driven by Toronto, Waterloo and Hamilton.

It’s a proposal long in the making, but its time has come. Anchored by research-intensive institutions such as ours, it’s time for Ontario to pool its resources and take on the world.

Enabling higher rates of knowledge-intensive growth in an economy as diverse and complex as Southern Ontario’s requires a break from the status quo. The international literature on clusters and innovation systems suggests that the key is to build on existing strengths by enhancing interaction between local economic actors, while deepening external connectivity to a range of global partners.

Universities play a unique and vital role – as educators and research performers, but also as innovation stimulators, entrepreneurship enablers and global connectors. And our governments at all levels, to their credit, have been coming around to the ecosystem mentality. You can see it in enhanced R&D incentives, improving support for high potential research, and commitments to invest in cluster-building infrastructure both soft (incubators) and hard (new transit lines and better intercity rail service).

So how do we realize this ecosystem’s full innovative potential, instead of continuing as a farm team? The right mix of investments and policies will spur us forward.

  • Invest in organizations that drive local economic development and quality of life, from civically minded governance bodies to cultural institutions.
  • Co-ordinate investments in research areas with both the highest success rates and strongest growth potential, from regenerative medicine to quantum science; from advanced materials to environmental technologies.
  • Ensure that our immigration rules make us a destination of choice for high-potential individuals.
  • Turn taxpayers into equity partners and give the public a share of the upside.
  • Support firms that can scale up by connecting them to successful mentors, addressing gaps in our venture financing systems and leveraging public procurement strategically.
  • Inculcate a culture of risk-taking that rewards rather than penalizes failure, that fosters adaptability and learning from mistakes.

We must also expose more students to entrepreneurship skills and experiences, encouraging an innovative mindset. That means recognizing that a broadly based education provides the foundation. If we succeed, exposure to world-leading research, ambitious industry partners and a rich entrepreneurship ecosystem should keep the talent we help produce right here.

The sooner our communities and institutions come together, the better. The pace of global innovation isn’t slowing. To be great, not just good, innovation ecosystems need to be built deliberately.

The conversation with all levels of government now needs to focus on an action plan for investment and decision-making. The best base for this ecosystem? A solid foundation of research-intensive universities, working collaboratively with government and the private sector.