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Facts & Figures Library - Innovation

Clusters Key to Innovation Culture
 
Published Wednesday, December 29, 2010 7:00 am
by Sean Fine

If Canada could nudge a few more Waterloos into existence, this country would be a hive of innovation, experts in competitiveness say. With several world-beating Canadian companies, including the BlackBerry-inventing Research In Motion and Open Text, with foreign companies such as Google, with two universities and a community college, with more than 700 high-tech businesses, the Waterloo region in southwestern Ontario benefits from that seemingly magical creation known as a “cluster” – in which talent, industry and post-secondary schools feed off one another’s energy and ideas to grow ever more innovative and prosperous.

Canada is struggling to get an innovation culture off the ground, and so productivity lags, and competing on the world stage becomes that much harder. Clusters offer one way to build an innovation culture, says the Coalition for Action on Innovation in Canada, a blue-chip group of business and academic leaders co-chaired by former deputy prime minister John Manley and Paul Lucas, president and CEO of GlaxoSmithKline Inc.

“Strong and growing clusters of interrelated industries and institutions are a driving force behind innovation and rising productivity,” the group said in its report in October. The group argues that the country’s productivity problem is really a business innovation problem. Its 10-point plan would strengthen business-academic links, reform government research support and seek out the best and brightest students, in addition to putting more emphasis on the development of clusters.

The Waterloo region has much to teach Canada about how to nurture a cluster, with a blizzard of support and mentorship programs that show the region is not taking its good fortune for granted. The programs include an Accelerator Centre and the Communitech Hub for digital media – each of them designed to bring companies of all sizes together for mutual benefit. Four levels of government, industry and academia help pay for and participate in the networking groups.

At the core of any successful cluster are talented entrepreneurs and specialized labour. Hence the importance of a vibrant post-secondary sector. The University of Waterloo is thus the cornerstone of the region’s cluster. From its beginnings in 1957, when it was created to train engineers and technicians, it allowed professors and graduate students to keep all the revenues from the commercial use of their research. The result: “You have these entrepreneurial professors and students working on new projects, and developing spinoff companies,” says William Elliot, business development manager of Canada’s Technology Triangle Inc., a public-private partnership that promotes the region to foreign companies.

The Waterloo region, with a population of half a million people, offers Wilfrid Laurier University (which has a graduate school of business), Conestoga College and, nearby, the University of Guelph, in addition to the technically-minded University of Waterloo (Mike Lazaridis, inventor of the BlackBerry, studied there).

“In today’s marketplace, it’s all about talent,” says Mr. Elliot. “Having proper infrastructure in place, whether that be roads, transportation links, buildings, broadband connections – that’s a given. You have to have that just to get into the game. If you don’t have the talent, I don’t care how good an infrastructure you have, people aren’t going to come. So it’s very important we maintain the talent base here.”

Those who study clusters say that clusters are born, not made. “Don’t try to create clusters,” policy analysts Mark Muro and Bruce Katz argue in a paper for the Brookings Institution in Washington. “Cluster initiatives should only be attempted where clusters already exist.”
Iain Klugman, the chief executive officer of Communitech, a non-profit group in the Waterloo region created by a network of 600 companies and groups, agrees. “Clusters are really built one company at a time,” he says. “It’s very difficult to look top down and say, ‘we want to build a life-sciences cluster.’ We say, ‘how can we do everything possible to start and grow more companies?’ We’re working with each company individually to solve the very specific challenges they face. It’s very much bottom up. At the end of the day you have a critical mass of companies doing great things, and voila! A cluster.”

Organizations aiming to nurture clusters are forming across the country for high-tech industries. Communitech is developing a national network of these agencies. In Toronto there is MaRS, which works with digital media; in Edmonton, Calgary, Regina, Saskatoon and Winnipeg there is TRLabs; in Fredericton, the National Research Council; in Vancouver, Wavefront. “You have to step back and say what are the assets of your community,” Mr. Elliot says. “Then, how do you market that, and build the ecosystem to nurture them and attract more people to build the cluster, and more companies?

Communitech’s Accelerator Centre is a step up from a business incubator. “With an incubator, you have the eagle sitting on the nest, hatching the eggs. With an accelerator centre, the eggs have already been hatched. How do you help them fly out of the nest?” says Mr. Elliot.

One answer is to bring them together with established businesses, including RIM, Open Text and Christie Digital Systems. “The accelerator program is focused on connecting early stage companies with leading companies,” says Kevin Tuer, Communitech’s vice-president of digital media. One-on-one mentoring may be provided in sales, marketing, finance and intellectual property. Critical to fostering innovation, he says, is “collaboration and partnership. We find partnerships in non-obvious places – we bring together an eclectic bunch from industry, government and academia, for unique conversations.” The benefits flow not only from large to small but small to large. The big companies “can look at new partnership opportunities that may result in new product offerings and acquisitions,” Mr. Tuer says.

To make the region’s culture of innovation last, Communitech aims to nurture the spirit of entrepreneurship. “I think innovation is rooted in the willingness to accept failure. Risk is fundamental to innovation and success,” says Mr. Klugman.

Communitech runs events such as an entrepreneur’s week, film festivals devoted to entrepreneurship, a business hall of fame and a conference for high school students, all designed “to say it’s absolutely acceptable to choose to do a startup, be an entrepreneur, think about how to solve a problem that annoys you and go for it,” Mr. Klugman says. “It’s absolutely okay if it doesn’t work out.”

He compares the region’s technology cluster to Canada’s development system for hockey players, aiming to wring every ounce of potential out of anyone with an interest in the game.

“We’re going to promote [entrepreneurship] and do everything we possibly can to support people who are willing to try. That’s reflected in everything we do, whether entrepreneurship training or coaching, or access to capital, customers or talent. Everything we do is rooted in our belief in a strong culture and a great development system.”


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