Canada’s Innovation Budget / Superclusters

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Canadian Prime Minister Justin Trudeau announced the 2017 budget included an Innovation and Skills Plan.   This is a bold and visionary plan for the development of the country.   It is driven by concerns for the stability of the USA as a long-term trading partner and focuses on building the necessary assets required to be a leading country in tomorrow’s global innovation economy.   The future state plan is multi-faceted targeting major investments in the development of their ecosystem around six superclusters and emerging industries.   It also incorporates the building of new education offerings around lifelong learning for both the current workforce and next generation of students and workers.  While many regions around the world are working on their regional cluster strategies,  this marks a leading trend of county-wide strategies targeting the development and integration of cross-region assets into superclusters.
Here is a quick summary of the budget announcement.
Proposed industry efforts include:
  • $950 million CAD ($709.8 million USD) over five years to develop superclusters in six key national industries:
  1. advanced manufacturing
  2. agri-food
  3. cleantech
  4. digital industries
  5. health/bio-sciences
  6. clean resource
    (+ 7. emerging AI cluster)
  • $50 million CAD ($37.4 million USD) to launch Innovative Solutions Canada.  This is a government procurement program modeled after the United States’ Small Business Innovation Research (SBIR) program.
  • $400 million CAD ($298.9 million USD) over three years to help drive investment in growth-stage companies. Through the Venture Capital Catalyst Initiative (VCCI), the Business Development Bank of Canada would make late stage venture capital deals with the intent of stimulating co-investment from the private sector.  The government hopes to unlock nearly $1.5 billion CAD ($1.1 billion USD) in private sector investments through these efforts.
Proposed education and research efforts include:
  • $3.1 billion CAD ($2.3 billion USD) for research and research training – e.g., scholarships, fellowships, research grants, and support for the overhead costs associated with federally funded research conducted in post-secondary institutions.
  • $741 million CAD ($553.3 billion USD) for investments to accelerate infrastructure projects at universities and colleges and affiliated institutions through the Post-Secondary Institutions Strategic Investment Fund.
  • $340 million CAD ($253.9 million USD) in planned support for equipment and facilities for post-secondary institutions, research hospitals, and other not-for-profit institutions.
  • $158 million CAD ($118 million USD) for several of the country’s public-private partnerships such as Mitacs, Genome Canada, the Canadian Institute for Advanced Research, the Stem Cell Network, the Institute for Quantum Computing, Brain Canada and the Perimeter Institute for Theoretical Physics.
Proposed Workforce efforts include:
  • $454.4 million CAD ($339.3 million USD) over four years, starting in 2018–19, and $46.3 million CAD ($34.6 million USD) per year thereafter, to help Canada’s middle-class workers find and keep good jobs.
  • $225 million CAD ($168 million USD) over four years, starting in 2018–19, and $75 million CAD ($65 million USD) per year thereafter, to establish a new organization to support skills development and measurement in Canada.
  • $221 million CAD ($165 million USD) over five years to fund up to 10,000 work-integrated learning placements for post-secondary students and graduates each year.
  • $186 million CAD ($138.9 million USD) would be provided to support other, unspecified research and development and related scientific activities in the higher education sector.
  • $7.8 million over two years to implement a new visa program that would allow certain skilled workers to obtain a work permit.
  • $50 million CAD ($37.4 million USD) for a new initiative – Coding Kids. The new two-year initiative would help teach Canadian children how to code to help prepare them for future IT-related careers.

 

See images of the announcement in the international gallery

Stay tuned to follow the progress of this initiative and more to come on cluster development and supercluster integration.

 

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FEDA, Harvard, and UMN Economic Cluster Development Conference

Cluster Mapping Project

The Federal EDA, Harvard, MIT, and UMN had teamed up around big data analysis on US industry clusters.  This was a two day event (09/29/14 – 09/30/14)  showcasing a broad range of speakers and case studies of cluster development.  For a number of years they have been collecting data on the current state of industry across cities in the USA.   The high level data starts to identify strong concentration of cluster assets by geography and creates a basis for measuring the effectiveness and growth ( or decline ) of regions.  The Federal EDA and Small Business Association have created grant programs to help regions develop their clusters.    Already many cities have capitalized on these government investments and begun programs and have created innovation centers / parks to bring clusters together in new ways and around joint collaboration and co-opition.
Reshaping Clusters Porter
Harvard Professor, Micheal Porter, gave a presentation with practices for reshaping clusters and highlighted the work he has been involved with developing the Life Sciences cluster in Massachusetts.  Some of the best practices he highlighted included:
  • Focus on competitiveness, not job creation
  • Cluster-based, reflecting the core drivers of jobs and wages
  • Build on existing and potential strengths, versus rely on reducing
  • Weakness
  • Develop an overall strategy rather than a list of actions
  • Prioritized and sequenced, not treating all weaknesses equally
  • Data driven, not political or based on wishful thinking
See more in the gallery
Water Cluster
The case study examples where interesting and great to hear them presented directly the teams leading the initiatives.  Ecolab CEO Doug Baker presented a very interesting cluster collaboration that spanned multiple states and adjacent clusters that included water, energy, and agriculture.   This highlighted that the potential of clusters is just not within the scope of a single city, but in the interconnection of key partners that may span state boundaries.   This concept was reinforced later in the year seeing states applying for the federal grants together in unified proposals.   The example also highlighted the power supporting adjacent clusters.   This allowed corporations from adjacent vertical sectors to partner in new ways and create business opportunities through combining assets, technology, and processes.
Regional economic development practices where discussed and it highlighted the wide variety of approaches adopted by groups and some of the trade off to the approaches.  For example:
  • Some regions don’t have strong leadership and lack any regional development plan, much less a shared vision.   This is worst case scenario, but can be common
  • Regions that have long standing clusters,  but struggle to maintain their lead.   They focus on keeping parity though this tends to ultimate lose the lead and invest enough in creating competitive advantage
  • A region could focus on a new and emerging cluster,  but that is a very competitive space.   Success would really hinge upon the actual strength of regional assets to support that industry.   This can be a very costly investment only to not sustain the lead in the long run against another region with inherit more advantages
  • Regional investment in generic infrastructure can also be an expensive but unsuccessful strategy.   Building generic industry parks,  start-up spaces, and industry support systems can turn into a bust without a clear and focused plan.
  • The opposite of generic infrastructure though would be an approach to build cluster specific infrastructure that creates a unique and differentiated assets for the region resulting in a clear competitive advantage.   Example of these can be innovation center campuses that integrate industry,  start-ups, universities,  research parks, that have common infrastructure around shared labs, manufacturing, supply chain, education and commercialization.
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One aspect of cluster development that paves the way is the development of supportive government policy in the region to create business opportunities,  align government investment, and create incentives.  This can be a huge factor in terms of attractiveness to the region for internal and external investment and the attraction of talent and ideas.   While government plays a key role,  it doesn’t mean a region can only be lead by government agencies.   In most case the agencies are not staffed or funded for extensive economic development programs and these programs have to last past any given administration.   Some of the most success case studies of cluster development are lead by private organizations that are built and dedicated to the mission.   It still takes government, industry, education, start-ups, venture capitalists, etc to be all contributing,  but much of the facilitation can come from private firms.   Two red flags I’ll immediately raise in this conversation are as follows:
  1. There can be more than one private firm involved.  Regional transformation is an enormous,  and though a shared vision is required, the work and easily and probably be better severed by a number of focused organizations that can sustain long term.
  2. There is a difference between leadership and control.   A leading organization can lead through delegation.   A clear flag of a failing economic development organization is one that seems to take control of everything.   Its a stewardship model vs. dictator model that is needed for scalability and sustainability.
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CHEVAL insight looking into regional cluster selection also brings a variety of approaches:
  • One can begin by looking at what the region is already known for and has in abundance.  Next one would have to compare the regions current success and competitive differentiators against any other regions that are in that space.   In too many cases a region that pioneers a field becomes comfortable at the lead and fails to see others gaining on them until it is too late.   Keep in mind that the individuals who probably created the industry tend to retire and turn it over to the politicians in their companies, so its not surprising that the decline of industries sectors in a given region over time.
  • Studying your areas of strength,  then exploring the strength you have in adjacent industries could also be a opportunity in waiting.   In many cases these have grown up independently and could be at a maturation point where stronger cross sector integration can create dynamic opportunities in the marketplace.
  • Investing in a growing regional competency might make sense.   Really mature clusters don’t need much additional support.   They have already built their systems and partnership.   So a growing sector could be the place where the investments make a big difference.
  • Even though emerging markets might be risky,   if you region already has strong momentum in that entrepreneurial area and that mark may have the support of mature adjacent sectors,  then it could be a strategic play.  You really have to look at the competition before jumping in though.
  • Looking at cluster intersects can be a game changing strategy,  even for your mature sectors.   Combining a horizontal with a vertical sector could be a multiplier.   For example:   Add a IOT focus to a manufacturing or agriculture cluster strengthens both sectors in your region and could create dynamic opportunities.   Combining mobile into healthcare or supply chain could amplify all your mature businesses and share the cost of the innovation and R&D.

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20140926-US Cluster Mapping Launch Michael Porter- 1I was able to have several follow-up meetings with the Federal EDA and some of the analytics partners.   We where exploring some partnerships around the next level of economic big data that could be generated around innovation centers.   This could provide much greater insights into regional activities and innovation plus expand the language of cluster development and metrics.   This effort will continue as regional cluster planning comes into focus across a number of cities we are currently engaged with.   I should also mention that these innovation centers with clear focus clusters are key landing pads for the international corridors programs we are developing to connect global clusters and innovation.