The Conference Board of Canada Myths & Realities in the Innovation Pipeline:

1. The Conference Board of Canada Myths & Realities in the Innovation Pipeline: Lessons from Other Sectors Presented to: ACAHO Fall Invitational Conference November 3, 2006

2. Presented by: Brian Guthrie Executive Director Networks, Innovation & Knowledge Management The Conference Board of Canada 613-526-3090 x364 guthrie@conferenceboard.ca http://www.conferenceboard.ca/inn/ici/

3. CBoC and Innovation

4. About the CBoC “Building leadership capacity for a better Canada…” • Independent, not-for-profit applied research institute. • Specialists in economic trends, organizational performance, public policy. • Members and clients from all sectors across Canada and the world. • 200 employees.

5. Insights You Can Count On Interacting Products & Services Executive Networks Customized Research & Tools Workshops& Study Tours Public Conferences Publications

6. Selected Publications • Picking a Path to Prosperity: A Strategy for Global Best Commerce • Exploring Canada’s Innovation Character – Benchmarking Against Global Best • Biotechnology in Canada: A Technology Platform for Growth • Lessons in Public-Private Research Collaboration: Improving Interactions Between Individuals • Trading in the Global Ideas Market • Clusters of Opportunity, Clusters of Risk • Collaborating for Innovation

7. Innovation Research & Tools • International Innovation Benchmarks • Annual Innovation Reports • Index of Corporate Innovation • Learning Performance Index • Innovation “Playbook” for Mature Industries • Innovation Skills Profile

8. Selected Executive Networks • Centre for Health Care & Innovation • Leaders’ Roundtable on Health HR • Centre for Health System Design & Management • Centre for Biotechnology & Competitiveness • Innovation Council • Council for IT Executives • Knowledge Strategy Exchange Network

10. Centre for Health Care & Innovation • Networking & qualitative benchmarking between innovative orgs. • Three-Phased Research Project: • Characterizing Innovation in Today’s System; • Towards a Better “Business Model” for Innovation; • Visioning Innovation in Tomorrow’s Health Care System.

11. Ten Myths • Innovation is a linear process. • Individuals can excel at all innovation skills • Creating ideas is the hard part. • More research means more innovation. • The best new ideas come from researchers. • Other countries have it right. One size fits all. • Academics and business people can’t work together. • Investors make decisions based on analysis. • Start-ups are a good measure of commercialization. • We should invest in a little bit of everything.

12. Myth #1: Innovation is a linear process

13. Innovation Framework Innovation Environment Creation of knowledge Use of knowledge Value Diffusion of knowledge Innovation Environment Transformationof knowledge Source: The Conference Board of Canada.

14. Defining “Innovation” “A process through which... economic or social value is extracted from knowledge…through the creation, diffusion, and transformation of ideas…to produce new or significantly improved products or processes.”

15. Myth #2: Individuals can excel at all innovation skills

16. “Do you really want your accountants and QA people to be innovative?!”

17. Three Key “Actors” in the Innovation Process Creators: Thinkers / Researchers / Inventors. Commercializers: Entrepreneurs / Marketers / Implementers / Doers. Managers: Planners / Organizers. No one individual or institution excels in all three… Knowledge-sharing & teamwork are essential for innovation!

18. Innovation Competencies Commercializing Creating Managing

19. What If... • We built innovation & knowledge teams based on the three recognized strengths (“actors”) above? • We left creators to think; Challenged commercializers to expand markets; Allowed managers to focus on team-building, partnering, knowledge sharing? • Knowledge sharing focused on the interaction between the three “actors”.

20. Myth #3: Creating ideas is the hard part

21. 3,000 : 1

22. A More Efficient Innovation Pipeline? Source: Stevens & Burley; "3,000 Raw Ideas = 1 Commercial Success"; Industrial Research Institute; 1997.

23. Myth #4: More research means more innovation

24. Research is a necessary but not sufficient condition for innovation.

25. Myth #5: The best ideas come from researchers

26. A Tale from November 2002…

27. Bumper Sticker Wars BUY THE CAR YOUR NEIGHBOUR BUILDS

28. Bumper Sticker Wars BUILD THE CAR YOUR NEIGHBOUR BUYS

29. 80% Customers or clients; 54% General literature; 52% Technical literature. 37% Suppliers 25% Universities 25% Consultants 24% Gov’t labs 22% Competitors 18% Associations 12% Bankers / VCs 11% Consortiums 11% Communities 10% Standards Groups Sources of New Ideas How often does your company use the following sources, partners, and/or networks when gathering new ideas and identifying new opportunities? Source: CBoC, AIR 5 Survey

30. Myth #6: Other countries have it right

31. Selected Benchmarks (1) Canada’s rank (out of 11 comparator countries, Leading Benchmarks unless otherwise noted) country Knowledge Performance Gross domestic expenditure on R&D as a per cent of GDP 7 Sweden Business enterprise expenditure on R&D as a per cent of GDP 8 Sweden Publication of scientific papers per 1 million population 5 Sweden Triadic patent families 8 Sweden University–industry collaboration in R&D 2 (of 10) Germany Technology balance of payments (payments plus receipts) 5 (of 10) Germany Skills Performance Educational attainment in the labour force 1 Canada Human resources in science and technology occupations 7 Sweden Adult participation in continuing education 6 (of 6) Finland

32. Selected Benchmarks (2) Canada’s rank (out of 11 comparator countries, Leading Benchmarks unless otherwise noted) country Innovation Environment Economy-wide regulatory environment 6 United Kingdom Total corporate tax as a per cent of GDP 3 Australia Attractiveness of R&D tax treatment 3 Spain Investment in venture capital 2 United States World Competitiveness Ranking 4 United States Relocation of R&D facilities as a threat to the economy’s future 7 Finland Foreign Direct Investment (FDI) Confidence Index 7 (of 9) United States Community-based Innovation Broadband subscribers per 100 population 1 Canada

33. Canada’s Innovation Character • Collaboration & knowledge sharing; Trading in “the global ideas market”; Connectedness. • Foreign investments in R&D. • Venture capital base. (Japan uses other forms of risk capital.) • R&D tax credits. (Sweden has none.)

34. The Evidence Suggests: • Global best goods & services in selected sectors (e.g., natural resources, telecommunications, software development, transportation equipment, pharmaceuticals, engineering services). • Strong skills foundation (i.e., literacy, and basic science and math skills). • Highly qualified workforce.

35. Opportunities for Canada: • Improve commercialization performance. • Balance government resources and programs between R&D and commercialization. • Increase business investments in R&D, training, machinery and equipment. • Improve understanding of “innovation skills”; Integrate into continuing education, training, immigration policies. • Better integrate professional immigrants into work force. • Foster locally-led community-based innovation.

36. Different Champions Have Different Characters Fly like a butterflySting like a bee Bite his ear off

37. Myth #7: Academics and business people can’t work together

38. 7th Annual Innovation Report Lessons in Public-Private Research Collaboration: Improving Interactions Between Individuals

39. Benefits to Publicly-funded Researchers • Renewed energy • Access to equipment • Use of unique materials • Access to unique areas & facilities • Connecting with new audiences and providing new perspectives • Developing new programs & disciplines • Establishing new companies

40. Benefits to Industry Researchers • Improved visibility and reputation • Networking opportunities • Increased human capital capabilities • Access to specialized talent • Access to unique facilities & equipment • Identification of new opportunities / Launching new business lines • Cost effectiveness

41. Shared Benefits • Leading-edge knowledge • Access to talent • Career mobility / Employment • Confidence: “We’re on the right path”

42. Turnover The most frequently raised barrier Promotion, transfer, fired Students are key, and problematic Institutional Fog Mass confusion of rules, policies and approaches Both for university and industry researchers Widely divergent perspectives about Tech Transfer Offices Key Barriers

43. Critical Success Factors • Trust • Just because it’s obvious, doesn’t mean it’s easy • There appears to be an inverse relationship between level of trust and number of legal documents • Preparation and planning • Getting the beginning right is critical—lack of clarity at the start haunts the rest of the project • Champions • Executive-level champions keep projects afloat, relevant and funded

44. Myth #8: Investors make decisions based on analysis

45. Intuition versus Analysis In the Boardroom

46. Making Investment Decisions Top Practices Source: The Conference Board of Canada, AIR 5 Survey, 2003

47. Myth #9: Start-ups are a good measure of commercialization

48. Poor success rates of startups; Small portion of the economy. • Horror story from AIR7. Why try to turn a great scientist into a mediocre business person? • Collaboration works! Note LRTC targets.

49. Start-up Customers or Markets Applied Research Basic Research Existing company Company ABC “Serial Entrepreneur” Company XYZ Researcher Supplier

50. Myth #10: We should invest in a bit of everything