AAAS: Scientific minds on business solutions

Elizabeth Howell
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It doesn't matter where a business conference is held these days – the challenges faced by research-intensive companies attending are all the same. Declining budgets. A lack of venture capital. Global competition.

Jonathan Linton, professor at the Telfer School of Management.

More importantly, the American Association for the Advancement of Science meeting in Vancouver last month focused on solutions that have applications here in Ottawa.

Research in Motion co-founder Mike Lazaridis talked about how to bring "shop" and scientific thinking together to come up with new business ideas.

University of Ottawa professor Jonathan Linton outlined how companies can pick the best technology from which to get a return, without spending too much money in the process.

And federal politicians and bureaucrats outlined their approach to supporting small businesses even in light of looming federal budget cuts.

Thousands of businesspeople, scientific minds and interested researchers in Vancouver heard what they had to say.


Picking R&D winners

Companies must make all individual research projects work together in a portfolio to rapidly bring technology to market, according to the members of one panel.

But it is difficult for companies to gauge the associated risks and potential for return, in contrast to investors in financial products, noted one Ottawa-based researcher.

Financial assets are based on market risk and a large number of people completing transactions, noted Telfer School of Management professor Jonathan Linton.

By contrast, research assets are based on both market and technical risk with smaller economies of scale in which to demonstrate the technology.

"We don't have efficient markets, like financial markets do, and there's a difference in the underlying (calculations)," the University of Ottawa professor told a room of about 75 researchers.

The solution, according to a senior director and fellow from Alcatel-Lucent's Bell Labs, is to undertake a system analysis that takes all business interests into account: shareholder value, budget projections and potential applications.

Joseph Morabito said the best projects are those that have multiple applications – a power supply, for example – and are an emerging technology in which a company has expertise.

But Bell Labs is best known for work done before being spun off from AT&T in 1998 – inventions such as the transistor, laser and Unix operating system.

The challenge today is pockets are not as deep, forcing efficiency from the beginning, Mr. Morabito said.

"We try to do our advanced testing at the design phase," noted the New Jersey-based researcher, a move that saves the global firm money since the product has not yet been manufactured.

Alcatel-Lucent, which is based in Paris, has a considerable presence in Ottawa where employees research technologies such as IP infrastructure for peer-to-peer networking, as well as spam and malware mitigation.


Dissecting the Jenkins report

A recently released report aimed at overhauling how the federal government supports research and development is only a start at improving this country's troubling productivity track record, according to both an opposition MP and the head of a large scientific government agency.

Their suggestions ranged from targeting different industries in different ways to focusing on more direct tax subsidies for small firms looking for a leg up from government funding.

"One size fits all will not be effective," said Suzanne Fortier, the president of the Natural Sciences and Engineering Research Council of Canada, in an interview following a panel discussion.

The Jenkins report, which was led by OpenText chair Tom Jenkins and which said Canada is falling behind in R&D despite generous tax incentives for innovation, was done in a limited time, she said.

But she added it appears to treat all businesses "as a homogeneous entity," without separating them out by sector.

NSERC has tailored programs for different industries such as forestry, and also has a two-year-old initiative called "Engage Grants," which gives projects up to $25,000 if they have a good business idea and an effective relationship between university researchers and the private sector.

Ms. Fortier framed the latter grant as a good way to get return for investment in a limited financial environment.

Quebec NDP MP Hélène LeBlanc, the party's critic for science and technology, sided with one of the report's conclusions that Scientific Research and Experimental Development, or SR&ED, tax incentives were too complicated for smaller business.

The program gives companies cash refunds or tax credits for their spending on certain types of R&D work done in Canada.

"What the (small and medium enterprises) said (to me) about that program was it was complex, it was hard to access. Or they were maybe not aware that they could apply for it, or they didn't qualify for it. That was one of the things that came up," Ms. LeBlanc said.

By contrast, the Industrial Research Assistance Program has always proved quite popular with the small businesses she's had a chance to talk to, she said. These direct programs should be where the government focuses its attention, she said, rather than indirect ones such as tax credits.

While saying she was too new to the portfolio to comment on which sectors are being effectively targeted by these programs, she pointed out that there are concerns common to all businesses that she is working to address, such as the lack of available venture capital.

The Conservative government is expected to change the way it funds R&D and implement some of the Jenkins report recommendations in its spring budget.


Productivity primer

Some of the recommendations contained in the Jenkins report:

1) Create an Industrial Research and Innovation Council with a clear business innovation mandate, including delivery of business-facing innovation programs, development of a business innovation talent strategy and other duties over time.

2) Simplify the SR&ED program by basing the tax credit for SMEs on labour-related costs. Redeploy funds from the tax credit to a more complete set of direct support initiatives to help SMEs grow into larger, competitive firms.

3) Make business innovation one of the core objectives of procurement, with the supporting initiatives to achieve this objective.

4) Transform the institutes of the National Research Council into a constellation of large-scale, sectoral collaborative R&D centres involving business, universities and the provinces.

5) Help high-growth innovative firms access the risk capital they need through the establishment of new funds.


Jim, who?

Mike Lazaridis had little to say about the company he once helmed in a 45-minute lecture.

In a speech less than a month after he stepped down as Research In Motion Ltd. co-CEO along with Jim Balsillie, Mr. Lazaridis said nothing about the shakeup at the top, BlackBerry's declining market share and financial fortunes, or the tumble company stocks took on the TSX, focusing instead on his childhood.

Mr. Lazaridis recounted stories he previously gave in a 2008 oral interview with Computerworld, outlining the steps that led him to "an inventor's life."

He then expanded into a soliloquy about the importance of "blue-sky technology" in driving new innovations, knowledge he said he acquired as a shop student in high school.

The math and science major saw boxes of new electronics littering the shop, and asked his teacher – Mr. Micsinszki – if he could use them. The answer was yes, as long as Mr. Lazaridis read and understood the manuals. By summer's end, every box was open.

"It was one of the defining experiences in my life," Mr. Lazaridis said. "The manuals and the equipment showed me the connection between the abstract science and math (in classes) upstairs and the devices I could use within the shop downstairs."

And it is research for research's sake that has led to innovations, he added, citing examples such as Einstein's theory of relativity. It led to unforeseen applications such as car starters, lasers, medical devices and DVDs.

Non-conventional research such as this, he said, will help society solve the problems of energy sources hurting the environment, and the encroachment of Moore's Law limiting the speed of electronics.

"At this time we have this enormous need for value creation," he said.

Mr. Lazaridis only mentioned RIM and BlackBerry in passing during the speech, except for outlining a thought experiment involving sending the device back in time to James Clark Maxwell, the person who discovered the link between electricity and magnetism.

The experiment was to demonstrate the importance of ideas over devices, as the famed Mr. Maxwell "would have no idea what to make of a BlackBerry."

Mr. Lazaridis left the stage abruptly after his talk without taking questions from the audience, which numbered in the hundreds, or from journalists.


Elizabeth Howell was one of 17 working Canadian journalists who received an award from the Canadian Science Writers' Association and EurekAlert! to attend the AAAS conference.


Organizations: University of Ottawa, American Association for the Advancement of Science, Alcatel-Lucent Bell Labs Telfer School of Management Natural Sciences and Engineering Research Council of Canada Research In Motion Ltd. Industrial Research and Innovation Council National Research Council TSX Canadian Science Writers

Geographic location: Vancouver, Ottawa, Canada Paris

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Recent comments

  • SteveB
    March 08, 2012 - 21:19

    Said it before... will say it again. Picking winners and losers is difficult if not impossible in new technology. Would a government bureaucrat responsible for winners and losers have put money into Facebook, Twitter, 4square or any other social media phenom? Not likely... do they even have an account today? Do they understand the current market in apps development and mobile communications? Doubt it. People who are willing to put their money where there mouth is should get the refundable credit for their investment. That investment is called skin in the game and is recognized as important for a company's success in the investment community. If you want to increase the refund %, then great! As for Tom J... "His" company (Opentext), which came out of Waterloo U and he joined after the fact was an anomaly. It was the search engine for Yahoo, and its stock traded regularly in the 90s for the cash value of its Yahoo shares!!! If it needed cash, it could simply sell some Yahoo stock. It is hard to loose with an essentially infinite runway that the situation provided. No doubt he did some good work, but to base Canada's future of R&D on an anomaly in a bubble is absurd! That would be like an enigma wrapped in a riddle... Which is not a basis of R&D policy.

  • James Colliander
    March 08, 2012 - 15:15

    The Jenkins Report also indicates that NSERC's mission has drifted away from supporting basic research. The future is filled with new industries not yet created. Why transfer funds from basic research and discovery to programs like Engage which only benefit current industries? Why are the statistics showing how many Engage grants have led to conversion into Collaborative Research and Development grants not available? Young basic researchers in Canada are asking: why can't my innovative ideas be explored if there is not a short term industrial application? The benefits of basic research are not always understood at the time of discovery.