EDITOR'S NOTE: This is the third in a five-part series.
In Part 3 we look at how innovation can drive Atlantic Canada.
Read
- Part 1: New trade deals have Atlantic Canadian exporters feeling bullish
- Part 2: Nova Scotia offshore goes silent; Newfoundland ramping up
Coming Thursday: Start-ups and entrepeneurship
When you ask the definition of innovation, the eyeballs start rolling.
It's one of the most overused words in today’s business vocabulary and subject to wide variations in definition and interpretation.
Is it innovation just because it’s new? Is it a product that makes a business more profitable?
Or is innovation even a physical thing at all? Maybe it’s more of a mindset, a different way of doing things that changes the game. Think Uber or AirBnB.
For some, innovation is an annoying buzzword that is too fuzzy with a whiff of boosterism – thus the rolling eyeballs.
The trepidation is understandable when public money is invested in the name of innovation, and in a region where governments have a track record for funding business enterprises that have ultimately failed.
Big returns on innovation
But dismissing the innovation economy outright isn’t necessarily fair.
When Salesforce acquired New Brunswick social media monitoring start-up Radian6 for $276-million, the New Brunswick Innovation Foundation saw an impressive return of $8.9-million more than its original investment. That is 28 times the original investment for a government organization.
That is a case of extreme success, but having a handful of businesses with two- or three-times return could be a recipe for economic development.
In his report on the future of Nova Scotia’s economy, former Acadia University President Ray Ivany emphasized the role innovation could play in improving the regional economy and lifting the Atlantic region out of its perpetual “have-not” status.
By some estimates, one high-tech job will create a spin-off of five jobs in an economy.
For Malcolm Fraser, President and CEO of Innovacorp in Nova Scotia, innovation is defined as a new and better way of doing things that have value to others.
“When I look at companies with new innovations, I’m looking for the pain they solving and asking if are people willing to pay for it.”
Innovacorp is a government-supported organization that uses a venture capital model to invest in businesses in the early stages. By supporting entrepreneurs and companies that invent new products and approaches to business, Innovacorp wants to generate economic growth and wealth where it did not exist before.
Fraser, himself from an entrepreneurial background, says investment in research and development has traditionally been low in Atlantic Canada, and this has held the region back economically as other economies transform to innovation economies.
“It’s not that we aren’t creative. We create amazing technologies. The commercialization or integrating into existing business is where we struggle the most.”
But Fraser says the tide is changing with a growing start-up sector and ecosystem supporting research, development and the commercialization of innovation.
Looking to the seas for innovation
One of the most interesting innovation developments in Atlantic Canada is occurring in an area we’ve had all along: the ocean industry.
The Ocean Supercluster is an industry-led partnership with governments and research institutions which is designed to grow the ocean-based industry through innovation. Through these partnerships, the Supercluster will develop new technologies for existing businesses, while supporting new ocean-tech businesses.
The federal government has contributed $153 million and a coalition of private-sector companies, such as Clearwater and Emera, matches the funding to create an innovation, research and development fund of more than $300 million.
The Ocean Frontier Institute is another example of ocean-based innovation. It was formed by Dalhousie and Memorial universities and University of P.E.I. to drive research and innovation areas such as sustainable fisheries and aquaculture, marine safety and ocean data systems.
The Centre for Ocean Ventures and Entrepreneurship (COVE) is a research and collaboration facility in Dartmouth which provides space for new companies to develop technologies in the ocean sector.
The idea here is to link up key players in the ocean industry and form a mutually-supportive economic engine that will not end up competing with itself or duplicating products and services.
Volta charging innovation in Halifax
And it’s not just happening in ocean tech. An ecosystem of entrepreneurs and start-up businesses has also been established at Volta in downtown Halifax.
This is another government-supported innovation hub where entrepreneurs base themselves to research ideas, develop business concepts, pitch to potential investors and grow their companies with advice and investment.
In addition to providing mentorship to start-up entrepreneurs, Volta also helps large, established companies build entrepreneurial approaches into their models.
“We are trying to help larger organizations get a little bit of start-up DNA into their organizations,” said Chris Crowell, Volta’s Vice President of Corporate Innovation.
Following corporate innovation models developed in Waterloo, Ont.’s Communitech hub, Volta has created outposts where innovation is removed from the parent company. This speeds up the processes of experimentation, prototyping and – if necessary – failure. It removes innovation from the politics and processes of the larger organization.
“Innovation outposts are really vehicles for hacking a business model. Hacking is a quick and dirty way of doing things,” said Crowell.
Atlantic Lotto is an example of a larger organization working in an innovation outpost at Volta.
The goal of these models, ecosystems, hubs and organizations is not just to create and grow businesses, but to generate an entire economy in which inventing and exporting produce new jobs and tax revenues to pay for services such as healthcare, education and infrastructure.
It is, in other words, regional economic development.
Public money helps
Tech analyst and writer Peter Moreira watches the start-up sector in Atlantic Canada and provides news and data through his portal Entrevestor. He believes the investment of public money in innovation is important for economic development in the region.
“The data shows that the money dedicated to high-growth innovation companies has produced jobs, wealth and exports. In some cases (such as the New Brunswick Innovation Foundation's investment in Radian6), it has even returned money to public organizations. So yes, I would say the investment is worth it.”
Building on the innovation economy requires a change of attitude towards work, university and risk. It abandons the old job-for-life model or the pour-knowledge-into-the-heads of students approach.
Workers form their own businesses and make their own jobs with support from universities, investment and incubators. If enough of them are successful, innovation will be a game changer for the regional economy.
This innovation economy is still in its infancy in this region; in the next five years it will be interesting to see what takes form.
Gail Lethbridge co-founded and exited ocean-tech company Welaptega.
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