LOUD AND CLEAR by Denzil Doyle

While many government labs operate incubators that provide accommodation to entrepreneurs, very few of them of them add real value to those startups; in fact, very often, their pursuit of short- term dollars jeopardizes the chances of a startup.

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Enough sophistication already, just measure economic returns
From SCAN's Print Edition

It will soon be a year since the Prime Minister unveiled Canada’s science and technology strategy in a document entitled “Mobilizing Science and Technology to Canada’s Advantage”. It is 103 pages long and it pretty well covers the waterfront in terms of the issues that the industry has been debating for years. That is not to say that it has all the answers to all of our problems, but it is interesting to see how often it is referred to in submissions for some of the $10 billion or so that the Government of Canada spends each year in support of S&T activities.
What is a little disconcerting is to see only about a half page devoted to the subject of measuring the impact of those activities. Section 6.3 calls for “Greater Sophistication in Measuring the Impacts of Our Science and Technology Investments.” While the intent is to be applauded, the choice of words is discouraging. What we do not need is any more sophistication. Mountains of material have been written on this subject over the years and very little of it is understandable by those of us who are part of the industry, let alone the average Canadian. What we need is more clarity in the debate.

The main trouble has been an inability (or refusal) on the part of the people who produce these reports to differentiate between social and economic benefits. They throw them all into the same pot along with lots of fancy arithmetic and out comes their version of benefits. About a year ago, the federal government issued a report that concluded that the payback from the research performed in our government laboratories was of little or no economic value. It caught my attention because, at the time, I had just completed a study for the Communications Research Centre that identified 62 companies whose origins could be traced to the transfer of either technology or people from CRC. Those companies had annual sales of $1.6 billion and employed over 6,000 people. During the previous fifteen years, CRC had generated over $33 million from the licensing of technology to these and hundreds of other companies around the world. Those sound like economic benefits to me.

Any attempts to quantify benefits from a publicly funded laboratory should be confined to economic benefits ─ benefits that are related to corporate sales, jobs, profits, and taxes and that occur as a result of extracting products, services, and processes from the technology produced by the laboratory. The extraction vehicles can take the form of either new companies or new product lines in existing companies. It is not that difficult to construct a diagram on a single sheet of paper that shows all of the above parameters as well as the flow of dollars, both in and out.

The flowback takes the form of tax dollars that come to government as well as licensing and cost recovery dollars that flow directly to the laboratory. But because the laboratory costs are much more visible and immediate than the tax dollars, they get the most attention from policy makers and the people who manage the labs. The net result is that very few of our government laboratories are in the business of creating spin-off companies anymore. While many of them do operate incubators that provide accommodation to entrepreneurs, very few of them of them add real value to those startups; in fact, very often, their pursuit of short- term dollars jeopardizes the chances of a startup.

The government does say that it “will improve its understanding of Canadian S&T developments and the impact of federally performed S&T, and will work with the OECD and other countries to develop metrics that will enable comparisons against international benchmarks of success.” That sounds good to me, but go easy on the sophistication.

Guru in one guise, angel in another, Denzil Doyle is a member of the Order of Canada, a professional engineer, founder and former CEO of Digital Equipment Corp. in Canada, company director, mentor, consultant, investor and author of the best-selling ‘Making Technology Happen’. He can be reached at ddoyle@doyletechcorp.com.

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