Tech highway for a mega-region

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Companies in the corridor, almost 6,000 of them, spanning the software, photonics, wireless, cleantech, digital media, life sciences, and microelectronics sectors, employ more than 250,000 people. There are almost 30 universities and colleges along the Ottorloo corridor.

By James Bowen and Tony Patterson
From SCAN's Print Edition

Ontario’s high tech regions are building an economic highway to link themselves tighter as the ecosystem idea of economic growth gains traction (SCAN issues passim, search ‘ecosystem’ here on the SCANsite). Funded primarily by Queen’s Park and nicknamed Ottorloo, the freeway has various official names and guises. First is the Ontario Technology Corridor (OTC), now a couple of years old but little publicized until recently (the website was launched just last month). OTC links Ottawa, Toronto and Waterloo as the heart of high tech in the province, which in turn is the heart of one of 10 tech mega-regions in North America.

Economic development agencies of the three cities have formed the MaRS Collaboration Network (MCN) to help start-ups and entrepreneurs overcome hurdles. OCRI (Ottawa Centre for Research and Innovation) in Ottawa has imported some training methods from MaRS (Medical and Related Sciences) in Toronto, and in turn is exporting its highly successful Entrepreneur’s Edge program to Communitech in Waterloo.

Ideas are great, real products and services even better, but business plans are needed in order to access capital ─ not just private capital, but public funds, such as the $29 million Ontario Investment Accelerator Fund. Executives-in-residence (EIRs) at the three agencies help build business plans and serve as mentors for SMEs ready to take a next step. Peter Becke, a longtime Nortel exec and former CEO of Cybercore, fills this role at OCRI, as does ex-Ottawan Dan Mathers at Communitech.

While Ontario’s tech corridor is in essence a grouping of companies along a fixed route through the economic heart of the province, tech commercialization, with arteries extending everywhere, cannot be so narrowly defined.
“Anywhere colleges or universities have a quality technology or entrepreneurship program, we are seeing local capability growing,” says Andrew Fisher, EVP of investment firm Wesley Clover. “We are interested in a variety of tech startups, and we’re finding lesser-known centres are doing joint innovation with the tech centres such as Ottawa. Places such as Sudbury and Sault Saint Marie have highly skilled tech people. Sudbury, for example, has a strong tech community with around 200 computer animators working for one of our media investments, March Entertainment.”

A strong commercialization web embraces regional, niche contributions. It also reaches out globally to create better solutions/products through joint initiatives.

MCN works with the next generation. OTC takes the ready abroad. They’ve done five missions to California, one to Washington and four to Europe, including one just returned from England. While out there, they spin tales of Ontario’s Technology Corridor that even people in Ontario don’t know, or don’t much think about, such as:

• Companies in the corridor, almost 6,000 of them, spanning the software, photonics, wireless, cleantech, digital media, life sciences, and microelectronics sectors, employ more than 250,000 people.

• National and international firms have homes here ─ Google, IBM, RIM, Adobe, Cisco, Microsoft, Toyota, GlaxoSmithKline, Nortel and Xerox are just a few brand names. OpenText and RIM are two with significant operations at both the Ottawa and Waterloo ends of the corridor. “RIM is based in Waterloo and that is its largest operating location,” says Mike Darch, who manages OTC for OCRI. “But much of its software development – one of its fastest growing operations – is done here in Ottawa.”

• There are almost 30 universities and colleges along the Ottorloo corridor, many offering internship and co-op education programs highly responsive to technology industry needs. Their extensive R&D facilities are augmented and often work collaboratively with the network of federal labs, including the National Research Council, provincial centres of excellence and basic research centres such as the Perimeter Institute in Waterloo or Guelph’s Barcode of Life project.

Innovation and commercialization are done globally. Gone are the days when managers could gleefully kill an idea by pronouncing it was “not invented here.” Gone, too, is any call for locally made tech products and services. A web of product development initiatives and “go-to market” channels spanning the province, the nation and the world should be forming around local tech companies. But are they?

As each generation of technology becomes more complex and markets more global and fragmented, it becomes increasingly difficult for a single company to do it all. A key part of a business plan is the ability to build a collaborative network. This network becomes a web of activities designed to achieve growth. Companies in the network all have unique attributes. They can operate in diverse locations but, as a whole, become an ecosystem of world-class capability. At the core is often an anchor company that provides funding or the path to market for the integrated output of all the smaller organizations. They are joint initiatives spanning the globe.

Not surprisingly, open source companies tend to have an edge when it comes to initiatives that cross regions. The very nature of their development approach elicits pan-regional co-operation. Open Health Tools (OHT), an international open source organization formed in 2007, is aiming to accelerate implementation of electronic health information systems. OHT was established by the Eclipse Foundation in Ottawa, and Health Level 7, headquartered in Ann Arbor, Michigan. Currently the OHT project has over 30 member organizations in North America, Australia, the UK and continental Europe.

Among larger companies embracing joint initiatives is Nortel, which is working with smaller organizations throughout Ontario to find “creative ideas and move them into products and solutions,” says Nortel’s chief architect Peter Carbone. In Kingston, the company is doing optical research with Queen’s University. In Waterloo, it “has contributed equipment to spur development in the areas of real time operating switch software and wireless technology,” says Mr. Carbone, noting that Nortel joint projects take into account a region’s strengths. In Ottawa, the company is pursuing co-development projects in open source technology.

“As new companies start to grow, they need help to sell to the big customer because big customers can’t handle dealing with lots of little companies that only have parts of a solution,” says Mr. Carbone. “There is a gap in the market, and networks are needed to help small companies to get to the next level. We need these virtual networks to be broadly extended and make these connections across regions.”

Such networks are forming in renewable energy, multimedia, security and defence and environmental technologies – all discussed in recent editions of SCAN (searchable by keyword on the SCANsite). There is not a lot of evidence of company-level product co-development or marketing initiatives along the Ottorloo corridor, but there is some OTC flow of capital. Major Ottawa players Allen Vanguard, in security, and Enablence Technologies, in optical networks, received much of their funding from Paradigm Capital in Toronto. Waterloo-based vencap company Tech Capital Partners has a portfolio of 14 companies, of which 11 are local to Kitchener-Waterloo. Two of the other three (Overlay.TV and Sidense) are in Ottawa and the third is in Toronto. Ottawa-based vencap company Celtic House Venture Partners provided seed capital for Waterloo’s Sandvine Inc. at startup in 2001. Last year Sandvine did nearly $75 million in business.

Ken Wigglesworth, senior managing director at Newbury Ventures, sees investment as a key strand in the commercialization web. Newbury Ventures is headquartered in California but has an office in Ottawa that provides a pathway for knowledge and contacts to flow between the two regions. “The network of contacts becomes larger through the investment companies and allows each region to leverage the other,” notes Mr. Wigglesworth.

Adam Chowaniec, chairman of Tundra Semiconductors also recognizes that the key to mega-region interaction is recognizing niche contributions from each part of a region as part of a bigger solution. It is a practice ingrained at Ingres Canada, which is working with partners in Japan, China, Spain and the US, as well as DM Solutions Group in Ottawa, to develop technology for storing map data in Ingres’s relational database and putting it into its routing and geo-coding software. The company is also working with global partners to develop a conference archiving product based on Linux and off the shelf hardware, which “allows for capturing great talks by open source experts around the globe and sharing them for free online,” says Andrew Ross, director of development at Ingres.

James BowenuOttawa’s Telfer School of Management. If you have ideas for future management, market or technology issue focused articles, send them to jbowen@ces.on.ca.
Tony Patterson is editor and CEO of SCAN
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