State of the Nation 2008

3. Foundations for Innovation — Elements of the Innovation System

3.1 Supporting Good Performance

A healthy innovation system requires the right conditions:

Supportive Marketplace Frameworks — Policies and practices that create strong, open, competitive domestic markets where ideas can be taken from conception to application.

Engaged Citizens — Individuals and businesses that demand better quality products and services, for themselves and their communities driving manufacturers and service providers to become more innovative.6

Highly Skilled People — People who have leading edge research skills and people who know how to put new technology to work.

Infrastructure — A modern physical and regulatory infrastructure to ensure the free flow of goods, services and ideas.7

Accurate Measures of Performance — Statistics that better reflect plans, activities, linkages and outcomes of innovation so that we can determine the full impact of innovation on the Canadian economy, and measure how well we are doing against global competition.

Underpinning these conditions is the vital need for collaboration. Greater cooperation and collaboration between the private sector, universities and colleges, all levels of government, and others8 at the regional and national levels strengthen a nation's ability to compete at the international level. Collaboration is also vital to foster multidisciplinary research, which is integral to the knowledge-based economy.

MaRS Innovation

MaRS Innovation

To succeed in global innovation, Canada has to create more homegrown commercialization success stories.

Enter MaRS Discovery District: a Toronto-based public-private partnership.

As a non-profit innovation centre, MaRS connects science, technology and social entrepreneurs with business skills, networks and capital to stimulate innovation and accelerate the creation and growth of successful Canadian enterprises.

This happens physically at the 700 000 sq. ft. MaRS Centre, which is home to a mix of research labs, companies of all sizes — including multinationals, Canada's largest bank and venture capital firms — as well as more broadly through hands-on market research and other advisory services for entrepreneurs, inventive programming and an expanding electronic community.

Anchored by major teaching hospitals, the University of Toronto and more than two dozen affiliated research institutes, the MaRS Centre attracts interest and delegations from across Canada and around the world.

Recent work in the U.S. by Fred Block and Matthew Keller at the Information Technology and Innovation Foundation, which looked at the extent of collaboration between organizations for winners of R&D Magazine's "R&D 100 Awards" from 1971 to 2006, found that:

Whereas the lion's share of the R&D 100 Award-winning U.S. innovations in the 1970s came from corporations acting on their own, most of the R&D 100 Award-winning U.S. innovations in the last two decades have come from partnerships involving business and government, including federal labs and federally funded university research. Indeed, in the 1970s, approximately 80 percent of the award-winning U.S. innovations were from large firms acting on their own. Today, approximately two-thirds of the award-winning U.S. innovations involve some kind of interorganizational collaboration — a situation that reflects the more collaborative nature of the innovation process and the greater role in private sector innovation by government agencies, federal laboratories, and research universities.9

Intense global competition and the rising cost of R&D are changing how companies innovate, and increasing the need to collaborate across firms, universities and governments. More information about the importance of firm collaboration and Canada's performance on this measure is discussed in Section 4.1 of this report.

In order for our innovation system to realize its full potential, all elements must work together to create and nurture the overall conditions under which innovation can thrive in all sectors of the system. Governments have a crucial role to play in encouraging coordination and promotion of S&T. The STIC views the provision of its advice as an opportunity to spur collaboration between the different elements of the science, technology and innovation system.

6 This ranges from a citizen demanding better health care to an individual consumer who buys a product from a store to a large corporation that purchases input parts from suppliers.

7 While Canada was among countries with the highest levels of infrastructure in the OECD as of 2000, its position has been slipping in recent years. Centre for the Study of Living Standards, Assessing Canada's Ability to Compete for Foreign Direct Investment, paper commissioned by the Competition Policy Review Panel, 2008.

8 Including health charities, not-for-profit organizations, etc.

9 Fred Block and Matthew Keller, Where do innovations come from? Transformations in the U.S. national innovation system, 1970-2006 (Information Technology and Innovation Foundation, July 2008); pp. 2-3.