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Who Will Be the Winners in Innovation Superclusters Initiative

August 29 2017 | 12:08 pm BY Brian Cookson | Government Funding

In its 2017 spring budget, the federal government of Canada announced that it would select and contribute $950 million for the establishment of four or five Superclusters in Canada. At the time of announcement, the government asked industry and technology groups to submit proposals by July 22 of 2017. In response to government request, over 50 letters of intent have been received from various companies, far more than the government had expected. Examples of applications ran from advanced manufacturing; AI/Machine learning/Big Data; Forestry, green chemistry, to genomics, aquaculture, energy agriculture and plant-based protein.

The Global Innovation Index is a report that has been produced for the last 10 years, ranking over 120 countries in Innovation. The most recent index looked at innovation clusters and ranked the world’s top 100.

Canada’s first cluster ranking comes in at number 47, with Montreal ranking at 47 followed by Toronto at 48. The US, China, Japan, and South Korea hold the top 5 spots in the ranking. So it seems that there is plenty of room for Canada to rank higher internationally in scaling and coordinating stronger tech and business clusters. According to a recent paper by Brookfield Institute on the role of government in supporting clusters, the initiative’s most important goal should be “overcome market failures that would otherwise inhibit the development of strong clusters”.

The benefits of clusters can be summarized as follows

- Matchmaking: clusters provide a common marketplace to bring together companies, researchers, customers and investors. For example a company that comes up with a world-class innovation could find international customers are attracted to the cluster and in turn to the company

- Supply Chain: clusters strengthen supply chain relationships

- Talent: clusters can attract top talent ( i.e Silicon Valley)

- Innovation Adoption: large firms will have access to young firms improving connectivity and sharing risk

- Innovation Intelligence: clusters can act as a key source to inform governments on the challenges to innovation and growth, which can drive policy changes that in turn can lead to better fostering of innovation

It makes sense that established clusters that have grown organically should be seriously considered for selection. In addition, how the supercluster will function will be critical.

Key principles for the development of a supercluster should include

- Market Demand: clusters should be addressing real business needs. Needs that can attract both domestic and international customers

- Risk Sharing: Both the private and public sector should commit funds, people, and other resources so that all parties have serious vested interest in the outcome of the supercluster

- Multiple Partners: In addition to public sector agencies, there should a sizable and proportionate mix of large, SME and start-ups collaborating with each other. These partners also include customers and investors.

- Global Recognition and Scale: Certain recent clusters like Tech City in London UK, have marketed the cluster very well with a bold vision that has attracted international recognition and participation

- Strong Governance: To function optimally, cooperation and collaboration among cluster actors is key. Cluster organizations can be formed to develop strategic direction, branding and identity and act as intermediaries between many clusters. The Brookfield Institute points out that initiatives to grow and strengthen clusters have mostly been led by cluster organizations in Europe.

While it has widely publicized the overarching goals of this initiative, the Canadian government has yet to comment on the specific performance indicators and metrics that will be used to measure the success of its cluster policy. We expect this to take place once the cluster organizations have been selected, and that the metrics will be developed in close collaboration with these organizations with the goal of driving priority outcomes. It has been suggested that the government should establish an independent organization to track cluster results, evaluate funding recipients and provide administrative advisory services that guide future investments in new clusters and wind-down of investment in exiting clusters.

As to which key technology sectors we can expect to receive this support, a key strategy the government could employ to drive long-term economic gain would be focusing on platform technologies, which are technologies that are used across many industry sectors. We already see this in action with the formation of new research institutes and initiatives around artificial intelligence and machine learning across the country.

Those involved hope will drive increasing collaboration among businesses across a range of verticals. So far, this has resulted in creation of the Toronto-based Vector Institute, which was launched officially this spring, with additional support from the Government of Ontario, University of Toronto (U of T), and players in the private sector such as Google, Shopify, Uber, Loblaws, Air Canada, Telus, FreshBooks and Deep Genomics, to name a few. You can read more about the government’s focus on AI in this blog post. Chances are good that at least one (if not more) of the Innovation Superclusters will be AI-focused.

The excitement around the development of Canadian Supercluster Initiative is palpable among business leaders across the country. If carried out properly and as planned, it would be a major win for Canada’s innovation ecosystem, academic institutions, its global status as an innovator, and for the country’s ability to attract much coveted educated talent in various aspects of the tech sector.

RDP is closely tracking this race and measuring its momentum through its network of business leaders, clients, and policy advisors. So do not hesitate to contact us if you have any questions about the pace of progress in the development of Superclusters.

Brian Cookson is President and Managing Director of RDP Associates.
For the latest developments on Canadian Superclusters, contact RDP at:
[email protected]

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