Have the feds finally found the right way to back winners?

By Leo Valiquette

Leo Valiquette is a consultant with Francis Moran and Associates

Government, particularly Canada’s federal government, isn’t known for being a bold early adopter of new technology and certainly not an entity eager to play the role of guinea pig.

But recently, six Ottawa-Gatineau technology companies were awarded contracts through Public Works’ Canadian Innovation Commercialization Program (CICP), ranging in value from $71,500 to $565,000. Four other local firms had already secured contracts through the program since its launch in 2010, in addition to a host of others across Canada.

Public Works describes the program as “connecting Canadian companies with federal departments and agencies that have a need for innovative products and services. By selling to the federal government, businesses can demonstrate the value of their products and services, and potentially generate future sales to non-federal customers.”

Bureaucrats can be champions, too

Early in this series, we discussed the nature of the role which government is best suited to play in the commercialization ecosystem. We quoted from The Way Ahead: Meeting Canada’s Productivity Challenge, by Tom Brzustowksi, RBC Financial Group professor in the commercialization of innovation at the University of Ottawa’s Telfer School of Management.

Brzustowksi wrote, “I believe that it is only the private sector that creates wealth.” The public sector, on the other hand, is a consumer of wealth in order to bankroll the two fundamental roles it plays. First, it provides the “supportive and normative framework for wealth creation by the private sector” through laws, regulations, treaties, incentives and so forth. Second, it is a “concentrator of resources assembled through the tax system” to pay for things like education, healthcare and infrastructure.

Both points are most certainly true. But government can also play the important role of champion. What is a champion in the context of getting technology to market? We explored that question too last year with Didier Leconte, president and director general of MSBi Valorisation, and Thomas Martinuzzo, project manager for business development, sciences and engineering at Gestion Univalor, both active in Quebec’s technology transfer scene.

According to Leconte, a “champion” is someone with decision-making authority within an established organization, perhaps a future CEO, who sees the value in a new technology and will support it by either investing money and resources into it, and/or adopting it within his or her own organization.

Leconte and Martinuzzo’s idea of “champions” also applies another way – established companies must be willing to share their needs, their pain points, and challenge both R&D folk and entrepreneurs to develop relevant solutions they can use.

“To commercialize, we need companies with an innovation vision willing to share risk,” Martinuzzo said.

Red flag, or the right step?

It appears that the federal government is certainly embracing the role of champion through CICP, which is budgeted at about $40 million a year. In the recent announcement, one of the six local companies that garnered much of the media attention was Solana Networks. This startup with only 10 staff is engaging in a six-month trial with DND, in which the federal department will serve as a test bed for Solana’s cyber security technology and to conduct security evaluation and vulnerability assessment studies.

Securing these contracts is no cake walk. As can be expected of government programs, there is an exhaustive, multi-round evaluation process. This should of course raise a red flag that bureaucrats who are seldom on the leading edge of technology trends and have little if any experience with competing in the private sector are in the position of trying to pick winners and losers. That alone could be enough to tarnish the whole initiative with the same sour aftertaste as the Technology Partnerships Canada program from the previous decade, which was once described by the Canadian Taxpayers Federation as a “sinkhole for tax dollars.”

However, this time around, our government of the day is relying on the input of an external innovation selection committee “of which the majority of members are from the private sector, are chosen based on their experience in investment and entrepreneurship; knowledge of innovation and commercialization trends; and knowledge of international business practices.” Without knowing who these individuals are, I can only assume on faith that they are a positive influence.

At a time when the IT consulting industry remains wary of what changes are in store with the federal government’s drive toward shared services, a program such as CICP is reason for optimism that the Harper government is putting serious effort into fostering innovation and, more importantly, commercialization in Canada’s technology sector. We can only hope that the entrepreneurs, executives and investors who understand what it takes to get great technology to market and have firsthand experience doing it will play primary roles in moving this agenda forward.

Francis Moran
Francis Moran
Francis Moran is principal of Francis Moran & Associates, a consultancy that provides business-to-business technology ventures with the strategic counsel required to make their innovations successful in a highly competitive marketplace. Francis can be reached at [email protected].

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