How to supercharge Canada’s superclusters
When it comes to economic development, Canada has long faced the twin challenges of density and scale. Clusters are supposed to help solve that, by bringing together researchers, commercial operators, entrepreneurs and investors, with a clear purpose and bold ambition.
In 2018, Ottawa set out to build a new model through a “supercluster initiative” that earmarked $950 million over five years for five major collaborations to lay a new Canadian foundation in oceans (Halifax), AI and supply chains (Montreal), advanced manufacturing (southern Ontario), proteins (Saskatoon) and digital technologies (Vancouver). Another $60 million was added in the recent federal budget.
The goal: to get Canada out of the relegation league for innovation as measured by cluster development (16th in the OECD), private sector collaboration (19th) and university-industry collaboration (19th).
While it’s too early to judge its success, the policy’s primary architect, John Knubley, has written an important assessment for the Brookfield Institute. Knubley was deputy minister of Innovation, Science and Economic Development when the program was launched, and has since retired from government.
Despite those obvious biases, his critique is worth reading. Here are some of my takeaways:
1. The clusters need more time and money — a lot more. The initial plan was to give each effort, on average, $40 million a year, which is a pittance compared to what the Americans, Germans, Israelis and Chinese spend. These are decades-long commitments, and will require billions.
2. Business is more interested than many had expected. According to Knubley, privatesector investment could well exceed government investment by 1.4:1 by the end of the five-year period.
3. Politics can bog down progress. Politicians are more interested in jobs than innovation, and bureaucrats continue to find ways to dampen the ambition. The blatant political geography of the initiative is another weakness, as they can be perceived as pawns of regional economic development rather than engines of global growth.
4. The economy has changed. The clusters were conceived for a different economic outlook, and while a few of them — the digital team, for instance — have moved quickly to address COVID-19, they need more reorientation. The Biden economic agenda, the acceleration to Net Zero and growing tensions with China were not part of anyone’s 2018 plans. They should be now.
5. Like Canada, the clusters often think too small. Rather than making a few big transformational bets, most are investing in scores of smaller ones and relying on what Knubley calls process innovation. That kind of portfolio approach is fine — it’s how Silicon Valley works — but only if you’re willing to ditch the investments that aren’t delivering 10x results.
6. The same cautious view may hold back the overall initiative. I once suggested that at the end of the five-year period, the government might want to pick the best 2 initiatives and give them each extra $500 million, effectively doubling the overall cost. Would Ottawa wave have the stomach for Supercluster Survivor? Probably not. But a bit more creative destruction help.
7. The clusters need to be more globally ambitious. Some still debate whether to be regional or national in focus, when they need to represent Canada’s ambitions for the 2020s, whether it’s to feed the world or use data to solve climate change. There’s some evidence of change: the digital supercluster is working with India on clean tech and ag tech, and the oceans group is pursuing partnerships with Norway for digital ocean monitoring and aquaculture. More of that would be good.
8. They need to focus even more on talent. Can the superclusters insert themselves in work-integrated learning programs to get coops and interns driving change? Can they connect with lifelong learning initiatives to help out-of-work Canadians find opportunities in growth sectors? And can they become magnets for a strategic immigration policy coming out of the pandemic?
There’s plenty to watch, and question, but the effort represents the sort of ambition Canada often lacks. With more adjustments, and perhaps more funding, it may even get us out of 16th place.
