a draft OP-Ed re Technology Incubation and the Clean Tech Sector

Green Sector Needs more than Encouraging Words from Government

Economic Development officials the world-over are heavily in pursuit of the next ‘bio-tech’ sector to create new employment opportunities in their Cities. The 2008 version of bio-tech is the ‘Green’ or ‘Clean Tech’ Sector. Toronto Mayor David Miller has talked openly of his goal to brand Toronto as an ideal location for such businesses to locate.

Warning to Businesses! We talk a great game but when the rubber hits the road, expect little support beyond rhetoric and encouraging words.

How so?

First, let me state that Canadian governments have done an excellent job to lay the groundwork for technology innovation. While we can always do better, our Universities are creating dynamic, intelligent and innovative graduates in sciences, math and computer science. In Toronto, one has to look only as far as the MaRS building at College and University (its building program co-funded by all 3 levels of government and private contributions) to see that excellent facilities do exist to incubate and commercialize clean and green technologies.

So in that regard, we are well positioned for the creation of a clean tech sector. However, if incubation spaces exist only to help companies to get to a pre-revenue, pre-commercialization stage, then much of the money we invest in facilities such as MaRS will have been wasted. Not only are those public dollars wasted but further millions of dollars of private investment threaten to fail to generate returns to ‘Angel Investors’ and further reduce the effectiveness of government strategies to grow this sector. If Angel Investors and then Venture Capital begins to look elsewhere, the ‘Clean Tech’ strategy will be doomed.

So while our governments have created these great frameworks, bureaucrats are still left scratching their heads wondering how to position their jurisdiction as a leader in ‘Clean Tech’ development. So what is the problem? Why, with all the investment in education and innovation are we failing to create and attract companies with innovative technologies through incubation to implementation and commercialization? Policy alone cannot stimulate economic growth.

A colleague of mine from a small yet innovative MaRS-based company I work with recently attended a session hosted by Toronto’s Economic Development department. City officials were asking the important questions about how to help grow this sector. Responses from the private sector attendees were fairly succinct and based upon a few mutually shared experiences: “Working with the government is like banging your head against a wall.”

Similarly, I attended an Intelligent Transportation Systems Conference in Montreal where Transport Canada officials asked: “How can we help create new technology to solve our transportation problems.” My answer to the room was that the problem was not in innovation but in implementation. There are lots of great ideas but without public policy ‘labs’ to test technologies and demonstrate their potential, Canadian companies are often forced to shop the world for clients to be first-users and early adopters. In those instances, Canadian companies face protectionism and local advantage that we don’t enjoy at home.

Here is the problem as I see it. Politicians want a clean-air machine. They have, I believe, largely convinced themselves that if they just set up technology incubators and create the conditions for innovation, a magical climate-change reversing ‘pill’ will be invented that we can all take, go to sleep and wake up a week later to ask Dr. Gore if its all better. Unfortunately, such a solution may never come along and I’m a big believer in using the solutions that are at your disposal, even if they are new and untested.

The fact of the matter is, human behaviour and the systems that we have built to support our lifestyles are largely unsustainable and require significant change if we are to tackle carbon challenges such as climate change, smog and resource depletion. That means we all need to change. That we all need to change requires that government mandate those changes – volunteerism only goes so far when it involves economics.

Furthermore, great innovations come in leaps and bounds – not in baby steps or from tinkering around the edges. I’ll paraphrase two of Albert Einstein’s famous quotes that come to mind: “We cannot solve the problems of today with the same thinking that created them” and “if an idea is not absurd at the beginning it is unlikely to succeed.” I also think Steve Jobs makes a great point when he says “People don’t know what they want until you give it to them.”

So what is my point and how does this all weave itself together? Let me get back to that MaRS-based company that I work with. Toronto Star readers may recall Judy Steed’s fine work in 2007 for her ongoing ‘Business Challenge’ reports. Judy profiled Skymeter, whose innovative approach to GPS signal processing has enabled them to create a market-busting approach to road tolling. Forget traditional road tolls – Skymeter’s beauty is the ability to privately and even anonymously charge for roads when and where they are used. To simplify – it’s a smart meter that would collect Gas Taxes or Road Taxes in a similar fashion to how a Water meter determines your bill – based on actual use. Plus it’s also a parking meter that removes all the hassle of finding and paying for a parking space.

Skymeter is just one example. There are numerous other companies with fantastic new technologies, many of them developed in conjunction with our Universities and Centres of Excellence. Skymeter is receiving fantastic attention in Cities and countries where governments are seeking to marry innovation to public policy to tackle our toughest problems. For instance, the government of The Netherlands is very keen on Skymeter as a potential tool to implement a nation-wide Distance-based taxation system for vehicles and roads. However, all government buyers ask the same question: “Where is this being used?”

What then is the missing link between Innovation, incubation and the wonderland of commercialization and success? The most important ‘I’ word here is Implementation. Had Apple required government for the iPod to succeed, we’d still be having blue-ribbon panels to discuss the idea. Governments must find the courage to test, pilot, demonstrate and otherwise support the export development of technologies made in Canada. Until we do, we will create more Alexandar Graham Bells – people who have to go away to succeed only to have that success nationalized once they return. The 2.0 version of Bell’s work is RIM and Blackberry.

I am not for one minute suggesting that Premier McGuinty implement provincial road tolls or that David Miller stand-up where Metrolinx has failed to and force the issue of fair taxation of motorists. However, I am suggesting that governments need to identify ‘test beds’ and put money forward for pilots and demonstrations. For instance, how would charging Courier vehicles for every stop in the downtown core affect the issue of illegal stopping? The City has a problem and Skymeter has a possible solution where all others have failed. This is a win-win-win-win. Traffic solution for the City, pilot for a local company, exposure of innovative clean tech sector, rewards to private investors. What am I missing?

Until Government realizes that it must step up to the plate and that politicians must take some portion of the risk that private investors and entrepreneurs are taking to develop these solutions then they will be doing little more than printing documents with great stated-goals that are never ever met. Ultimately that will lead not only to the failure of our economy but to our failure as a society to deal with our most pressing problems.

If, as Mayor Miller has stated, Climate change is [his] generation’s greatest challenge, than doesn’t that require the boldest steps?