Superclusters: Rhetoric and Reality

By Creso Sá

Minister of Innovation, Science and Economic Development Navdeep Bains announced the federal government’s “superclusters” initiative yesterday. This had been in the works for a while. We already knew that the idea was to support a handful of projects across the country involving industry and universities in technology sectors deemed to hold high innovation potential, which Canada could excel on. We also knew that the government had earmarked $950 million for this initiative, hoping to create jobs, launch new firms, and help them scale.

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Missing were the details: how would the program be designed? What criteria would be employed to evaluate proposals? A few weeks ago, Minister Bains indicated these details were being worked out and would be disclosed in the program announcement. Let’s take a look at that.

Clusters or Consortia?

For an initiative that has been finessed over several months, the superclusters are widely unfocussed. That is both surprising and disappointing, given the high-profile consultations around innovations that the government placed so much emphasis on over the past year. First, what are “superclusters”? Here’s the official definition:

Superclusters are dense areas of business activity where innovation happens and where many of the middle-class jobs of today and tomorrow are created. They attract large and small companies that collaborate with universities, colleges or not-for-profit organizations—forming a consortium—to turn ideas into solutions that can be brought to market.

There is some confusion here. The concept of industry cluster refers to the concentration of interconnected firms, suppliers, service providers, and other institutions in a given region. So yes, they are “dense areas of business activity where innovation happens”. But “superclusters” as envisioned are nothing like this – they are good old industry-university consortia, with an emphasis on commercialization (“solutions that can be brought to market”). Clusters are the result of market-driven processes; industry consortia are organizational solutions to a collective action problem – how can competitors collaborate?

Industry consortia are an established idea – think SEMATECH, the coalition of semi-conductor manufacturing technology companies, launched in 1988 as a partnership between the U.S. government and 14 firms. SEMATECH was conceived in the mid-1980s as the US computer chip manufacturers were being eclipsed by Japanese firms, as a way to help the industry pull together in regaining its competitive edge.

The announcement specifies that a company must lead each supercluster proposal, which must involve the creation of a non-profit organization enlisting the participation firms “of all sizes” and postsecondary institutions or non-profit organizations. Each consortia must provide 1:1 matching funds. Clearly, we are in industry consortium territory, and the dreadful allusions to “Silicon Valley” are obviously misguided.

There is a broad palate of objectives each consortium must commit to: “build a shared competitive advantage”, “increase business R&D”, “generate new companies”, “commercialize new products, processes and services”, “foster a critical mass of growth-oriented firms”, and “strengthen collaboration between private, academic, and public sector organizations.”

This is the problem with the conceptual confusion noted above – the program expects industry-led consortia not to coalesce around a specific goal of shared interest that is achievable in five years, but to act as de facto regional development agencies.

In short, a literal interpretation of the program criteria implies that superclusters are expected to do everything.

What to expect?

The superclusters initiative is not a “first of its kind for Canada”, as stated. Programs aimed at creating industry-university- government partnerships have been around for a long time, with mixed results. Think of the various iterations of the networks of centres of excellence, for example, which the Harper government steered heavily towards industrial goals in its later years.

This particular initiative is overly ambitious in its rhetoric and objectives, and conceptually fuzzy in its format and evaluation criteria. If we take at face value that “the purpose of this initiative is to create more middle-class jobs and more opportunities for Canadian businesses to grow into globally successful brands”, we are likely to be disappointed. More proximate objectives like stimulating collaborative R&D between academic institutions and firms, and commercializing new products are more probable.

Colleges and universities already collaborate with industry in many ways, and these pre-existing relationships will no doubt play a role in the shaping of these consortia. I would not be surprised if some of the country’s leading universities play a leadership role in bringing partners together to form consortia, building on longstanding research linkages with major companies. Likewise, their efforts to launch start-ups and commercialize research will likely feature prominently in these arrangements.

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