Alberta’s nanotechnology industry participants came together for Alberta Innovates 2013 nanoConnect conference that explored nanotechnology opportunities emerging within Alberta. As a steering committee member of nanoMEMS Edmonton cluster from 2001-2007 I was curious to understand current developments and progress made since 2007.
Reflecting on the discussions I was pleased to see how the product development support infrastructure has matured and is now fully in place to help entrepreneurs productize their ideas – physically realize a product for field trials, early adopters, and limited product runs. The technical support infrastructure is based on $300M capability investment since the late-90s in Edmonton resident in NINT, University of Alberta nanoFab, ACAMP, and NAIT nanoCARTS with some capability resident in Calgary at the University of Calgary AMIF.
The creation of Alberta Innovates in 2010 consolidated multiple research programs into a coherent innovation system that builds on Alberta’s jurisdictional advantages in: energy, environment, agriculture, forestry, and healthcare. The logic as I understand it is that Alberta Innovates provides the platform for nanotechnology application commercialization building on these jurisdictional advantages. The current Alberta nanotechnology strategy guiding research and commercialization activities was released in 2007. The return on investment in terms of economic benefit from the $300M nanotechnology capability investments, R&D activity, and new venture investments though has still has not contributed to any perceivable growth in Alberta GDP so is beginning to come under some pressure to show results.
A consistent theme during the presentations and well articulated by Skip Rung from Oregon based ONAMI was the importance of three main building blocks: research; talent; and capital/business formation in order to see economic benefits of new technology. I would add a fourth being the need for market development. Alberta’s nanotechnology industry is strong in the first two but struggling in the other two – capital/business formation and market. Although the end-to-end systems are in place to realize the product….business formation, customer development (in Alberta industries & global product markets), and market connections remain weak and immature.
The commercialization impediment of intellectual property stuck in universities (where most R&D tends to be invested in Canada) received some attention but other challenges to economic gain from Alberta nanotechnology investments remain:
- Weak Demand Side Engagement – If commercial exploitation is being directed towards Alberta’s jurisdictional advantages then to move to the next level the Alberta nanotechnology industry needs much stronger and active demand side engagement from Alberta’s jurisdictional strength industries. Participation remains too heavily weighted towards the ‘bottoms-up’ supply side or ‘technology push’ oriented. Building strength from a strong domestic Alberta base is critical to economic success so where was the engagement from Alberta’s jurisdictional advantages? I have heard it said that industries don’t understand nanotechnology, how to use it, or what competitive benefits it brings. The best example I have seen recently of senior executive participation was at the Cellulose Nanocrystal (CNC) pilot plant grand opening because of the burning need to find new applications for the forestry industry brought about by the decline in pulp & paper segment from the digital economy. More demand side ‘top-down’ engagement like the CNC pilot plant is needed.
- Industry – Research Misalignment – Underlying the weak demand side engagement is the misalignment between research and industry. Canada’s heavy reliance on universities for R&D funded by federal and provincial governments and the misalignment with industrial needs is well-known. Refocusing resources in Alberta to leverage Alberta’s jurisdictional advantage is bringing alignment and clearly local start-ups who presented are pursuing industry problems which is much better than 6-7 years ago. We heard both sides of the ‘spin-off’ success debate but pressure is mounting to get universities aligned with industry needs.
- Industry Receptors – The structure of industries (size, ownership, head office location) exploiting Alberta’s jurisdictional advantages are holding back demand side engagement and industry – research alignment. Although energy, petrochemical, and forestry have larger Alberta based businesses that conduct R&D in Alberta the agricultural sector is a diffuse collection of SMEs. Environmental and healthcare sectors are very young composed of start-ups or small businesses. The environmental sector benefits from strong energy industry support and investments. There are no large healthcare firms headquartered or with large operating divisions in Alberta. BioAlberta is the main cross sector voice for the nascent advanced technology growth with Agriculture, healthcare, and biological based environmental industry.
- New Venture Financing – After experiencing the ‘valley of death’ in a molecular diagnostic medical device start-up in Edmonton the issue of poor new venture financing in Alberta (and Canada) remains a problem. The Alberta Enterprise Corporation was formed in 2009 to inject funds into venture funds but there was no evidence during this conference that this initiative has made any impact in support of commercializing the province’s nanotechnology investments. The AEC 2012 deal flow study determined that nanotechnology (combined with aerospace & robotics) only comprise 2% of the Alberta sector venture deals although the percentage is likely slightly higher in their data because of how they may have categorized embedded applications in life sciences, devices, materials, and chemicals applications.
- Internal/Local Focus – As former Alberta based international vice president sales & marketing with experience in 25 countries and recently working in the UK for a year it is clear to me that the vast majority of Alberta are still too internally focussed. Whether due to a preference for life-style companies, lack of ambition, or lack of global business experience too few Alberta firms don’t take an external view. Although Alberta is a land locked province, with no tidal ports, constrained international airline access, and not on major global trade-routes it is still possible to access global markets. The internal focus may also be due to Alberta’s jurisdictional advantages that are more commodity oriented with an over reliance on the US market rather than driven by-product/market choice growth strategy. Alberta is still a small market with only 4 million people so global markets for product companies are critical to growth and economic prosperity.
- Lack of Urgency – Nanotechnology investments have not ignited economic growth – who is accountable for results and does this matter to anyone? Saying that nanotechnology is not ready for commercialization is a way to take the pressure off but there are examples of MEMS and basic nanomaterials seeing commercial success. Our current resource wealth and prosperity means that we are not fighting for survival as Nava Swersky Sofer’s presentation on Israel very succinctly emphasized. Canada lacks natural enemies as our territory is largely not in dispute – Canadians are fortunate but should not be complacent in a rapidly changing world. The vast majority of Albertan’s really haven’t experienced a significant threat to our way of life other than the NEP. Alberta is largely protected from world events and has only experienced localized or sector specific problems that in the aggregate not slowed growth such as: pipeline capacity limits, low natural gas prices, reduced pulp & paper, BSE hitting Alberta beef sales; or a strong Canadian dollar. There is no sense of urgency driving nanotechnology commercialization.
- Investment Dilution – Canada’s geography, large landmass area, and low population density will always be a challenge to focus enough critical mass to generate significant economic benefits that for example Finland has been able to achieve in Helsinki through Otaniemi as described by Ari Huczkowski. Clusters and creative cities matter. Rivalries and special interests will always work against critical mass in Canada. Edmonton has been fortunate to build critical mass on the supply side but lack or results is raising questions.
Solutions to improve economic outcomes from Alberta’s nanotechnology investments:
- Clear Grand Challenges – Dr Carlo Montemagno’s discussion of ‘grand challenges’ resonated with me as a means to align research-investments and build critical mass to improve commercial outcomes in Alberta. I did not see or hear a list of ‘grand challenges’ so this is worth building consensus across Alberta’s jurisdictional advantages. A clear list of ‘grand challenges’ can serve to finally bring industry-research alignment, alignment with provincial priorities, and serve as a compass to guide wise investment decisions. I also think it is worth distinguishing between solving ‘Alberta’s Grand Challenges’ such as environmental impacts of heavy oil and solving one or two of the ‘World’s Grand Challenges’ such as food and water supply constraints. In competing for limited funding resources which will take priority?
- Adopting a DARPA Approach to Commercializing ‘Grand Challenges’ – A prior post describes the basis for the approach. The Alberta nanotechnology industry needs some quick wins and a DARPA approach aligned behind the ‘Grand Challenge’ vision would help.
- More Senior Demand Side Participation – Future conferences require senior executive participation from industries representing Alberta’s jurisdictional advantage to be the voice of the customer to communicate ‘grand challenges’ – ‘can nanotechnology solve these industry challenges….’. For example participation from COSIA made up of energy firms who are collaborating to address: tailings, water quality, and green house gas emissions. Participants from agriculture, forestry, healthcare, and the environment.