Canadian Council Proposes Model, Metrics for Regional Innovation Ecosystems

Innovation is not a causal, linear process, but a dynamic and ever-changing network of actors connected by activities and linkages, according to a report from the Council of Canadian Academies. Despite this complexity, however, by identifying behaviors that feed firm innovation, regions can make informed decisions about high-tech economic development. In the report, the council identifies quantitative ways to measure the actual and potential impact of innovation investments, along with presenting a new firm-centric model of innovation ecosystems.

The report, Innovation Impacts: Measurement and Assessments, is the product of an expert panel, convened by the council, to address the issue of how to evaluate the success or failure of its efforts to build a thriving innovation-based economy. In order to deal with the complexity of how individual programs affect a larger economy, the council presents a framework to conceptualize the relationships between actors in an innovation ecosystem. Although measurement and assessment of micro-level interactions in an innovation ecosystem are difficult to capture, the authors claim the best way to assess its overall health is to evaluate aggregate behaviors engaged in by the various players in the innovation economy.

At the center of the ecosystem is the firm, according to the council. A healthy ecosystem provides resources and support to the firms, who then play the principal role in translating ideas into innovations, which in turn boost the overall economy and help build a stronger ecosystem. Knowledge generation, innovation facilitation, policymaking, and demand are the four behaviors within the ecosystem that feed into and support firm innovation. The report provides a variety of recommended indicators for each of these behaviors to assess whether existing programs, institutions and other actors are contributing effectively to the overall ecosystem in a way that positively promotes and results in firm innovation. The health of the innovation economy as a whole can be measured by rate of new venture creation, leading R&D firms, new and improved products, aggregate productivity and GDP.

View a diagram of the report's firm-centric model

For example, within a region a subset of public and private actors, including university and public research organizations, are key in generating knowledge. If policymakers wish to evaluate the effectiveness of their knowledge generation efforts, the report includes a list of indicators that can be used to gauge the sufficiency of these efforts. In the case of knowledge generation, ideal indicators include higher ed expenditure on R&D, number of publications and patents, number of highly qualified personnel, and degrees.

Policymaking is another aggregate behavior engaged in by regional actors. Policies and regulations, governments shape the linkages and activities within the ecosystem and, ultimately, affect firm innovation. In order to gauge the effectiveness of regional policymaking, stakeholders can look at indicators like competition policy, trade policy, intellectual property, sector-specific regulation, governance, and other public innovation platforms to assess whether the actors engaged in policymaking are contributing to the ecosystem in a positive way and are facilitating firm innovation.

Within the council's model, actors involved in technology-based economic development would often be characterized as innovation intermediaries. Intermediaries include university tech transfer offices, research networks, research institutes and councils, research parks, economic development agencies and other organizations focused on commercialization and entrepreneurship. The indicators explicitly outlined in this framework to assess the effectiveness of these organization include direct financial support, in-kind support by the intermediaries, private financial support, indirect financial support, mentoring, levels of collaboration, and new venture creation.

Innovation Impacts smartly catalogs the most reliable and representative indicators that empower states, regions, and nations to evaluate their innovation ecosystems through a universal firm-centric approach. Although it requires experienced analysis, consistent data, and complementary qualitative input, the panel's firm-centric innovation ecosystem framework manages to create a method of quantitatively measuring and assessing an innovation ecosystem's infrastructure while capturing the elusive idiosyncrasies that affect the ecosystem at the micro and macro level.

Download Innovation Impacts: Measurement and Assessments at: http://www.scienceadvice.ca/en/assessments/completed/inno-investments.aspx.