It takes more than bricks and mortar to build a regional economy

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By Denzil Doyle

A few years ago, a group of hockey enthusiasts from southwestern Ontario embarked on an ambitious campaign to establish an NHL hockey club in their area. A nasty comment that went around at the time was that it would never happen because if it did, Toronto would want one as well.

That joke came to mind when I was asked to comment on the enthusiasm for the MaRS Centre, a Toronto-based innovation centre, only this time the shoe is on the other foot; MaRS appears to be a successful business accelerator that is being emulated across the country. In fact, it appears to have been looked at in some detail by the people who played a key role in the planning of the Ottawa Innovation Centre, to be located at the Bayview yards area.

One can only hope that the planners took the time to pick and choose from the MaRS model in order to come up with one that is finely tuned to the needs of Ottawa because the two areas are vastly different when it comes to innovation. Toronto is dominated by branch plants that sell and service products that are designed and manufactured outside of Canada, while most Ottawa companies operate throughout the entire innovation spectrum from business planning to prototype development, selling, marketing and distribution.

Ottawa companies are continuously chasing after investment capital while Toronto companies rely on their head offices for their day-to-day money needs.( In fact, I recently listened to a speech in which it was argued that one of the reasons why Canada has such difficulty in building a venture capital industry is because the country has an economy that does not need much of it and so there is no training ground for it.) Certainly, ex-bankers don’t seem to cut it.

Ottawa’s planners would be well advised to stand back and identify clearly what problems they are trying to address with the new Innovation Centre. Above all it must provide more than bricks and mortar.

Two problems that stand out are a shortage of well-managed venture capital and a lack of directors who are willing and able to back it up with good governance.

It appears that concrete steps are finally being taken to address the first with the establishment of the Mistral venture capital fund, but the second seems to be endemic to Canada and is not well understood by most people in the industry. Those who do believe in having competent boards of directors attempt to recruit high-profile individuals who are so busy the choice doesn’t make sense. They usually don’t cut it either.

The Ottawa planners will not be able to solve the governance issue on their own but they should be prepared to bring it to the attention of those who can do something about it – like policy makers who review directors’ liabilities from time to time. A failure to do so will result in strange things like dual CEOs and management organization charts that look like crossword puzzles.

More will be said about the corporate governance issue in my next article. Hopefully, the people who will be managing the pool of venture capital will be equipped to do something about it. If not, 10 years from now we will wonder why the Innovation Centre failed.

Image: Coldwell Banker

Denzil Doyle’s involvement in Ottawa’s high technology industry goes back to the early 1960s when he established a sales office for Digital Equipment Corporation, a Boston-based firm that had just developed the world’s first minicomputer. The Canadian operation quickly evolved into a multi-faceted subsidiary. When he left the company in 1981, Canadian sales exceeded $160 million and its employment exceeded 1,500. In his next career, Doyle built a consulting and investment company, Doyletech Corporation, that not only helped emerging companies, but built companies of its own. In recognition of his contributions to Canada’s high technology industry, he was awarded an honourary Doctorate of Engineering by Carleton University in 1981 and a membership in the Order of Canada in 1995.

/// COMMENTS

3 Comments »
  • Ian

    January 30, 2013 9:11 am

    Great post Francis and brilliant idea to have Denzil Doyle offer his thoughts. I couldn’t agree more regarding his point about good governance. I find these two quotes regarding the consequences of failing to implement good governance very telling; “ A failure to do so (implement good governance) will result in strange things like dual CEOs and management organization charts that look like crossword puzzles.” … “If not, 10 years from now we will wonder why the Innovation Centre failed.”

    While it was generally acknowledged that OCRI was an organization requiring significant change, new direction and rebranding. Very little was disclosed publicly that I am aware of as to the root causes of the organizational malaise. IMHO, if you boil down the root cause of failure good governance is a key contributing factor. I have been very vocal in my advocacy regarding good governance for regional economic development having contributed too many of the opportunities to submit input by the city of Ottawa. In fact I still have the comments and suggestions I submitted to Opinion Ottawa.

    A key to success for the “Innovation Centre” will be to have good governance coupled with a functional board that is open and accountable to the taxpayers who will be funding the facility. Good governance sounds so obvious, fundamental and straight forward but has also been very elusive in the past. OCRI is perhaps a case in point.

    Looking forward to the next installment in the series.

    Ian Graham

  • Joelle D'Aoust

    January 31, 2013 10:00 am

    Fantastic article Denzil – as a relative newcomer to this scene I have been both impressed and disapointed in the level of support offered here in Ottawa. On one hand there is an amazing core of strong leaders poised and fighting for change; on the other we have the constant struggle against red tape and bureaucracy… Let’s be innovative and finally change the governance ways of the past and demonstrate bold leadership rather than tedious politics.

  • Ian

    January 31, 2013 5:31 pm

    “Those who cannot remember the past are condemned to repeat it.”

    George Santayana, “Reason in Common Sense, The Life of Reason, Vol.1″

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