A Psychiatrist Crusades To Bring Risk Taking To Canadian Science

The ex-chairman of the nation’s Science Council forms a startup to spark government scientists OTTAWA—Stuart L Smith was fed up with his government’s inability to help Canadian scientists turn their knowledge into commercial products. So he formed his own company to do something about it. A psychiatrist turned liberal politician, Smith served from 1982 to 1987 as chairman of the Science Council of Canada. The council, Canada’s equivalent to the National Academy of Sciences, provides the government with a stream of reports on science and technology policy issues. In his capacity, Smith saw what he calls “an abominable waste of research talent.” His favorite example is the case of two government scientists who discovered a method of extracting oil from sewage sludge. Not only would their process permit the oil to be used, but it would also make the sludge safe enough to be buried as landfill. Yet nobody in Canada would invest in the idea, and the scientists finally found backing by going to Australia. “It seems clear to me that the two who invented it should have been encouraged to develop it here,” says Smith. “But that isn’t the way it happened.” Smith says that such situations abound in his homeland. He point out that turning research into com mercial products quickly is hard enough in the United States, where the Reagan administration and Congress have spent the past several years trying to spur federal, academic, and industrial scientists to compete more effectively with the rest of the world. And it’s ever harder for Canada, he says. A recent government report supports Smith’s thesis. In April, the Ontario Premier’s Council warned that the country was falling behind its international competitors in such high-tech areas as computers, and failing to play any role at all in such emerging areas as biotechnology. Neither the provincial nor the national government, it added, had a clear plan to improve the situation. The report recommended “an entrepreneurial, risk-taking culture” at government labs, as well as greater federal support. The report noted that Canadian industry spends less on R&D as a proportion of its gross domestic product than eight comparable Western countries. Other studies have found that Canadian industry generates only half of the country’s R&D, compared with nearly 70% in the U.S. Part of the problem lies with Canada's way of doing science. government scientists perform nearly one-fourth of Canada’s basic research—twice the proportion performed by their counterparts in the U.S., Western Europe, and Japan. Along with that larger government role, Smith points out, comes the inevitable delays and bureaucratic barriers to commercial activity. What’s more, Canadian scientists admit they lack the entrepreneurial spirit of their southern neighbors. But not Smith. Last August he left the Science Council to form a company expressly chartered to bring technology to the market— and earn him some money in the process. As president of Rockcliffe Research and Technology Inc., Smith intends to help government scientists put their knowledge to work for the good of the nation. His company plans to serve as an intermediary between the government and the laboratory scientist. Rockcliffe will do this in two ways—each designed to offer safeguards to scientists who are reluctant to risk their careers on a new venture, while providing incentives for managers to exploit existing research. One approach would be to create a company that would hire government scientists and then allow them to contract their services back to the government. The scientists would receive a stake in the new company while retaining their government benefits; and they could return to their old job if the new venture fails. Smith’s second model would allow an outside contractor to run a government-owned facility, as is done with such U.S. facilities and Oak Ridge and Sandia national laboratories. But unlike the U.S. models, where the company is the primary beneficiary of laboratory spinoffs, the Canadian contractor would be bound to serve many clients, including other government agencies, private industry, and even other countries. The plan allows employees to determine their own futures by requiring that any new arrangement be approved by a majority of the current staff “What we’re trying to do is liberate the creativity of the government scientist and engineer,” explains Smith. Smith is aware that commercial spinoffs from national labs are becoming increasingly common in the United States. A GAO report (RCED-88-116BR), for example, cites more than 30 such cases in the last five years at one government lab. Other influences on Smith were Britain’s Harwell Laboratories and West Germany’s Fraunhoffer Institutes, two examples of government facilities that have used private capital to expand the scope of their research. What’s in it for Smith? Money, for one thing, in the form of a 10% consultant’s fee and a percentage of any revenues. But he says he also wants to strengthen his country’s high-tech industries and keep within its borders whatever benefits accrue from commercial applications of research done by its scientists. Smith’s ideas have received a qualified endorsement from government officials, who feel they are already moving ahead in this area. “It’s an interesting experiment,” says Larkin Kerwin, president of the National Research Council of Canada, which currently provides about $430 million to 14 research facilities around the country. “I hope it will be tried.” Kerwin believes that the NRC already has its own extensive industrial network. Its Industrial Development Office, he notes, “is already well known to industry.” But Smith says that Kerwin is missing the point of his message. The council’s specialized programs that set out to help industry, he admits, “are second to none in the world.” But he says that a larger, untapped source is the NRC’s basic research labs. “With my model they could expand their work for industry by a factor of 10,” Smith predicts. “The Institute for Research in Construction, for example, could become the flagship for the Canadian construction industry.” Not surprisingly, Smith’s ideas win strong praise from D.J. Doyle, former president of Digital Equipment of Canada Ltd., whose current venture capital firm, Doyletech Corp., is a backer of Smith’s new company. “It’s so badly needed in Canada that I can’t say enough about it,” be asserts. “It’s an idea whose time has come.” Doyle, an electrical engineer who worked for the government in the 1960s, recalls one communications device he developed that could have become a product “if I’d had something like this [Smith’s new firm].” He notes ruefully that years later he found a U.S. firm that was selling just such a product. “It’s sickening what’s happening in this country,” says Doyle. There isn’t enough R&D going on in the private sector, and we’re leaving developments from government labs on the shelf.” Smith realizes that his approach runs counter to a pattern whereby the National Research Council, since its formation in 1917, has set the tone for both public and private research in Canada. At the NRC’s founding, it expressed the idea that industry would eventually take over much of the work being funded by the government. But that simply hasn’t caught on. For example, Canadian Patents and Development Ltd., a government corporation that licenses government inventions to industry, costs almost twice as much to operate each year as it generates in royalties. Smith concludes that Canadians are not as entrepreneurial by nature as their U.S. neighbors. “They’d rather be scientists than businessmen,” he says. But he is convinced that government researchers, with the help of their industrial colleagues, must be allowed to put their expertise to the test, if they hope to keep their country competitive and Canadian science healthy. David Spurgeon is a freelance science writer in Ottawa.

A Psychiatrist Crusades To Bring Risk Taking To Canadian Science

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