Alberta needs innovation strategies for all sectors
In late February, when Alberta Finance Minister Travis Toews delivered his 2021 budget in the legislature, he applauded some of the province’s most innovative, technology-driven companies, like Symend, Jobber, mcloud and Neo Financial, for their rapid growth during the pandemic year.
As a close observer of Alberta’s burgeoning tech sector, I was pleased to see some of our local innovators recognized in a major government speech. But it was a different section of the minister’s remarks that needs attention.
“Some suggest diversifying the economy requires a transition from our traditional sectors such as energy,” Toews said. “Let me be clear, Mr. Speaker. That is not this government’s position.”
Toews was correct that economic diversification isn’t a threat to the energy sector. Alberta, after all, is home to a vibrant clean tech ecosystem. But at the same time, the view that Alberta’s traditional industries are separate from more contemporary industries is simply misguided. Today every company is a tech company and none more so than those in our energy sector.
Too often in conversations about Alberta’s economy, we act like it’s a zero-sum game. Data-intensive companies and firms that prioritize generating intellectual property (IP) feel this acutely, as entrepreneurs get pushback from so-called traditional industries that mistakenly believe a thriving knowledge economy will undermine the energy or agriculture sectors when it comes to policy priorities.
Yet energy, mining and agriculture are rapidly creating and adopting innovative technologies and data-driven processes, and leading companies in these sectors are filing patents and trademarks while securing other forms of IP, and taking steps to control data to give themselves a competitive advantage.
In every industry, the fastest-growing companies are the firms harnessing the power of data and developing new technologies to transform their businesses. Innovative companies are developing the tools that disrupt and transform entire industries, and IP owners reap the benefits by creating products and services they can charge fees on, often embedded as a higher value in their traditional product offering.
The Canadian oil and gas sector does an enormous amount of research and development — around $1.5 billion annually. This investment is often focused on techniques to extract, refine and transport their product efficiently and cleanly. Like so many other parts of the economy, energy companies are leveraging big data, sensors and artificial intelligence to advance their work.
But Canadian oil and gas companies are not owning their fair share of the IP and data they produce from this R&D, undermining their ability to generate economic returns on their investments. Instead, year after year it is American energy producers Halliburton and Baker Hughes that file the most oil and gas patents in Canada.
This means that American competitors are owning ideas applied to the energy sector in Canada. These ideas allow them to improve their products and services and get better margins, which leads to better profits. IP is crucial in a data-driven economy because a company can use its IP to assert control of the technology and block access to data. By expanding their freedom-to-operate, sophisticated firms constrain their competitors to smaller and smaller portions of revenues, which then limits business investment, stifles growth and squeezes their profits.
Today, IP, data, software and an array of connected technologies are underpinning every industry. If Alberta’s traditional industries do not catch up, getting smarter about owning their IP and controlling their data, they will be increasingly losing their margins to technologies and platforms developed in Austin, San Francisco, Munich and Beijing.
This is why Alberta needs a provincewide innovation strategy with the long-term goal of creating an ecosystem where startups become scale-ups, and scale-ups become large multinationals and our established industries make the most of their IP and data assets.
Such a strategy would aim at promoting the value of IP and data and educating our entrepreneurs on strategies to protect their innovations, so they are not leaving money on the table. The government could also create IP collectives in strategic sectors to ensure that the economic benefits generated by the Alberta innovation ecosystem are captured for the benefit of our economy. Such entities would pool global IP assets for strategic defence of Alberta’s companies as they expand globally and protect the IP that has been generated by taxpayer-supported research.
The government could also establish data trusts for such key sectors as energy, cleantech and agriculture. Data trusts are entities that collect information in a central data facility that is authorized to make such data available to parties interested in using it for designated purposes including economic advancement, research, public-sector planning and social benefit.
If this sounds like big government socialism, remember that this kind of approach is nothing new. The Alberta government has played the critical role in unlocking the energy sector with an energy and utilities board in the 1930s, pipeline infrastructure in the 1950s, industrial research in the 1970s and 1980s (AOSTRA), and in contemporary cleantech strategies.
If the Alberta government is serious about its commitment to traditional industries, it must once again play its leadership role, helping those sectors reap the full benefit of innovation. No matter whether it is traditional or emerging industries, Alberta needs to be positioned for success in the 21st-century knowledge-based economy.
TODAY EVERY COMPANY IS A TECH COMPANY.